California Public Employee Layoffs — A Feature Not a Bug
AEI BLOG
By Steven F. Hayward on Politics and Public Opinion
The Wall Street Journal today does a good job outlining the fiscal disaster area of California, but that state's Tuesday vote reminded me of the public mood back in 1978 when Proposition 13 passed. At that time, I was a college student, arriving home after the spring semester to hear the worries of my dad, who was at the time an elected member of a local school board in a suburban district heavily dependent on property taxes for its budget.
If Prop. 13 passes, dad told me, I don't know what we're going to do to make up the budget shortfall. Prop. 13 is a crude, meat-ax approach to the problem of high taxes and overspending, he said. It will wreak havoc on local government throughout the state, etc.
"So, dad. . . are you going to vote for it?," I asked.
"Damn right I am," he replied.
It turned out that when pollsters and politicians told the public that the passage of Prop. 13 might lead to layoffs of public employees, it only made public support go up. I suspect that the threat of layoffs and cutbacks if this week's vote for the budget fix failed was seen by much of the public as a feature rather than a bug of a no vote. My neighbors out here on the central coast, where I am this week, seem to think so.
So what will happen now? The state ought to go bankrupt, but don't bet on it. For one thing, the public employee unions already own the state, so they can't be enticed by a Chrysler-like deal to own more of it. (Heh.) My big fear is that Obama will indeed see California as "too big to fail." Does he want newspaper headlines reading, "Obama to California—Drop Dead"? Not likely. And a federal bailout (followed by New York and others) will accelerate the long-run liberal agenda of greater centralization of political control over the states.
In fact this is the unintended perverse result of Prop. 13 in California—it centralized political control in Sacramento, and actually aided the liberal agenda (especially with regard to public education) over the next two decades. Shortly after Prop. 13 passed, economist Frank Levy of the Urban Institute wrote that "the passage of Proposition 13 has caused almost the entire liberal agenda to be de facto adopted." The state assumed most county health and welfare costs, and state funding for public schools increased from about 40 percent of all expenditures prior to Prop. 13 to more than 80 percent today. The state's legislative analyst at the time, Alan Post, wondered whether Prop. 13 "left any significant role for local school boards," and economist William Oakland wrote that "local control or 'home rule' may become a thing of the past in California." They don't and it did.
Back in 1993, on the 15th anniversary of Prop. 13, I wrote in Reason magazine:
In a perverse way, many big spenders probably take secret delight in Prop. 13 and other tax limitations, because in addition to enabling a vast centralization of government authority, tax limitation without tough spending controls allows big spenders to squeeze the basic public services that taxpayers demand from government as a means of eroding public opposition to raising taxes. In California, for example, spending for roads has steadily declined from nearly 16 percent of the state budget in the mid-1960s to less than 5 percent today. 'You see,' the big spenders say when folks complain about the lack of public works, or about mis-spent education funds, 'it's all Proposition 13's fault.' |
