Larry Beinhart's Body Politics

Joint Session

by Larry Beinhart, April 26, 2010

When you’re flat, you’re busted, you’re totally broke, when the ATM eats your card for a joke, when you’re out of cash, out of credit, and have no more hope, what do you do? You take to the streets and start selling dope.

It happens in the hood and out in the ’burbs, see them hangin’ and slangin’ out by the curbs, cars cruise by making the scene, down by the mall and out on the green. It happens to the lowly, it happens to the high, when the river of money abruptly runs dry.

It happens to the quick and those who hesitate, and now it has happened to our very largest state.

California, O California, always on the cutting edge, now you are standing on a fiscal ledge. California, O California, always ahead of the scene, is thinking of going really, truly green. The only way out of their deep financial grief is at last to turn to our special sacred leaf. In this crisis so full of rants, tears, and sighs, the only escape is to legalize. To cover the shortfall, fill in the cracks, send muggles to market, and collect the tax.

California has a unique referendum system. Anyone can propose a law.

For $200 and with the signatures of 5 percent of voters who voted in the most recent gubernatorial election, a referendum can get on the ballot to become a law. With 8 percent, it can go on the ballot as a constitutional amendment.

In 1978, California voters passed Proposition 13 as a constitutional amendment.

Prop 13 limits real estate taxes to 1 percent of the cash value of the property. The baseline for such values was set at 1975 prices. Increases in valuation are limited to 2 percent a year, except when a property is sold, at which time the sale price establishes a new value.

Prop 13 also requires a two-thirds majority in the state legislature and in local legislatures to increase other taxes, including sales taxes and income taxes. Even at its most liberal moments, California has a large, significant, and immovable conservative minority. Passing tax increases is impossible, as Governor Schwarzenegger, like all the governors since Ronald Reagan, has discovered.

Prop 13 was, and remains, hugely popular. It was also hugely influential. Since then, tax cuts have become our national theme song and tax hikes have become almost impossible anywhere.

At the same time, costs don’t go away. If anything, they continue to increase.

With the Crash of 2008, which has continued as the recession of 2009-10, tax revenues in all states have fallen sharply. States search frantically for compensating cuts, but their costs include things that can’t be cut for practical reasons, for political reasons, or because they are mandated by other state laws, federal laws, or the courts.