Raising taxes isn’t the solution to California’s problems

Californians are some of the most taxed people in the country, yet it never seems to be enough for those who want more of other people’s money.

California has among the highest per capita tax burden and some of the highest income, sales and gas tax rates in the country. It’s no surprise the Tax Foundation ranked California’s business tax climate 48th in the country last year.

This extensive system of taxation puts California on track for a state government general fund budget of nearly $132 billion in the coming fiscal year, which begins July 1. That’s up from an enacted general fund budget of $102 billion in 2007-08.

Rather than taxing and spending ourselves into prosperity, however, California continues to lead the nation in poverty, finds itself in the grips of a housing crisis, produces some of the most abysmal educational outcomes in the nation and even after pension reforms in 2012 will remain buried in pension obligations for decades to come.

It is a state of affairs which should prompt some reflection on whether continuing to throw more money at government institutions without ensuring those institutions are as efficient and effective as possible makes any sense.

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Alas, there are plenty of well-funded special interest groups and public sector unions at the state and local level which would not be well-served by a suddenly critical populace and honest political establishment and which thrive on the continued system of looting from taxpayers.

Now, those special interest groups and public sector unions are looking to get more, billions more, from property owners this year.

Last month, a proposed ballot measure called the California Schools and Local Communities Funding Act of 2018 was submitted to the attorney general. The measure seeks to implement a long-talked about “split roll” system to siphon more property taxes from commercial and industrial properties.

The list of supporters should surprise no one. Among those endorsing the “Make It Fair” proposal includes the SEIU, California Teachers Association, the single-payer obsessed California Nurses Association and the United Teachers Los Angeles.

Proponents estimate the change to Proposition 13 will generate over $11 billion in annual revenues necessary so California “can restore funding to its underfunded schools, invest in local communities, level the playing field for business, and stimulate the economy.”

It isn’t hard to think of several better and more direct ways of restoring funding to schools, investing in communities, leveling the playing field for businesses and stimulating the economy. In reverse order: repealing job-killing regulations will probably do more to stimulate the economy than extracting billions more from property owners.

Rather than permit crony capitalist exercises like offering subsidies to giant corporations like Amazon, or doling out tax credits which don’t produce measurable results, simplifying the state tax code and lowering tax rates overall would probably do a better job of leveling the playing field for businesses.

If restoring funding to schools and investing communities is truly the goal, it’s an admirable one. Unfortunately, given those supporting the proposal, such rhetoric is generally code for “paying for pensions.”

The state, counties, cities and school districts have all felt the impact of rising pension costs and the problem of pension crowd-out, whereby pension costs engulf increasing portions of budgets and crowd-out funding for tangible services.

According to a study released last year by Stanford University Professor Joe Nation, the state’s contribution to CalPERS and CalSTRS took up 2.1 percent of the state’s operating expenditures in 2002-03. This year, they take up 7.1 percent of operating expenditures and by 2029-30, it will be 10.1 percent or more.

The same thing is felt at the level of school districts, including LAUSD, where UTLA has gotten its way on pension and health benefits to the point where by 2031-32 the district will spend more than half of its budget on pensions and health benefits.

If one is serious about investing in communities and schools, more pension and benefit reforms should be demanded.

While the unions will continue to cloak themselves in progressive rhetoric and seek to trick voters into thinking the path to prosperity and justice is to give the government more money, Californians should cast a more critical eye towards such proposals and resist further looting of taxpayers.

Sal Rodriguez is an editorial writer and columnist for the Southern California News Group. He may be reached at salrodriguez@scng.com

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