

The Beholden State: How public sector unions broke California - jacoblyles
http://city-journal.org/2010/20_2_california-unions.html

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whyenot
_City Journal is a quarterly magazine, published by the conservative Manhattan
Institute for Policy Research, a free market think tank based out of New York
City._

This is not an impartial source when it comes to California's problems, not
that they are wrong, unions are part of the problem, but there's also the 2/3
rule for raising taxes, corrupt and ineffective politicians who have
constructed non-competitive districts for themselves, the initiative system
and ultimately California voters who apparently don't give a rats ass about
anything unless it is approving more services and lower taxes for themselves.

~~~
lionhearted
> VOTERS who apparently don't give a rats ass about anything unless it is
> approving more services and lower taxes for themselves.

California has the highest state taxes in almost every tax category, from
personal income, to corporate income, to minimum corporate tax ($800 corporate
taxes payable if you broke even or lost money, ouch), highest vehicle
registration costs, vehicle re-sale taxes, high sales tax, high hotel taxes,
etc, etc.

It doesn't matter how much money you bring in if you consistently spend more
than it.

~~~
TomOfTTB
That, to me, is the real point here. You could not imagine a state or country
with more going for it. Farming, the technological and entertainment hubs of
the world along with a climate that produces idealic beaches, snow covered
mountains and an ideal enviornment for theme parks (little rain combined with
mild temp).

California should be studied as what not to do because the fact that it has
become so screwed up is almost beyond belief

Edit: I forgot shipping. One whole side of the state is along the pacific and
we're the closest landlocked state to Asia where all the cheap goods are made

~~~
rdl
I'm expanding a startup in Texas or Washington State due to not just the high
costs of California, but the uncertainty -- the state is basically bankrupt,
as are many local municipalities, and it's really unclear what changes will
happen as a result.

WA's government is better, but not vastly; TX seems like the most solvent
state with a viable startup nexus (I don't see Alaska becoming a startup
center unless global warming vastly improves things :).

~~~
protomyth
North Dakota has a budget surplus, but is not going to be a startup culture
anytime soon. Although a lot of towns have fiber to the home.

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gte910h
No, the stupid 2/3rds rule to pass a budget did that.

Unions are just one of the many special interests that win from that silly
constitutional issue.

Supermajorities to do normal things are bad.

If they had a normal budgetary process, then they'd have more normal repubs
cut taxes/services vs dems add them sort of dynamic that the rest of the
country does.

~~~
jacoblyles
Could you elaborate on that? I don't see a direct causal link between two-
thirds vote requirements and higher union pension obligations, and your
comment appears to be popular.

~~~
TomOfTTB
Though not the original commenter I can elaborate.

The people of California are well intentioned. So they tried a very liberal
approach to their public employees pensions. This quickly got out of control.
But the fact that they need 2/3rds of the vote to get anything done combined
with special interest money has made it impossible to repeal this well
intentioned system that simply doesn't work. Because doing so would require a
cut in the budget for said program. So we're being bankrupted.

This is true of many of California's problems. Our State Government lacks the
ability to even pass a budget on time so repealing the public sector mess that
has been created is far beyond what they are able to accomplish

~~~
anamax
> But the fact that they need 2/3rds of the vote to get anything done combined
> with special interest money has made it impossible to repeal this well
> intentioned system that simply doesn't work. Because doing so would require
> a cut in the budget for said program.

Repubs are just under 40% of the CA legislature.

The stereotype is that repubs would cut any budget, so you're most of the way
to a cut without any Dems.

The 2/3 req means that around a third of the Dems have to agree to a cut.

A majority reqt means that around one sixth of the Dems have to agree to a
cut.

In other words, the reason that CA doesn't cut things is that so few Dems are
unwilling to do so.

The reason that CA's spending goes up is that all of the Dems want it to go up
and they manage to find a Repub or two to go along.

Do you really think that letting Dems pass a budget without any Repub votes
(and losing some Dem votes) would result in lower spending?

~~~
gte910h
There are 2 ways to get a balanced budget:

Raise Taxes

OR

Cut Services

If you strip the 2/3rds rule at the moment, you'll see taxes go up. And you
know what party high taxes are great for, republicans. You'll get a more
active republican party and you'll be able to win more seats, especially after
the taxes go up.

Most importantly, you'll get fiscal republicans running for office, instead of
social republicans, and independent and some dems are much more likely to
defect to social republicans than moral republicans.

So if you ditch the 2/3rds rule, you'll get 4 years of democratic rule, and
you'll have a good shot at gaining republican control of the house after that.

Remember, California is not the liberal mecca people portray it as in the East
Coast media. It's a very purple state which has some very republican ideas
widely popular in the state along with some very relaxed republicans which
have wide voter approval. It's the state of Regan, that keeps hiring
republican governors for some reason. While right now, most of the legislators
are democrats, if the 2/3rds rule ended, republicans could actually win the
legislature.

And more importantly, BOTH parties could get working budgets that don't leave
the state doing wacky things with furloghs, random shutdowns, and paying
people in scrip.

Remember, killing the 2/3rds rule _also allows repubs to be repubs_. The
teachers unions and prisons unions in Cali will support republicans as well as
long as they're on board with cuts. Republicans now are in the tenuous
position of having to support organized labor to get elected. That's a very
odd message to support in today's republican party.

It's just people who are _terrified of the other side_ rather than terrified
of broken government who keep the state locked up in the status quo instead of
in the 2 stable working states it could be in.

~~~
anamax
> The teachers unions and prisons unions in Cali will support republicans as
> well as long as they're on board with cuts.

Since neither the teachers' nor prison guards' unions are on board with
cuts....

If you really think that either one will change, please supply supporting
evidence beyond "they need to do it" and "It must be true because I need it to
support my conclusion".

I don't expect either union to support cuts in their budgets.

