Wednesday, November 3, 2010

The Ruinous California Propositions, 2010 Edition

One of the not-so-secret electoral problems displayed its flaws once again this year, and no one seems to mind: I’m referring to the California proposition system, which is an ill-conceived, poor-yielding idea which promises to hamstring the state in the future as it has done in the past. When California voters do get it right—as they did twice last night—they usually become hopelessly confused and end up voting for counterproductive measure.

Start with the “getting it wrong” aspect. I’m not one to dilate endlessly on the wisdom of the Founders this, excellence of Constitution that, but one aspect of the Constitution that evolved very quickly in the history of the republic that’s pretty excellent is that it doesn’t put people’s rights up to popular vote. You have the right to free speech no matter what other people think of the matter. California, and other states that allow initiatives and propositions, effectively put people’s rights up to popular vote, and that’s why California gay marriage is in such a limbo and why Californians voted to reject a more-sensible marijuana policy. (The latter is less egregious, I think, since the vote didn’t affirmatively strip away someone’s right. But still: putting up people’s rights to a democratic OK is not a very good idea in general.)

Then there’s the “hopelessly confused” part of getting it right. To California’s credit, it voted against Prop 23, the proposition that would’ve gutted California’s cap-and-trade plan; actually, there’s noting ambiguous about it. On the other hand, let’s consider California’s budget process: Californians very sensibly voted to make the budget subject to a simple majority (NOTE for how crazy the previous process was: even the U.S. Senate thinks that supermajorities for the budget is a bad, gridlock-inducing idea. If your idea produces more gridlock than the Senate thinks is optimal, chances are your idea has too much gridlock.) but on the other hand forced the state government to come up with a two-thirds majorities for fees, and even retroactively repealed fees in last year’s budgets. So there is a nontrivial number of Californians who want the budget process to be easier for everything but actually making a budget work: now both fees and taxes can only be raised with a two-thirds majority (the latter rule is a ruinous consequence of previous propositions.)

Let’s examine the specific fees:
A fee is a levy that is used for a specific purpose, such as a user fee for state parks or fees on chemical pesticides that go toward funding the state's pesticide control agency. A tax may be used for the state's general operating costs, to pay for things like public education, prisons and health services.

The state's business community has railed against these fees for years. And with Prop. 26, they sought to erase the semantic difference between fees and taxes -- requiring the same two-thirds vote on fees that currently exists for taxes. The measure effectively expands the definition of a state tax, requiring a two-thirds vote for any new surcharge or levy, even if the money is earmarked for a specific purpose.

It is kind of weird that that distinction exists, which is why I’d prefer taxes and fees to work just like every other bill and be subject to a simple majority. The good part about fees—since legislators generally tried to hit up politically distasteful things like cigarettes, pesticides and the like—was that it functioned as a tax on a negative externality, which I believe is among the very basic things you do in economics.

So, in the future, because of California’s very sensible proposition process, California will find it very easy to spend and impossibly difficult to raise money. Great job, California voters!

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