Naussau County Exec Edward Mangano cuts taxes to bone, triggers state takeover of finances.
Thirty three years ago, Proposition 13 roared out of California to signal the beginning of the nation’s first serious tax revolt since 1932. Prop 13 restricted property taxes to 1% of valuation, allowed reassessment only when property changed hands and required supermajorities for local governments to pass makeup taxes. California’s once and future governor, Jerry Brown, spent state money to make up for lost local revenue back then, setting the stage in part for the budget breakdown he faces again today. Yet, in California, which is facing a $25 billion deficit, Prop 13 remains sacrosanct--the third rail of state politics.
While the effects of Prop 13 will be debated until California tumbles into the sea, some on the frontlines, like L.A. Mayor Antonion R. Villaraigosa, say, “We are just decimating government and the services it provides.” This, it would seem, is the perfect year for those who would like to starve government and the services it provides.
According to the Center on Budget and Policy Priorities, 44 states and the District of Columbia face budget shortfalls for the fiscal year beginning in July. Yet, according to the New York Times, “Governor after governor has publicly forsworn the prospect of raising income taxes, preferring to talk layoffs and cuts in programs and public union benefits.”
The way most recessions work, states experience the worst budget crises towards the end of the recession and in the year or two after recovery begins. Historically, they cut first, then raise taxes. But this year may be different. According to Donald J. Boyd, a senior fellow at the Nelson A. Rockefeller Institute of Government at the State University of New York in Albany, as quoted in the Times, “We’re in quite an extraordinary anti-public union, anti-tax climate right now.”
One enterprising Tea Party-backed county executive in Nassau County, New York was so eager to undo an unpopular tax that he acted before he was even sworn in. To shouts of “Eddie, Eddie, Eddie,” Republican Edward Mangano whacked an energy tax, triggering a wholesale takeover of the county finances by a state watchdog panel. “A lot of people who got elected on this type of anti-tax platform are running into the brick wall of fiscal reality,” noted Matthew Gardner, executive director of the non-partisan Institute on Taxation and Economic Policy in Washington. Interestingly, “Eddie” did not advertise the word “Republican” in his bid for office. He went exclusively with “tax revolt.”
Then there’s suburban San Carlos, in San Mateo County California, which outsourced its police department to the county. Dave Maggard, police chief of Irvine and vice president of the California Police Chiefs Association, does not think this will turn out to be unusual. “I think many cities are evaluating their police services based on their fiscal constraints," he said.
From sea to shining sea we seem to be witnessing a redefinition of the social contract that once held that taxes and government meant services and local autonomy. What we have now is, well, to be determined. Whereas once, “starving big government” was a theoretical trope of the right, now it seems to be entering the realm of distinct possibility. Is this our third wave of implicit tax revolt in a century? If so, this one will be engineered not by tax relief organizations or curmudgeons like Howard Jarvis, but by those already elected to office in the last wave of voter upheaval—and perhaps those to come.
When you face a budget deficit as large as that of California, Illinois, or New Jersey, you begin to hear some crazy things, like using bankruptcy to get out from under state pension obligations. That hasn’t been tried since Arkansas hit bottom during the Depression.
It’s instructive to realize that dismantling government—or at least its benefits—can be achieved. California boasted one of the best public education systems in the nation in the 1960s. Today it is ranked 48th by many measures. I left the state largely for reasons related to that decline. I paid more in taxes in my new home state of Minnesota, but my kids received a pretty great public education in an urban environment. Today, those two terms are never paired in polite discourse in my old home state.
There are many ways to dismantle a working democracy; semi-crazed self-interest is one of them. But I wonder: if government is the enemy, why haven’t private interests already solved our problems? Is it true, as some claim, that if we just dismantle government, the private sector will kick into high gear? Will health insurance companies cover the uninsured? Will for-profit kindergartens obliterate the achievement gap?
To my ears, these sound like dumb-ass rhetorical questions, but that’s what we are being asked to swallow. Despite that, I would venture that we are not on the brink of a tax revolt; we are in the midst of one.
[This article appeared originally at does this make sense.com.]