The Not-So-Golden State of California
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blog.inc.com
California's problem is that we keep on spending money like it's flowing in like water, yet the flow was greatly reduced 30 years ago with the passage of proposition 13. Instead of trying to live within our means, we voted people into office who either wanted to spend more, xor reduce taxes and then we made the problem much worse by passing a slew of costly initiatives without being willing to raise the money to fund them fully. So here we are. The governor screwed us, the state senate and legislature screwed us, but ultimately, we screwed ourselves, and now we're going to have to pay for it.
As someone who lived most of my 38 years in this state, went to UC, and has the joy of living in one of the most beautiful places on earth, it makes me profoundly sad to see what we have done to ourselves.
Proposition 13 is not California's problem, read this if you are interested.
http://weblog.signonsandiego.com/weblogs/afb/archives/034048...
The San Diego Union Tribune is a right wing knee jerk paper. Any commentary in it should be taken with a grain of salt.
You are incorrect, it is capped at a 2% increase per year and of course is reassessed at 1% of the total property value when the property changes hands.
Of course proposition 13 lowers the income from property taxes for the state, that is the point of it. Do you think the state deserves more than a 579% increase in revenue from property taxes since 1980? No other tax has increased as much.
The truth is the California government doesn't know how to spend within its means. Why do you believe we would be in better shape without prop 13? I'm sure we would have simply increased spending and leveraged out the state more. With the devaluation of homes it would have just hit us harder, representing a larger percentage of our income.
It is easy to claim California would have more revenue without prop 13. That is a prima facie argument. What you need to do is prove that taxpayers should have paid more, that California is responsible enough to have handled the money, and that the burden should be borne disproportionately by property owners more than it already is.
Actually, the rate can be higher. The rate in Santa Clara county is over 1.5%.
Note that folks who bought more than a couple of years ago will see a property tax increase this year because their assessed value is still lower than their market value. Folks who bought recently are getting a huge cut.
The net result is that property tax revenues are fairly stable.
In the past, huge run-ups in property values did not result in lower rates - the local govts got huge revenue increases. When property values crashed, they raised the rates to maintain steady revenues.
That's simply not true.
CA's spending has increased 20+% more than population and inflation since 2005 or so. Initiatives are not responsible for a significant fraction of that increase (and most of them are self-funding).
Note that the amount of the increase since 2005 is roughly equal to the deficit, so cutting back to then would balance the budget.
I'd argue that none of the new programs and increases since 2005 have been a significant benefit. Those who do think that their new program is essential are invited to find some pre-2005 fat to pay for said program.
As far as the problem being obvious to "everyone not in Sacramento," clearly you are wrong because here we are, and the voters of California played an active role in bringing us here.
I have a friend who recently bought a house and his property taxes are like rent, it is just that expensive. He could rent a 1 bedroom apartment with his property taxes.
Money is coming in but as you said, too much money is being spent (through ballot intiatives (high speed rail for example) and the legislature gone-wild. But I believe that the gone-wild days have come to an abrupt end and mostly thanks to Schwarzenegger who has nothing to loose by being rational.
Yes, his property taxes are probably higher than they would be without Proposition 13, because he's subsidizing those around him who have owned their homes for twenty or thirty years, and aren't paying their fair share.
If property taxes on residences are too high, they should be lowered across the board. Of course, this means that either spending will need to be lowered, or the money will need to be gained through some other form of taxation.
California's government is the problem. The state is business-hostile. It is merit-hostile. It has the highest tax rates and returns less in services to its average citizens. Massive pension abuses are not dealt with.
One wonders if California's emphasis on citizen democracy is at the root of the problem. It's certainly left us with the best democracy that money can buy, which turns out to be a pretty bad one.
Yeah, but there are much better ways to do it. I'd recommend a substantial decrease in the Citizen / Legislator ratio. That gives regular citizens greater access to their legislature, while giving its members the power and responsibility necessary for them to invest themselves in its decisions, and make a more direct case to the constituency for the more responsible policy decisions.
For example New Hampshire has
* 400 representatives for
* 1.3 million people, or roughly
* 3,000 constituents/legislator (illustrated: http://www.biblebaptistchurchmoldova.com/evangelism/images/m...)
Meanwhile, California has only
* 80 representatives for
* 38 million people, or roughly
* 475,000 constituents/legislator (illustrated: http://kashmirwatch.com/postnews/data/upimages/eidgah22aug2....)
New Hampshire citizens have over 150x the access to their state representatives, and those 400 legislators have 5 times the personal experience with laws and regulation to bring to the table.
Now you may say it's crazy to suggest that California should have 12,000 state legislators, but I disagree. The practicalities which have capped large-scale decision-making have largely been wiped away with the invention of modern electronic communication. And having those 12,000 means you could keep them in their home neighborhoods, rather than call them out to Albany. This way there's always someone within a reasonable distance that you can speak to directly.
Interestingly, with the position California is in, I'd think this idea (or a more moderate version of it, say 2,000 legislators) might have a chance at making it. That is, if people make a serious push for it in the new constitution.
As we all know, there are times when it no longer makes sense to keep maintaining legacy code which has begun to collapse under its own weight. In that spirit, I invite HN readers to look into the Bay Area council's proposal for a constitutional convention: http://www.repaircalifornia.org/index.php
Politics is an awkward subject, as evidenced by the often febrile debates here over libertarianism, the role of government and so forth. But those of us who are residents of California owe a lot to the state - not to be confused with The State - and as hackers, pride ourselves on having the energy and insight to make things work better. Rewriting our socioeconomic source code is a messy and likely thankless task, but no less worthy of our participation for that.
How many Dems were advocating 2005 level spending? How many Dems were willing to say "we'd love to have all these new programs but since we can't get the revenue, we're going to delay them or cut something else?"
I'd love to be making 25% more than I actually am, but is it responsible to spend that way? If not, why are Dems off the hook?
What is really sad in California is the cost of higher education. In the mid 80s, U.C.S.D cost me about $400 per quarter (which covered health insurance), plus I had to come up with another $300/month on rent. My summer job as a Domino's Pizza guy (at $10/hr after tips) and my part time job throughout the year as a high school teacher's assistant ($7/hr) covered most of my expenses for the year. Folks worrying about California should be looking at the cost of education, and the impact that that might have on innovation.
(I'm not familiar enough with California - But if it did, you got what you deserved :-))
Posted here: http://news.ycombinator.com/item?id=645478
California is the 8th largest economy in the world. We have the world's most productive agricultural region, two of the world's top universities, the largest port in the US, Hollywood, Silicon Valley, and tourism.
WHY THE HELL CAN'T WE MAKE IT WORK?
I doubt that California can beat hi-tech farms in Brazil and South Africa. The climate is good, but not that good.
"two of the world's top universities"
It's more like three: Caltech, Stanford, Berkeley. The other UC schools are quite good too. For instance, UCLA is strong in math, while UCSB is strong in physics, etc.
The real answer: it depends on your criteria. Delaware is the cheapest place to incorporate, but nobody knows where it is. Nevada is the best place if your business involves lots of cash and/or hookers. Silicon valley may still be the best if you want to meet like-minded geeks. Hollywood stays in LA both for the infrastructure and the weather. Michigan has great incentives right now if you don't mind the cold winters...see the problem?
Most of the governments in Canada (National, Provincial, and Municipal) are solvent, even in net-present-value terms, and crime and corruption is astoundingly low.
If you are hoping to sell off the company quickly, incorporate both in Delaware AND Canada and figure out how to sell the services through the Delaware office, so when it comes time for the acquisition you can easily be bought out by American interests.