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Rigonomics:

Optimism in bad times

September 11, 2009|By Jim Righeimer

Though a whopping 96% said the state budget was a problem, they seem conflicted on how to solve it. Sixty-five percent want a law for a strict spending cap to limit increases on state spending, while a majority (53%) think they should lower the threshold to pass a budget to 55% from two thirds. In addition, 50% thought local taxes should also be able to be raised by a 55% vote of the people instead of the two thirds needed now.

In a state with some of the highest tax rates in the country, it’s hard to believe the public would want to raise taxes. When you look at the numbers more closely, you find — not surprisingly — that people do not mind raising taxes as long as they do not have to pay them.

To see what that gets you, look back to 2004, when Californians voted for Prop 63, the 1% millionaire tax to fund Mental Health Services.

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The public thought, how big of a deal would it be to raise taxes a measly 1% on a millionaire? As it turns out, a lot. In 2007, Los Angeles County lost 7,000 millionaire households, when, during the same period, Maricopa County in Arizona, with a much smaller population, gained 23,000 new millionaire families.

We may have gotten an additional 1% on the millionaires who stayed, but we lost 10.9% on those who left — taking with them not only the taxes they paid, but also the jobs those high incomes kept employed.

So here is the good news: The public is awake and ready to do whatever it takes to get this state back on track. According to the poll, 56% say that decisions made through the initiative process are better than those passed by the legislature and signed by the governor.

I expect to see this in action starting in the June primaries. Citizen direct government will be in full gear with at least a half dozen citizen-led measures on the ballot. Initiatives go the full range from a part-time legislature to 50% pay cuts for legislators. Any type of pension reform or spending cap initiative would pass easily.

These are serious times, and the public is serious. I will keep you informed as the initiatives move forward. I think I see the light at the end of the tunnel.


JIM RIGHEIMER is a Costa Mesa Planning Commissioner, local business owner and a father of four. He can be reached at jim@rigonomics.com.

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