State of ‘taxiness’

For 32 years, California’s Proposition 13 has been denounced by everyone — except the people. Before the June 1978 vote on the ballot proposition to roll back property taxes and make it harder for assessors and legislators to raise taxes, the state’s superintendent of public instruction warned that Proposition 13 would “do nothing short of destroying education in California.” After its landslide 65%-35% victory, Pat Brown, the Democratic governor from 1959 to 1967, said Proposition 13 had “cut the guts out of a great government.”

Late last year, writing in this newspaper, the liberal columnist Harold Meyerson blamed Proposition 13 for “the fiscal straitjackets that make California ungovernable today.” The website of the California Federation of Teachers still asserts that “the real problem that needs to be addressed to solve California’s budget problems is Proposition 13.”

And yet, in a state with huge Democratic majorities in Sacramento, one carried easily by every Democratic presidential nominee since 1992, Proposition 13 remains “the third rail of California government,” according to the political scientist Jack Citrin. Jerry Brown, who as governor in 1978 opposed the initiative before promising to make it work, recently said of his 2010 gubernatorial campaign: “I’m not going to advocate messing with 13. That’s a big fat loser.” A 2008 survey by the Public Policy Institute of California found that even 56% of self-identified Democrats said Proposition 13 was “mostly a good thing,” compared with 31% who said it was “mostly a bad thing.”

Is it possible that California’s pro-13 majority, denounced for decades as shortsighted and greedy, is actually on to something? The reason people refuse to believe that California’s taxpayers keep too much money and its tax collectors don’t get enough is, as Brown now says, that there’s “so little confidence in state government.”

The core of that distrust is the belief that California’s public sector suffers not from the lack of money but from the failure to use the ample funds it does receive efficiently and beneficially. There’s no shortage of facts about the revenue and spending sides of government, California-style, to justify that suspicion.

California, in the first place, is not a state with low taxes. It’s not even a state with especially low property taxes. In 2007, the year of the most recent Census Bureau data comparing state finances, California’s state and local governments levied $1,141 in property taxes per capita, less — but only 11% less — than the corresponding average, $1,288, for the 49 other states and the District of Columbia.

If we broaden the view to look at all taxes (property, income, sales and excise taxes) paid to state and local governments by individuals and corporations, California’s governments received $4,731 per resident, 14% more than the $4,160 average outside California. Only eight states and the District of Columbia had a higher per capita tax burden.

Not only is California a high-tax state, it is even more conspicuously a high-revenue state. Things that aren’t taxes, such as fees for government services, often have a high degree of “taxiness,” as Stephen Colbert might say. The Golden State, routinely described as desperately short of funds because of Proposition 13, brought in $12,776 per capita in governmental income from all sources — taxes, fees, federal aid, charges for government-administered insurance and revenue from government-owned utilities — in 2007. Only three states and the District of Columbia received more.

Californians would feel better about all the money being pushed into the government factory if high-quality services were rolling off the assembly line. To take just one example, however, California’s public school students perform miserably on the U.S. Department of Education’s National Assessment of Educational Progress. In reading, California fourth- and eighth-graders rank 48th among all states; in math, fourth-graders rank 45th and eighth-graders rank 46th.

Despite spending less per pupil, two other populous, diverse Sun Belt states, Florida and Texas, have significantly better test scores. California’s pupil-to-teacher ratio is the second highest in the country: A public school with 1,000 students in California is likely to have 48 teachers. An average school the same size in Florida will have 63 teachers, and one in Texas will have 69.

Make teachers expensive, and schools will hire fewer of them. According to statistics for 2008-09 from the National Education Assn., California’s public schoolteachers are America’s most highly compensated, with an average salary of $66,986, 24% above the national average. A job that requires nine months of work for $66,986 corresponds to one that pays $89,312 for 12. The majority of California taxpayers not only earn less than $89,312 a year but cannot receive, as Los Angeles teachers can, guaranteed lifetime tenure after a drive-by performance evaluation in their second year on the job.

Politics is usually a zero-sum game, in which measures liberals deplore gratify conservatives. Proposition 13 is an exception. Three months after it passed, Milton Friedman wrote that a revenue limit would force government to find efficiencies and set priorities. Three decades later, Californians still endure wasteful, expensive, disorganized government.

Conservatives used to oppose payroll withholding, and still oppose value-added taxes, because they believe taxes should hurt. If they don’t, government will expand indefinitely but imperceptibly. What the proponents of Proposition 13 didn’t reckon with was the unspoken but equally powerful liberal conviction that tax cuts should hurt. Vindicating the public’s belief that government can do more with less would only encourage further tax reductions. Better, instead, to defend unlimited government by insisting that “devastating cutback” is a redundancy, and prove the point by having government do less with more.

The moral of the story is that expenditure and tax limitations, of which Proposition 13 was the prototype, are necessary but not sufficient for frugal, disciplined governance. Such “parchment barriers” are not self-implementing. Their success requires continuous political exertions from citizens who want their tax dollars spent fairly and effectively.

William Voegeli is a contributing editor of the Claremont Review of Books and the author of “Never Enough: America’s Limitless Welfare State.” This article is adapted from the spring issue of City Journal.