"But also expect Washington to take some heat if it simply bail outs out California, especially now that we have governors like Mark Sanford of South Carolina pointing out that the federal aid to states amounts to a subsidy by citizens of fiscally responsible governments to states where legislators have chucked responsibility out the window."
Federal spending per federal tax dollar paid (2005):
The bulk of the difference between CA and SC in federal spending appears to come from matching funds for Medicaid, caused by a lower per-capita income in SC and a higher percentage of people below the poverty level.
Relative to other states, SC has a slightly below-average state payroll, and seems to be criticized more for not providing enough services than for being profligate.
California has a lot of problems, sure, but this article seems to blow many of them out of proportion. Some of the statistics sound shocking, but the author fails to make comparisons to other states.
The statistic that 95% of the people live in 5% of the land sounds bad, but I bet it isn't that much different than other states. Also, California looks big on a map, but you must remember that 45% of the land in California is owned by the federal government. That means that the land is generally off limits to housing people. Some people like park rangers and military personal might live on federal land, but very few do.
http://strangemaps.wordpress.com/2008/06/17/291-federal-land...
I live in Santa Rosa and my biggest problems with California are prop 13 and the zoning laws that encourage sprawl. California planners don't seem to like multi-use zones, so strip malls and sprawling apartment complexes pop up all over. I want to live in an apartment in a livable, diverse community on the same street as stores and restaurants, but this is extremely rare outside of places like San Francisco.
> California planners don't seem to like multi-use zones, so strip malls and sprawling apartment complexes pop up all over. I want to live in an apartment in a livable, diverse community on the same street as stores and restaurants, but this is extremely rare outside of places like San Francisco.
Actually, it's Californians who generally dislike "diverse" communities.
That said, they're not that rare. They exist in all of the bigger cities, SF, Oakland, Berkeley, Sacramento, plus places in the LA basin. (I don't know about the inland empire.) Heck, it's even possible to find them in almost every "college town". Almost every small town is "diverse".
In short, your real complaint is with places like Santa Rosa. Move.
> my biggest problems with California are prop 13
Prop 13 is the only reason that CA cities and counties aren't having to choose between a 20% drop in revenues or a 25% increase in property tax rates this year.
About half of the homeowners and the vast majority of the commercial property owners are going to see a 2% increase in their property taxes this year. Meanwhile, folks who bought recently may see a modest decrease in their property taxes.
As a result, CA's property tax revenues are going to be fairly stable.
Prop 13 is a cap on property tax rates and a limit on the increase in "value for the purposes of taxation" wrt a given owner of a given property. When property changes hands, the value for taxation goes to the sales price, but as long as it doesn't, the rate of increase is capped, which is why many owners (especially commercial) will see a modest property tax increase even though their property lost value in 2008 - the property tax is catching up slowly.
Remember that "cap on property tax rates" that I mentioned above. Almost every CA city and county is at that cap. Do you really want to argue that they would have dropped the rates to keep revenues stable during the years when property values were exploding? (Prop 13 was enacted during a previous boom when they didn't drop rates....)
Living in California is really wonderful for the most part - but the state income tax is a killer. I'd love to move back to Cali, but it would involve a higher cost of living (not a big deal) and about a 10% pay cut (due to state income tax, and a big deal). I work remotely, so when deciding where to live next I have to think through:
"Ok, I'd looove to live in the Bay Area, but if I lived in Seattle where there's no income tax, I could have an extra X bucks per month."
Where X is 9.3% of your salary:
60K => $465/mo
80K => $620/mo
100K => $775/mo
120K => $930/mo
So the question becomes, is it worth the X bucks a month to live in Cali? Sometimes it is, sometimes it's not. I use Seattle as an arbitrary example of course - but it could be any of the no income tax states. Of course, many folks don't have the option at all - but more and more people will be able to choose in the future.
I don't know much about how state governments work - but it's interesting to see how some states can have no income tax and still be better off financially than high income tax states like Cali. Sometimes I hear the argument that it's because the no income tax states have much higher sales taxes. However, the sales tax in Cali vs Washington or Texas seems about the same (around 8%). Perhaps there's a big difference in property taxes - I'm not a homeowner so I don't know or really care about that. A lot of it does seem to come down to how well the state is run when you look at it as a business instead of a 'state'.
