Maybe our budget problems began with Howard Jarvis. There was
once a need for reforming the tax system in California and Jarvis
led the way with the sponsorship of Proposition 13. Now, we have to
look at the results and make a decision whether or not the tax
basis of our state and local governments needs another
revision.
Maybe our budget problems began with Howard Jarvis. There was once a need for reforming the tax system in California and Jarvis led the way with the sponsorship of Proposition 13. Now, we have to look at the results and make a decision whether or not the tax basis of our state and local governments needs another revision.
The school system in California is in deep trouble. Once a leader in education, California fell to the bottom 5 percent of all of the states and it is not just because teachers are incompetent and administrators paid too much, two reasons that some Jarvis followers would have you believe. But then the Howard Jarvis Taxpayers Association is living so far in the past that their WWW site still encourages us all to send our letters to Gov. Gray Davis. (http://www.hjta.org/legislation.htm).
Along with Proposition 13, the State of California has taken away the rights of cities and counties to levy their own property taxes. Now, the state determines how taxes are computed, collected and allocated to the various jurisdictions. At the time that the state finds that it can not balance its budget, we are also forced to cut local spending because there is not enough money for both the state and the counties to get all of their share.
This year, we find that the cuts go deep. Schools are badly affected. Some local jurisdictions are relatively well off because they have shown past fiscal restraint and maintained an adequate reserve. Others, such as the City of Richmond, are in such trouble that they may need to close all their libraries, lay off one-third of police and firemen and borrow the rest.
We now hear that Santa Clara County will end up cutting into the health and public safety protection for residents outside our city limits. They may also end up cutting all of the non-mandated state programs.
The recent Times article on the 4-H program funding is one example of how much these cuts hurt. Even though agriculture is disappearing from Santa Clara County, it is a sad thing if this type of program were to disappear in America’s leading agricultural state.
I have written Assemblyman John Laird asking him to ensure that the U.C. Cooperative Extension Service allows counties some flexibility as to which programs they need and how these programs are funded. I would encourage others to do likewise.
There are three major problems with the current taxation system that need to fixed. Proposition 13 is the third rail of California politics and is probably not going to be fixed, but if it were, there should not be the same protection for major corporations on their property taxes that there is for individuals and small businesses. Even with the protection of Proposition 13, we had pond scum landowners who invoked the Williamson Act to lower their property taxes even further, when their only farming activity was hanging a bird feeder in their front yard. In truth, they were stealing governmental services from the rest of us including the ability to adequately fund our schools.
Everyone is afraid of corporations leaving the state if their property were taxed at anything close to real value. If that is all that is keeping them here, then maybe we should just let them go. There would be a lot of savings in not building new highways, water systems, etc. On the other hand, if these companies are more concerned with having the right, creative people in the company, then they will be motivated to stay.
Only last month Disney closed its animation studios in Florida and were looking at outsourcing the activity to India. If you look at the quality of recent Disney movies, maybe they should continue to contract with Pixar Studios in Emeryville. It is not cheaper animation work that would save Disney, it is creative talent. It is not tax savings that keeps Pixar in the Bay Area either, it is our creative talent.
A second problem is in the manner that counties and cities are funded. It is to their advantage to encourage industrial or retail development and to discourage residential growth. One makes money for the city, the other costs the city money. When every city is doing this, the results include longer commutes for workers, less time with their families, increased traffic and its associated air pollution. It also leads to a decline in social capital, the amount of time and effort that individuals put into their community and even the feeling that they really belong. Pay close attention to what San Jose is doing in Coyote Valley.
The third problem is in our regressive personal taxation system. The largest share of state government is paid for by income tax. The state collected approximately $1 billion more in personal income tax in Santa Clara County than it did in property taxes. If we are to fix the state tax problems, we need to look at personal income taxes, because that is were the money is coming from.
Peter Camejo, citing the California Budget Project, made a campaign point of the fact that, measured as a percentage of their income, the poorest quarter of our residents pay significantly more (11 percent) than the richest quarter (7 percent). If that were rectified so that everyone paid their fair proportion of their income in taxes, the state would not be in the financial mess that it is in. Oracle CEO Larry Ellison may not like it but we should not care what Larry likes. The median annual income in Santa Clara County is around $45,000, the second highest in the state. It would be very sad if we had to cut our 4-H, close elementary schools or start laying off public safety workers.
“I find I have a great lot to learn – or unlearn. I seem to know far too much and this knowledge obscures the really significant facts, but I am getting on.” – Charles Rennie Mackintosh