~~~
gte910h
That was actually supposed to say 'no cuts'

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stretchwithme
California state spending doubled between 1996 and 2006. The problem is not
that not enough money can be taken from the taxpayer.

I think whoever and however things are decided, spending with debt ought to be
as hard as spending with tax money.

And this practice where you work tons of overtime in your last year and get
paid extra for those hours for the rest of your life is simple thievery. Who
in their right mind would agree to pay for such a thing?

~~~
_delirium
In nominal terms yes, but over that period, there was also inflation,
population growth, and a rise in standards of living. If you look at state
spending as a percentage of state GDP, it's pretty flat from 1996-2006,
basically wobbling on either side of 20%, until the current recession when it
jumps up to ~25%.

    
    
      1995: 19.7%
      2000: 18.2%
      2005: 20.8%
      2008: 22.3%
      2010 (est): 24.8%
    

Source:
[http://www.usgovernmentspending.com/downchart_gs.php?year=19...](http://www.usgovernmentspending.com/downchart_gs.php?year=1990_2010&view=1&expand=&units=b&fy=fy10&chart=F0-total&bar=1&stack=1&size=m&title=&state=CA&color=c&local=s)

~~~
anamax
State GDP is a strange way to measure things.

For example, Google's growth doesn't cause a proportional growth in the demand
for govt services. If anything, Google's grown decreases said demand through
the economic activity multiplier. (Folks who benefit from that growth spend
money, which employs people and so on.)

~~~
_delirium
I agree there are other ways, but it's a vague proxy for
inflation+population+standards of living, and I don't currently have available
a better proxy. If government spending is staying constant as a proportion of
GDP, it just means that government services are growing exactly in line with
everything else, with an unchanged private:public sector balance.

You can't _just_ use inflation, because if, say, median wages rise faster than
inflation, then the cost to the government of the same amount of labor will
typically rise faster than inflation as well. (This is one reason Alabama has
low spending, because cost of living, land, and prevailing wages in Alabama
are low.)

What people expect out of government services also rises roughly with GDP: a
spectrum from poor countries, where not having A/C in government offices is
fine, as are overburdened slow trains and pot-hole-filled roads, to advanced
countries, where people start wanting things like internet-enabled services,
high-speed rail, and modern freeways.

~~~
anamax
CA got its modern freeways in the 70s. It failed to maintain them.

> You can't just use inflation, because if, say, median wages rise faster than
> inflation, then the cost to the government of the same amount of labor will
> typically rise faster than inflation as well.

You can, however, look at spending on existing programs and new programs
separately. On existing programs, you look at why you spent more - was to
maintain the same level of service, to pay more, or to expand. With new
programs, you can ask similar questions.

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jackfoxy
Anecdote: I know a couple, she a former high-level bureaucrat for the state of
Ca., he a former mid-level Ca. bureaucrat. I say former because they both
retired at 55. I don't claim to know much about the public employee's
retirement system. I do know public employees do not pay into Social Security,
and no one can retire on SS at age 55. I also know it's very likely this
couple will live long enough so that they both enjoy more years in retirement
than the people of Ca. paid them to do something productive.

~~~
adolph
Hopefully they will find a nice low-tax state to live in!

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vondur
We also have the problems with having a huge illegal immigrant population and
the associated costs with it. (education, health care, public assistance) When
you add it all up, California is in pretty bad shape.

~~~
jacobolus
Undocumented workers pay more in taxes (automatically withheld from their
paychecks just like everyone else’s) than they take out in services.

~~~
rdl
I think that is not accurate.

While undocumented workers pay more into FICA-funded programs than they take
out in services, those are generally federal.

Illegals probably consume higher per-capita services than legal immigrants or
citizens, if for no other reason than being lower income. Lower income people
consume roughly comparable amounts of some services, and consume higher per
capita police, locally-funded health clinic, etc. resources. As well, they're
unlikely to pay as much per capita property tax (via rentals). If they have
children, their education would cost more (due to ESL programs), although I'm
not sure what the rate of having children is among this class.

~~~
sprout
I was in a Bilingual kindergarten class in Texas, which has been a lifelong
boon, as a native English speaker. Children pick up language pretty easily. If
we're putting the adults through ESL courses, that could be a serious drain.

Even more for children born in the states - many won't ever properly learn
Spanish, even when their parents mostly speak it in the home.

On the rest of your points, undocumented workers primarily rely on charity,
not on the government. They don't want to run the risk more often that they
need to. They're not going to go to any free clinics that accept tax dollars,
and they're not going to want to attract the attention of the police.

~~~
rdl
Second (and more) languages are definitely valuable for the US -- having
immigrants living in the US with fluency in their heritage language as well as
English makes it easier for US companies to do business in foreign countries,
and domestic people learning foreign languages helps as well.

I tried to find stats on the net costs of illegal immigrants resident in the
US, and really couldn't find anything conclusive. The best information seems
to be that they could impose slight net costs on some communities, but that
it's a relatively minor amount relative to the size of budgets.

I definitely wouldn't say California's problems are mainly due to illegal
immigration. I'm just curious why it is so much more of a political issue in
some states than others.

~~~
protomyth
knowing the language of the majority makes you normal; knowing your own
language and the language of the majority give you an advantage; not knowing
the language of the majority sets you up to be a lifelong victim and pawn of
people who seek power in your name

------
jacoblyles
The idea that California's only budget problem is that they can't raise
property taxes easy enough sounds suspiciously like tribalistic thinking.

