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Californians are unparalleled when it comes to financial self-delusion. Our compulsion for expenditure and indebtedness is almost heroic. Perhaps we are still imbued with the legacy of our get-rich-quick, live-for-the-moment, Gold Rush past. Undeterred by a sluggish economy, high taxes, skyrocketing housing costs, a bruising budget battle in the state Legislature and the prospects of an enormous deficit in the year to come, the voters of the aptly named Golden State approved a veritable miner's banquet of expensive ballot propositions.
Propositions 46, 47, 49, and 50 all passed with nearly identical levels of support at approximately 56 percent of the popular vote; no small majority. Proposition 46 provides for the creation of a trust fund to finance emergency shelters for the homeless, low income seniors, the mentally ill and others in need. Proposition 47, which may turn out to be the costliest bond measure ever passed in this state, provides funds for a comprehensive overhaul of education facilities from kindergarten classrooms to large university office buildings. Proposition 49, backed by film star Arnold Schwarzenegger, increases funding for after-school programs, while Proposition 50 is the latest in a series of "clean water" bonds.
On the surface, this might appear reasonable. Who could argue against homeless shelters, classrooms, after-school programs and lecture halls for college students? But bonds are debts assumed by the state for long-term expenditures; they shouldn't used be for every short-term pet project — that's what our high taxes are for.
And despite the meritorious goals contained in elements of these provisions, they must be examined in the context of the overall fiscal situation in the state. Whether they know it or not, the citizens of California in the last election signed on for approximately $40 billion worth of additional financial obligations, according to information provided by the secretary of state's office. That is nearly $1,200 for every person in the state. Moreover, this is a conservative estimate, not fully taking into account the unknown fiscal implications of Proposition 49.
This is money that will have to be paid eventually with tax dollars. Even if certain provisions merely take existing money from specific elements of the budget and shift it into others, the constituents of the newly depleted budget portions will seek to recover their losses somehow. That money will have to come from somewhere. And therein is the problem.
We live in a heavily taxed state, yet we may face a $15 billion shortfall next year in the budget. Without an impending gubernatorial election and with safe Democratic majorities in the Assembly and Senate as far as the eye can see, we can expect a combination of painful tax increases and spending cuts to make up for the deficit.
To put it bluntly, we are broke. As a state, we cannot continue in this fashion for much longer. Something has to give, sooner or later. And taking into consideration our history with the power crisis, whose warning signs appeared much earlier yet went unheeded, it is unlikely that anything will change significantly until the financial situation is so bad that even the most Draconian spending cuts and tax increases will fail to stop the fall of our state's credit rating.
Once that happens, it will be almost impossible for the state to sell bonds for its pet projects, even if approved by massive majorities. And then a reckoning will occur. State officials will be forced to utter the unspeakable to the people. Somebody, somewhere, in some office in Sacramento will have to say, "No, we can't afford it."
One is reminded of the debt-ridden character Micawber in Charles Dickens' "David Copperfield" who uttered the valuable aphorism, "Annual income 20 pounds, annual expenditure 19.6, result happiness. Annual income 20 pounds, annual expenditure 20.6, result misery." Misery indeed.
And misery we shall have if our profligate proposition habits continue in the voting booth. Bond measures are tricky phenomena. They seduce one with the promise of easy money right away. After all, we have 30 years to repay. We can worry about paying all that interest at another time. Right?
Wrong. We are saddling future generations with a tremendous burden. The financial effect of our current ballot propositions will seem to them like an icy cold glare from a distant star that has long since died. This is the legacy of November 2002. Let's hope we can stop ourselves before it is too late.
