02 November 2009

California Un-Love

My wife is from California. I enjoy traveling there to visit her family. I love the great climate and there is always something fun to do. But as most people know, California is in trouble. From today's L.A. Times-

Starting Sunday, cash-strapped California will dig deeper into the pocketbooks of wage earners -- holding back 10% more than it already does in state income taxes just as the biggest shopping season of the year kicks into gear.
Technically, it's not a tax increase, even though it may feel like one when your next paycheck arrives. As part of a bundle of budget patches adopted in the summer, the state is taking more money now in withholding, even though workers' annual tax bills won't change.
Think of it as a forced, interest-free loan: You'll be repaid any extra withholding in April. Those who would receive a refund anyway will receive a larger one, and those who owe taxes will owe less.
This may amount to $25 a month for a family of four earning $90,000. That really doesn't seem like much, but I'm not comfortable with the budgetary shell game being played by the California government. Having to repay the monies at tax time is not a real fix for the state, and it demonstrates a disregard for the rights of the taxpayer. Moreover, as this op-ed suggests, the benefits provided by the State of California in exchange for those taxes is not what it used to be:
In America's federal system, some states, such as California, offer residents a "package deal" that bundles numerous and ambitious public benefits with the high taxes needed to pay for them. Other states, such as Texas, offer packages combining modest benefits and low taxes. These alternatives, of course, define the basic argument between liberals and conservatives over what it means to get the size and scope of government right.
It's not surprising, then, that there's an intense debate over which model is more admirable and sustainable. What is surprising is the growing evidence that the low-benefit/low-tax package not only succeeds on its own terms but also according to the criteria used to defend its opposite. In other words, the superior public goods that supposedly justify the high taxes just aren't being delivered.
California and Texas are not perfect representatives of the alternative deals, but they come close. Overall, the Census Bureau's latest data show that state and local government expenditures for all purposes in 2005-06 were 46.8% higher in California than in Texas: $10,070 per person compared with $6,858. Only three states and the District of Columbia saw higher per capita government outlays than California, while those expenditures in Texas were lower than in all but seven states. California ranked 10th in overall taxes levied by state and local governments, on a per capita basis, while Texas, one of only seven states with no individual income tax, was 38th.
The author addresses education, population inflows/outflows, and transportation to demonstrate the decline of Californian excellence in those. I think the article is well-written, and although there may be other areas not addressed by the author where California excels, but this Florida-boy is staying put. Any thoughts? A.J.?


Anonymous said...

Traveling right now for work, so not going to say much yet via BlackBerry. I will say I am very jealous of the Florida no state income tax! More to come tomorrow.

A.J. said...

Caught an earlier flight, so home much sooner than I thought. It is a bit rambling … Oh, California ... this state is a ticking time bomb. How is the withholding increase not against some law? Grumble ...

The major problem I have with California is that it is very short-sighted. I will focus on education, since my wife is a high school teacher. Prop 13 is the perfect example (read link for deep explanation): http://en.wikipedia.org/wiki/Prop_13 . At the time it seemed like a good idea as people were getting priced out of their own homes as property values sky-rocketed in California. However, people pay really low property taxes now, which means the education system suffered (as did various other public entities).

To avoid education dollars being lost, they then passed Prop 98 (10 years after Prop 13 ... way to be quick guys ...): http://en.wikipedia.org/wiki/California_Proposition_98_(1988) . Basically, a certain percentage of state budget MUST go to education. I am sure at first this seemed like a great idea. Money for schools always wins you elections around here. BUT ... they did not think about the fact it binds you to spending a certain amount. Therefore, for every dollar the government raises for something else, a certain percentage gets lopped off for education even if it does not need it (though, schools in California need it).

Unfortunately, even this amount of money has not helped. Now it is basically left to parcel taxes on land that people vote on. This basically leads to the rich areas having great schools and the poor areas having schools with the lowest paid teachers and buildings that would probably fall over at the first earth quake above 6.0. Not good ... My wife is fortunate to teach in an affluent area, but it really goes against her sense of public education some times. I went to private school and the kids she teaches are far more privileged, have far more money, and drive far nicer cars than any of the kids at Oak Hall, even though this is a public school. So much for the "diversity" they speak of in California ... There is a great documentary on the plight of the California education system called First to Worst. Basically, California went from 1st to 48th (so not the worst ... thank you Mississippi!) from 1960 to I think some time in the 80's.

Now, I have a lot of experience with Texas as I travel there a lot for work. The state has other issues I will not address and I am not about to up and move there tomorrow, but the place is dirt cheap. It is also pretty ugly (sorry if I offend). And I think that is the problem with California. California is GORGEOUS. Coasts, mountains, valleys, EVERYTHING all within a short drive. That is why I have loved living here. Don't get me wrong, other states have their beauty, but this is awe inspiring. So, a ton of people want to move here. And in general, Californians are pretty laid back people and allow for all sorts to come as they are. However, it is EXTREMELY resource limited. Water, food, parking, etc. There are just a lot of people and not enough public money to go around. Thus, the schools suck, the roads suck, 911 people ignore you when you call (I speak from personal experience), etc.

So why do I live here and continue to live here? Simply: I have a well paying job that is very mentally stimulating and my wife loves her job. Would I move tomorrow if a similar job offer came up somewhere else closer to the east coast? Hell yes! (Sorry for swearing). My wife and I do quite well and we still can't afford a house and are nervous about raising kids in a state with this sort of reputation and that is very far away from both our families.

A.J. said...

Got long, so had to divide it into two ...

To sum up: As much as I am liberal at heart, I can not stand California politics. I have voted no on every proposition ever put up for a vote (Prop 8 I voted no out of principal, not by my always voting not rule). I hate all propositions because they are short-sighted AND I vote people into office to take care of this stuff for me. It makes me more willing to deal with ignorance / intolerance I see in some other states (I am looking at you Louisiana, with the dude refusing to preside over a bi-racial marriage). At least with ignorance / intolerance, people can learn otherwise. I some times feel the people of California should know better ... maybe their education system really has failed them ...

Anyway ... going to bed ... I am sure this is more emotional than factual, but had to get it off my chest ...

Jlowryjr said...

Thanks for the response AJ. I really enjoy California whenever I am out there, and understand the appeal.

Related to Prop 13- wouldn't some of these issues have been mitigated if the state government had simply spent less money?

A.J. said...

Perhaps. My only question is whether or not those numbers are adjusted for a "cost of living," per se. My experience is that it can cost anywhere from 25 to 40% more to buy goods or services (anything, really) in California. Maybe Californians are paying the same per capita, when you think of it on those terms. Is it inappropriate to use a COL adjustment in this sort of calculation? Maybe the best thing to do would be to compare like NYC and Boston to SF and LA, and throw Houston and Dallas in for good measure.

I am not trying to defend the spending, but just trying to understand it. Believe me, I actually like it when government is fiscally conservative.