By Jean Ross
Special to Calbuzz
I have often described myself as profoundly Californian, so it is with some degree of trepidation that I prepare to head east in search of new challenges after nearly two rewarding decades heading the California Budget Project (CBP). Some might ask whether two plus decades of examining California’s budget isn’t enough challenge for one lifetime.
A disproportionate share of the income gains over the past two decades has gone to the very top of California’s income distribution, while the incomes of the vast majority of Californians have fallen behind. This is true despite continued productivity gains that have led to strong growth in corporate profits. During this same period, the state has lurched from one budget crisis to next, leading one colleague to note that the term “crisis” loses meaning when it is used to refer to the status quo.
During this generation of widening inequality – from 1987 to 2009, the longest period for which we have consistent data — the combined income of all Californians increased by $219 billion, after adjusting for inflation. One-third of that amount — $78 billion, an amount slightly less than the 2011-12 General Fund budget – went to the wealthiest 1 percent of California taxpayers, 144,000 individuals. In contrast, just 2.5 percent went to the middle fifth of state taxpayers. In fact, the incomes of the bottom 80 percent of California taxpayers failed to keep pace with inflation over that same period of time.
Public policies can and should work to narrow income gaps. Yet, as a result of changes in state and federal tax and spending priorities, public programs close a smaller share of income gap today than they did a generation ago. Here in California, choices made to balance recent years’ budgets have slashed cash assistance payments back to where they were in the mid-1980s, and cuts to public schools have caused class sizes to explode and diminished young Californians’ ability to get the college degree that provides an increasingly essential ticket to economic success.
California’s challenges reflect the profound disinvestment in public structures and systems that began with the passage of Proposition 13 in 1978 and continued with repeated rounds of tax cuts that reduced the revenues available to support public services, even at the depths of the state’s budget crisis. As a result, state General Fund tax collections as a share of the state’s economy will be lower in 2012-13, even if the voters approve the governor’s proposed tax measure, than in all but one year since 1987.
A balanced approach: Yet, I prepare to depart with some degree of optimism: 2012 offers Californians the opportunity to stabilize the state’s financial condition and lay the foundation for restoring luster to the Golden State. The work of the CBP is guided by the belief that public policies and programs can and should work to improve the lives of all Californians, with a particular emphasis on low- and middle-income Californians.
This is why we have consistently argued for a balanced approach to addressing the state’s fiscal challenges. To that end, the CBP recently endorsed Gov. Brown’s proposed tax initiative. We took that position because the governor’s measure, unlike some others potentially headed to the November 2012 ballot, provides significant revenues with the flexibility needed move the budget towards balance.
The mid-March compromise between the governor and the California Federation of Teachers’ “millionaires’ tax” combines the best of both measures: the flexibility of the governor’s measure, along with the certainty it provides for the 2011 shift of public safety programs to local government, with additional progressivity, a long time period, and somewhat more revenues inspired by the CFT’s proposal.
Voters’ approval of the compromise tax measure won’t solve all of the state’s budget problems or even provide sufficient revenues to restore recent spending cuts. It would, however, end the state’s fiscal free fall, provide stability, and send a critically important signal that we, as Californians, value and are willing to pay for the public services that led to the state’s historic position as an economic and cultural leader in the global arena.
California is, and always will be, the place I call home. It is a place, in the words of the great Carey McWilliams, in need of, “men and women who can match, in the scale of their imagination and the depth of their insight, the extraordinary diversity, power, and challenge which is implicit in this immense and fabulous province which sprawls along the Pacific like a tawny tiger.”
Jean Ross will be leaving the California Budget Project, where she has served as executive director since 1995, at the end of March, to become the US Program Officer for Transparent, Effective, and Accountable Government at the Ford Foundation.