If you have been following California doings in last week’s election, you may think that Governor Jerry Brown’s victory at the polls, in getting Proposition 30 (the tax increase initiative) passed, has solved the looming deficit. Right? Wrong.
We offer the deathless line of California’s state Treasurer, responding to demands that all that money anticipated to come from Proposition 30 (estimated at $6 billion in anticipated revenue) be spent on new government goodies, who points out that “the money has already been spent” last year. Specifically, the money is already included in the budget the governor signed last year. Oops! Talk about spending money before you get it! You can read all about it in Chris Megerian’s front-page story, Prop. 30 Victory Is No Cure-All, L.A. Times, Nov. 12, 2012, at p. A1.
So it looks to us like nothing has been solved and the fiscal can has been kicked down the road for another year. In the meantime, California’s debt service is hovering at 9% of its general fund annually to cover the cost of that borrowing. And so it goes.
What troubles us is that competent, affluent people who are confronted with having their hard-earned wealth looted, are leaving California in droves for other states where living is easier, and where you can buy a really nice family house for less than a half-million dolars. And it’s not so much that these folks don’t want to pay taxes, as that they don’t want to see their taxes frittered away, particularly on yet another hare-brained “soak-the-rich” scheme that hasn’t worked in the past and is unlikely to work this time. In any event, whatever their motivation, they are leaving California in droves, leaving behind a state largerly composed of the poor, a middle class largely composed of government employees, and wealthy Silicon Valley entrepreneurs and show business types — click here. For lots of additional dispatches on this subject, just go to Google and type in “people leaving California.” The new, additional taxes aren’t going to help that problem, and neither will the fact that the City of Los Angeles is now contemplating an increase in its own sales taxes, to be tacked on to the state sales tax boost. If anything, those new taxes will drive more people out.