NO ON 1A, 1B, 1C, 1D and 1E!

Foreword by Stan Lerner: this is Ben’s second blog for downtownster and as you may have already guessed we are happy to have him on our team. With respect to the following blog it gives me great hope that Californians are ready to say NO TO PROP’S 1A and 1C.

May 19th, Special Election

Imagine you hire a contractor to work on your house. Both of you agree on the budget, you give them the money, and they dutifully get to work. Two weeks later they come back to you and announce that in order for them to be able to fully pay their construction team, fully purchase all the supplies, make sure the site is secure, and be finished on schedule; they are going to need some more money. 

“Wait a second,” you say, “we agreed on a price and I paid you the money. What happened to all of it? Why wasn’t it enough?”  

“Well,” they explain, “it’s like this. We underestimated how much money we would initially need, and the money you did give us we spent on other things. On top of that, we didn’t have much of plan with regard to how we wanted to spend the money and consequently bought a bunch of material we don’t actually need.”

“I see,” you respond. “And do you now have a plan as to how to spend my money?”

“Not really. But trust us.”

Actually, there is no need to use your imagination. For Californians (and also citizens across the U.S.) the scene comes naturally. Except in this scenario, the inept contractor is a hoard of politicians. And instead of inadequate supplies, citizens are asked if they could stomach underpaying teachers, firemen, and policemen, and overcrowding prisons – inevitably resulting in the early release of certain prisoners. If citizens are unready to deal with these problems, they had better prepare to open their wallets.

This decision will be brought to a head in California, May 19th, in a special election where voters will get to decide if they do trust the government and if they are prepared to give up more of their money. There are six propositions on the ballot. All of them concern money and regulations on how the government can spend it. The individual measures are complicated (though our governor would have you believe otherwise) but I’ll highlight some key areas voters should be aware of.

Proposition 1A extends temporary taxes on sales, income, and vehicles, for at least another year. Estimates are that this will generate an additional 16 billion dollars in revenue. Additionally, the law would require the state to deposit all revenue that is achieved above “historic trends” to be placed in a budget stabilization fund (BSF), or “rainy day fund.” Barring further economic decline, withdrawals from the BSF could only be made in response to natural disasters.

Proposition 1B can be enacted only if Proposition 1A passes. It would allocate $9.3 billion of the funds raised from Prop 1A to schools and community colleges.

Proposition 1C would allow the state to borrow – limitlessly – against anticipated future earnings of the lottery. Also, spending of the funds raised through the lottery would no longer be restricted to education (as was previously required).

Proposition 1D would shift $608 million dollars from the California Children and Families Program, funded by the annual tax on tobacco, into health and human services programs.

Proposition 1E would remove $230 million dollars from the budget allocated by Mental Health Services Act for mental health programs. This money would instead be spent on a Medicaid program for “Early Periodic Screening, Diagnosis and Treatment” of low income citizens under the age of 21.

Proposition 1F would prevent the governor and state legislature from receiving salary increases when the state is expected to end the year in a deficit.

The state of California, one of the top 10 economic powers in the world, is clearly reeling from the global economic downturn. Nothing could be more plain from the above outlined ballot measures than the desperation of law makers to raise and recover funds they did not think they would need. A tax we thought would be temporary must now be extended. Funds that were to be reserved for specific groups – children and the mentally ill – must now be redirected back to the general budget. Restrictions on borrowing need to be lifted. And most terrible of all, law makers who thought they should get a raise for leading the state into economic decline must now go without a pay increase.

I joke, of course. In fact, the sentiment behind Proposition 1F seems weirdly simpering. There is something oily about being told in the face of mountainous debt and some considerably unpalatable demands: “Don’t think we won’t suffer too.” Naturally, legislators should not be paid extra for doing their jobs badly (this isn’t Wall Street), but didn’t there used to be a better method for punishing incompetent politicians? How about not voting to reelect legislators that were dipping into the BSF every time they wanted some extra money? Better yet, how about legislators have the gall to admit they made mistakes and not run for reelection. Or they could not get paid extra during a depression – so long as we’re all hurting together.

Despite the scaly hand extended by Sacramento to entice Californians into paying additional taxes and forgoing services, the measures to be voted on this May 19th are not easily dismissed. The state, at minimum, is facing a deficit of $50 billion. This means that regardless to the outcome of the election, $50 billion will have to be leveraged from some part of the budget or citizenry. If the taxpayers elect not to provide, then it is very likely that state services will see budget cuts across the board. It’s a Hobson’s choice. A “no” vote makes likely the downsizing of public services, the understaffing of schools, and the overcrowding of jails – possibly resulting in an early release program. A “yes” vote allows for an increase in taxes and the loss of cash flow to important social programs. Californians will pay one way or another.

Recent public opinion polls show support for only Proposition 1F – cue faux-populist togetherness – and majorities against Propositions 1A and 1C. Using this special election, Californians will be able to speak clearly with regard to how much they trust the government to do the same thing they were supposed to be doing in 2004, but this time to do it better. However, no one on either side should be complacent after this election’s outcome. California’s economic troubles are in their first throes – this is a prelude. Very tough economic decisions will dog us for years to come.

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