As an aside, if you live in a no income tax state and want to avoid sales taxes where possible - Amazon Prime is your friend ;)
I live and work in San Francisco, and according to you I should be paying $620 a month in state income tax. According to my payslip I pay ~$420 (awesome) a month, $60 of which is for state disability insurance.
> I don't know much about how state governments work - but it's interesting to see how some states can have no income tax and still be better off financially than high income tax states like Cali.
One interesting question is why should state and local taxes be deductible at the federal level?
Yes, I know that folks are paying them, but presumably they're doing so for the benefits. Why should folks in low tax states pay more federal taxes to cover state tax benefits that they don't get?
Yes, this article is written, it seems, with a bit of a vengeance. I'm not sure where "Go ahead, California, make my day." comes from...
There are some relevant points, but they're all contentious. California is in some dire straights, it's unfortunate. We'll get things sorted one way or another though, certainly.
"There is no housing boom (or bubble) about to inflate, as it did in 2004" - I don't know much about Mr. Malanga's finances, but I would presume he's a multi-millionaire, if his ability to see booms and bubbles is at all accurate.
He's a member of the Manhattan Institute, a heavily market-oriented "conservative" think-tank, and I can't help but wonder if a bit of ingrained bias played a part in this article.
Yeah, the thing that stood out to me was this long tirade about how the state of CA can be so retarded so as to have services for its people... It all just sounded like standard conservative "let-the-market-decide-and-life-will-be-wonderful-for-everyone" platitudes.
The point about Google having a datacenter in Oregon has nothing to do with mismanagement in California and everything to do with the availability of cheap, green, hydro power in the Pacific Northwest.
> mismanagement in California and everything to do with the availability of cheap, green, hydro power in the Pacific Northwest.
What makes you think that mismanagement of CA has nothing to do with the cost of power in CA and the availability of "green hydro power"? (CA occasionally tries to tear down power damns and has stalled construction of one of a major one, somewhere around Folsom, for over 20 years.)
This is a state whose politicians, public sector unions and advocacy groups have been living in a fantasy world of overspending, investment-deadening taxation and job-killing regulation.
Now I know the article is just whining from someone who doesn't want to pay taxes.
>> Now I know the article is just whining from someone who doesn't want to pay taxes.
Do you know anyone who does want to pay taxes? Also, when did ad hominem arguments become valid?
>> job-killing regulation
The US Chamber of Commerce rates California as the worst state in the nation for business. 50th out of 50. Intel, a CA-based corporation, just announced the creation of 7,000 new jobs. In Oregon, Nevada, Arizona, and New Mexico.
>> public sector unions...
The interchange at I-880 and CA-237 in Silicon Valley took 6 years to complete (yes, you read that right). Just a bit further north, the interchange at 880 and Mission took at least 5 years. Can you say "union featherbedding"?
>> advocacy groups
Enviro impact fees add $7,000 to a house in Texas. In CA, they add over $75,000.
This is a stupid nitpick, but is California's standard of living higher on average, or is its cost of living higher? Implying that teachers get paid more so they can afford California's "standard of living" rings more accusatory to me than if the author had attributed it to "cost of living," but I don't know if he's right, if he's wrong and deliberately wrote that to fan the flames a bit, or if it was an honest mistake.
States with higher salaries and more generous welfare programs tend to have higher costs of living. The extra spending is one factor which tends to drive up prices.
It works with the schools too. One of the reasons colleges tuitions have risen in recent years is because subsidies have increased. When there is more money being spent on a good or service, there nearly always an increase in price.
So, if the California government pays it's employees more money, and spends more on welfare than average, then the costs of living are necessarily going to increase. Of course, there is more to it than that. Highly paid technical workers can make things difficult for more poorly paid locals as well, but it's certainly part of it.
