Less of a return on the tax dollar

Middle-class Californians have long griped about paying more taxes than they might pay elsewhere, but for decades this state could boast that it gave them quite a bit in return. Now that contract is in doubt.

A modern freeway system, easy access to superior universities and progressive health programs used to be part of the compact. Even local schools plagued with financial problems continued to offer small classes, innovative after-school programs and advanced arts and music curricula.

But at a time when taxes are about to rise substantially, the services that have long set this state apart are deteriorating. The latest budget cuts hit public programs prized by California’s middle class particularly hard -- in some cases at the expense of preserving a tattered safety net for the poor -- following years of what analysts characterize as under-investment.

The governor’s signature on the new spending plan, some experts say, has accelerated the sunset of a way of life in California.


“Twenty years ago, you could go to Texas, where they had very low taxes, and you would see the difference between there and California,” said Joel Kotkin, a presidential fellow in urban futures at Chapman University in Orange. “Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California’s government and the middle class is constantly being renegotiated to the disadvantage of the middle class.”

The reasons are varied. The cost of services continues to outpace inflation. Programs are being squeezed out by things the government was not providing in the halcyon 1950s and early 1960s, including Medi-Cal and some welfare programs. And the state has been reluctant to embrace new ways of funding services while holding back state money to plug other holes in the budget.

“We keep shifting money over to programs where there has been rapid growth, like prisons or healthcare,” said Ross DeVol, director of regional economics at the Milken Institute, a Santa Monica think tank. “Ultimately, you pay a price for that.”

Perhaps nowhere has that become more obvious than in the state’s freeway system. Even the infusion of federal dollars on their way from Washington will make only a small dent in repairing the shoddy network of roads that once was a sturdy backbone of the state’s economy. The patchwork of local sales tax increases being put in place in various communities to fund transportation projects also will go only so far.

Most transportation experts have concluded that it will be impossible to keep the state’s freeway system free. California simply can’t afford it anymore. The days of being able to crisscross California without having to pay a toll, they say, will soon be over.

The state’s new budget package acknowledges this by giving Caltrans free rein to turn over road projects to private companies, which would probably recoup their investment through tolls. Ellen Hanak, director of research at the Public Policy Institute of California, predicts that in the not-too-distant future, drivers will need to place electronic transponders in their vehicles to keep track of the miles they log on various freeways. They would be charged accordingly.

“This where a lot of experts see our system heading,” Hanak said. “The question is how soon.”

Other states are far along in implementing complex toll systems and have the roads to show for it. California has continued to cling to the notion of the freeway, which many road builders say is unsustainable. State funding for the system comes largely from a fixed tax on gasoline that hasn’t been increased in 15 years, even as vehicles become increasingly efficient, resulting in less gasoline used and less revenue for the state for each mile driven. The result is roads that are increasingly clogged, pocked with potholes and even dangerous.

Funding challenges at another longtime California draw, the state’s impressive system of public colleges and universities, have forced it to become increasingly restrictive, shutting out students who would have had no trouble gaining access a decade or two ago.

The new reality will be reflected at a Capitol protest Monday, where about 300 students plan to hold a mock funeral for affordable higher education. The latest funding cuts will cost the system $887 million -- after tuition has doubled over the last 10 years.

Another 10% fee increase is in the works, and UC is planning to take away at least 2,300 freshman spots for fall 2009, a cut of about 6%. Cal State is planning to cut an additional 9,000 slots.

In 1975, about 17% of the state general fund budget went to higher education. Now that number is below 11%.

Classes at Cal State are increasingly difficult to get into, and students who once would have had access to the most elite California universities are being offered admission only at the relatively new UC Merced.

“More than ever before, we are rationing college opportunities in this state,” said Patrick Callan, president of the National Center for Public Policy and Higher Education in San Jose.

California is also cutting back in other areas where it once occupied the cutting edge. The state’s landmark First 5 program, established by voters in 1998, uses tobacco tax revenue to fund a network of education and health services, child care and other programs for children ages 5 and younger. The new budget will raid that program for hundreds of millions of dollars if voters agree. California’s promise to make a large investment in community-based mental-health care will also be scaled back temporarily if voters go along.

In addition, the state is withdrawing its subsidies to local governments for public transit -- a $460-million cut. The result is almost certain to be widespread fare increases and service reductions, according to Joshua Shaw, executive director of the California Transit Assn., a nonprofit group that promotes public transportation.

And the segment of California government that has arguably most disappointed middle-class families, the K-12 educational system, is positioned to decline further.

Former presidential candidate Mitt Romney spoke to the frustrations of many California parents during a speech at last weekend’s state GOP convention in Sacramento. Pointing out all the taxes Californians are now paying, he asked, according to the Sacramento Bee: “With all that money, how are your schools?”

The simple answer is: Not what they used to be. And now the state is cutting billions more out of them, including money set aside to keep classes small and to fund arts and music electives.

“The social compact is: I pay taxes and good things happen,” Kotkin said. “But I pay a lot of taxes and can’t send my kid to our local public schools because they are terrible.”