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Capital Ideas
By: Steven F. Hayward, Ph.D
8.21.2003

Capital IdeasCapital Ideas

CAMBRIA, CA - Lost in the recall frenzy are a pair of ballot initiatives that voters will also see on October 7. There has been some media attention for Ward Connerly’s Proposition 54, the Racial Privacy Initiative, but almost no notice paid to Proposition 53, which would dedicate three percent of the state general fund each year to infrastructure projects such as roads and water supplies.

The near-total media blackout on Prop. 53 says much about the insubstantiality of political discussion today, for the issue gets at the heart of the trouble with the state budget and California’s precarious economy. Each of the 135 candidates should be asked their position on this initiative. Their answers would reveal much about their grasp of the state’s fiscal profile.

Most of the talk about California’s poor economic climate centers around high taxes and regulation. This is true enough, but misses one leg of the public-sector triad: public works. California has been notably remiss in building new roads, water supplies, and other public works necessary to accommodate a growing population and economy. It wasn’t always this way.

Back in the early 1960s, when Pat Brown was governor and the state’s total tax burden was less than five percent of personal income, California built hundreds of miles of new highways, a large water project, expanded its university and state college system, and added thousands of new public-school classrooms. Today, with the state tax burden at about 10 percent of personal income, California builds--almost nothing. How did this happen?

The character of public spending underwent a slow-motion revolution. Starting in the late 1960s and 1970s, social spending began to soar and politicians robbed infrastructure funds to pay for it. When Pat Brown was governor, the state devoted more than 15 percent of the budget to transportation infrastructure alone. By the early 1980s, when Jerry Brown was governor, the portion of the budget devoted to transportation had fallen below three percent. No wonder traffic got worse.

In the 1980s the state actually had a constitutional spending limit (named for Paul Gann) that worked. In 1987 taxpayers got rebate checks, signed by state controller Gray Davis! This angered the teachers union, so they floated Proposition 98, which exempted education spending from the Gann Limit and mandated that roughly half of the general fund go to K-12 education. Subsequent measures chipped away the rest of the Gann limit. If it had remained in place, California would never have sunk into a $38 billion deficit. In fact, taxpayers would have received rebates in 1999 and 2000.

The state budget has been so fully carved up by initiatives, earmarks, and mandates that it is virtually on automatic pilot. It is amusing to hear state Superintendent of Public Instruction, Jack O’Connell, complain that under Prop. 53 “taxpayers will have no idea how the money is actually spent.” Like legislators know how the budget is actually spent now, especially when it comes to education.

More mandates, like Prop. 53, may not be the optimal way to fix things. Better to abolish all the mandates and make the legislature actually deliberate about spending priorities, preferably under the gun of a spending limit.

The first candidate who acknowledges this will be the first to show he or she is serious about fixing California’s broken government.



Steven Hayward is a senior fellow at the Pacific Research Institute in San Francisco and the author of The Age of Reagan--The Fall of the Old Liberal Order, 1964-1980. He can be reached via email at shayward@pacificresearch.org.


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