The per-capita deficit isn't really that meaningful. $1000 a person isn't even that much - each citizen of the USA would have to pay $35,462.89 to cancel out the country's national debt. the reason it's not a problem is because our national debt is only like 75% of GDP. comparatively, California's deficit of $41 billion is only 2.4% of their GDP. it's a little different because California can't print money, but nothing to get all armageddon-y about. raise some taxes, decrease some spending, seize some swiss bank accounts and call it a day.
another point of comparison - we've already given way more than $41 billion to SINGLE corporations like AIG, not to mention bank of america, citi, fannie, freddie, etc. personally, i'd much rather bail out states than corporations. spending money on teachers - the horror!!
It's also worth pointing out that per-capita income is much higher in CA than it is elsewhere, NY including. We need to pay our teachers here that much just so that they can afford the rent. The rent is that expensive because there are too many rich Californians. =P
[+] [-] 100k|17 years ago|reply
Federal spending per federal tax dollar paid (2005):
South Carolina: $1.35
California: $0.78
Who is subsidizing whom, Gov. Sanford?
See: http://www.taxfoundation.org/research/show/22685.html
[+] [-] tptacek|17 years ago|reply
The bulk of the difference between CA and SC in federal spending appears to come from matching funds for Medicaid, caused by a lower per-capita income in SC and a higher percentage of people below the poverty level.
Relative to other states, SC has a slightly below-average state payroll, and seems to be criticized more for not providing enough services than for being profligate.
[+] [-] blackguardx|17 years ago|reply
The statistic that 95% of the people live in 5% of the land sounds bad, but I bet it isn't that much different than other states. Also, California looks big on a map, but you must remember that 45% of the land in California is owned by the federal government. That means that the land is generally off limits to housing people. Some people like park rangers and military personal might live on federal land, but very few do. http://strangemaps.wordpress.com/2008/06/17/291-federal-land...
I live in Santa Rosa and my biggest problems with California are prop 13 and the zoning laws that encourage sprawl. California planners don't seem to like multi-use zones, so strip malls and sprawling apartment complexes pop up all over. I want to live in an apartment in a livable, diverse community on the same street as stores and restaurants, but this is extremely rare outside of places like San Francisco.
[+] [-] anamax|17 years ago|reply
Actually, it's Californians who generally dislike "diverse" communities.
That said, they're not that rare. They exist in all of the bigger cities, SF, Oakland, Berkeley, Sacramento, plus places in the LA basin. (I don't know about the inland empire.) Heck, it's even possible to find them in almost every "college town". Almost every small town is "diverse".
In short, your real complaint is with places like Santa Rosa. Move.
> my biggest problems with California are prop 13
Prop 13 is the only reason that CA cities and counties aren't having to choose between a 20% drop in revenues or a 25% increase in property tax rates this year.
About half of the homeowners and the vast majority of the commercial property owners are going to see a 2% increase in their property taxes this year. Meanwhile, folks who bought recently may see a modest decrease in their property taxes.
As a result, CA's property tax revenues are going to be fairly stable.
Prop 13 is a cap on property tax rates and a limit on the increase in "value for the purposes of taxation" wrt a given owner of a given property. When property changes hands, the value for taxation goes to the sales price, but as long as it doesn't, the rate of increase is capped, which is why many owners (especially commercial) will see a modest property tax increase even though their property lost value in 2008 - the property tax is catching up slowly.
Remember that "cap on property tax rates" that I mentioned above. Almost every CA city and county is at that cap. Do you really want to argue that they would have dropped the rates to keep revenues stable during the years when property values were exploding? (Prop 13 was enacted during a previous boom when they didn't drop rates....)
[+] [-] kubrick|17 years ago|reply
[+] [-] mattjaynes|17 years ago|reply
"Ok, I'd looove to live in the Bay Area, but if I lived in Seattle where there's no income tax, I could have an extra X bucks per month."
Where X is 9.3% of your salary:
60K => $465/mo
80K => $620/mo
100K => $775/mo
120K => $930/mo
So the question becomes, is it worth the X bucks a month to live in Cali? Sometimes it is, sometimes it's not. I use Seattle as an arbitrary example of course - but it could be any of the no income tax states. Of course, many folks don't have the option at all - but more and more people will be able to choose in the future.
I don't know much about how state governments work - but it's interesting to see how some states can have no income tax and still be better off financially than high income tax states like Cali. Sometimes I hear the argument that it's because the no income tax states have much higher sales taxes. However, the sales tax in Cali vs Washington or Texas seems about the same (around 8%). Perhaps there's a big difference in property taxes - I'm not a homeowner so I don't know or really care about that. A lot of it does seem to come down to how well the state is run when you look at it as a business instead of a 'state'.
