George Will sees a California bailout in the American taxpayer's future. He notes that the only one of 6 propositions on the ballot that voters approved was one denying state legislators pay raises unless the budget is balanced--it passed with 73.9 percent support. But Will is not happy with them, either:
Now California's mostly Democratic political class will petition Washington for a bailout to nourish the public sector that is suffocating the state's dwindling -- and departing -- private sector. The Obama administration, which rewarded the United Auto Workers by giving it considerable control over two companies it helped reduce to commercial rubble, will serve the interests of California's unionized public employees and others largely responsible for reducing the state to mendicancy.
These factions will flourish if the state becomes a federal poodle on a short leash held by the president. He might make aid conditional on the state doing things that California Democrats and their union allies would love to be "compelled" to do: eliminate the requirements of two-thirds majorities of both houses of the legislature to raise taxes and pass budgets, and repeal Proposition 13, which voters passed in 1978 to limit property taxes. These changes would enable the legislature (job approval rating: 14 percent) to siphon away an ever-larger share of taxpayers' wealth and transfer it to public employees. Such as prison guards, whose potent union is one reason California's cost-per-inmate (about $49,000) is twice the national average.
California's voters are complicit in their state's collapse. They elect and reelect the legislators off whom public employees unions batten. Also, voters have promiscuously used their state's plebiscitary devices to control and fatten the budget. In November, as the dark fiscal clouds lowered, they authorized $9.95 billion more in debt as a down payment on a perhaps $75 billion high-speed-rail project linking San Francisco and Los Angeles -- a delight California cannot afford.
A WSJ editorial sees a message in California voters rejecting a set of tax-hike ballot initiatives in the Golden State. They note:
Tuesday's vote was a voter cry that the state needs more such restraints, and now is the time to push them. First, California needs a sturdy cap on the rate of spending growth. Thirty years ago this November, when California's economy was in a similar rut, three-quarters of the voters approved the famous Gann Amendment. That limited the annual growth rate of spending to population growth and inflation.
The result was that California's annual average rate of spending growth after inflation fell to 2% through the 1980s from 9% in the 1970s. California's state per-capita expenditures fell to 16th in the nation in 1990 from 7th in 1979. The economy soared, growing by 121% -- 14% faster than the U.S. average. The Gann limits were effectively neutered in 1988 and 1990 by initiatives that exempted education and transportation from the cap.
The next step is to fix California's steeply progressive and antigrowth tax code. California's 10.55% income tax and 9% sales tax are driving businesses and high income taxpayers out of the state, depleting the tax base month after month. They also lead to overspending during the good times as revenues boom, but to budget crises when those revenues fall precipitously during the busts. A 5% to 6% tax rate on sales and income without deductions would halt the flight to low-tax neighboring states and invite newcomers who could start buying houses again.
WSJ adds pension numbers that are ghastly. Wes Pruden, in an uncharacteristically somber column, sees the end of illusions in the land where everything is tried first and then exported to the other 49 states.
Perhaps the Great California Quake will resolve the issue by detaching the Golden State from the CONUS and set i on sail for Asia, where it can ask China for a bailout.
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