As an aside, if you live in a no income tax state and want to avoid sales taxes where possible - Amazon Prime is your friend ;)
[+] [-] jpancake|17 years ago|reply
[+] [-] anamax|17 years ago|reply
One interesting question is why should state and local taxes be deductible at the federal level?
Yes, I know that folks are paying them, but presumably they're doing so for the benefits. Why should folks in low tax states pay more federal taxes to cover state tax benefits that they don't get?
[+] [-] rsheridan6|17 years ago|reply
California is a beautiful place (at least some of it is), but I wouldn't want to live there because of the state government.
[+] [-] sgrove|17 years ago|reply
There are some relevant points, but they're all contentious. California is in some dire straights, it's unfortunate. We'll get things sorted one way or another though, certainly.
"There is no housing boom (or bubble) about to inflate, as it did in 2004" - I don't know much about Mr. Malanga's finances, but I would presume he's a multi-millionaire, if his ability to see booms and bubbles is at all accurate.
He's a member of the Manhattan Institute, a heavily market-oriented "conservative" think-tank, and I can't help but wonder if a bit of ingrained bias played a part in this article.
[+] [-] lutorm|17 years ago|reply
[+] [-] tjmc|17 years ago|reply
[+] [-] anamax|17 years ago|reply
What makes you think that mismanagement of CA has nothing to do with the cost of power in CA and the availability of "green hydro power"? (CA occasionally tries to tear down power damns and has stalled construction of one of a major one, somewhere around Folsom, for over 20 years.)
[+] [-] sown|17 years ago|reply
[+] [-] jrockway|17 years ago|reply
This is a state whose politicians, public sector unions and advocacy groups have been living in a fantasy world of overspending, investment-deadening taxation and job-killing regulation.
Now I know the article is just whining from someone who doesn't want to pay taxes.
[+] [-] miked|17 years ago|reply
Do you know anyone who does want to pay taxes? Also, when did ad hominem arguments become valid?
>> job-killing regulation
The US Chamber of Commerce rates California as the worst state in the nation for business. 50th out of 50. Intel, a CA-based corporation, just announced the creation of 7,000 new jobs. In Oregon, Nevada, Arizona, and New Mexico.
>> public sector unions... The interchange at I-880 and CA-237 in Silicon Valley took 6 years to complete (yes, you read that right). Just a bit further north, the interchange at 880 and Mission took at least 5 years. Can you say "union featherbedding"?
>> advocacy groups
Enviro impact fees add $7,000 to a house in Texas. In CA, they add over $75,000.
[+] [-] ja2ke|17 years ago|reply
[+] [-] astine|17 years ago|reply
It works with the schools too. One of the reasons colleges tuitions have risen in recent years is because subsidies have increased. When there is more money being spent on a good or service, there nearly always an increase in price.
So, if the California government pays it's employees more money, and spends more on welfare than average, then the costs of living are necessarily going to increase. Of course, there is more to it than that. Highly paid technical workers can make things difficult for more poorly paid locals as well, but it's certainly part of it.
[+] [-] jacoblyles|17 years ago|reply
That's too bad. New management might be a nice change.
[+] [-] sgrove|17 years ago|reply
Why would new management be nice? What change would it bring?
[+] [-] eyudkowsky|17 years ago|reply
[+] [-] nazgulnarsil|17 years ago|reply
[+] [-] darkhorse|17 years ago|reply
another point of comparison - we've already given way more than $41 billion to SINGLE corporations like AIG, not to mention bank of america, citi, fannie, freddie, etc. personally, i'd much rather bail out states than corporations. spending money on teachers - the horror!!
[+] [-] miked|17 years ago|reply
This is mixing apples and oranges. The $1,100 deficit is this year's deficit. The US's $35K/person is total accumulated.
>> i'd much rather bail out states than corporations.
Why bail out any of them? Whatever is subsidized you get more of. Bailouts will lead to even more fiscal irresponsibility.
[+] [-] baguasquirrel|17 years ago|reply