The Problem: A Broken Tax and Fiscal System

For decades, the Golden State of California promised a new beginning and a chance to make dreams come true.

But the state has slipped over the last decade.

There is no question that the Great Recession has been a big part of the problem. But the California budget process and our state’s chronic fiscal crisis has made things even worse for working and middle-income families and individuals.

California has faced massive budget deficits and sustained billions of dollars in drastic cuts to our most valuable resources that have made the California Dream possible to so many: public schools and universities, state parks and beaches, the health care system, and basic safety-net programs which protect the most vulnerable Californians—our children, the elderly and the disabled.

For the first time since 2002, California has not faced a budget deficit in 2013 due to the passage of Proposition 30.

This measure, passed by a majority of voters in November 2012, restored over $6 billion in new revenues to K-12 education, the California State University and University of California systems of higher education and other vital state services.

But a balanced budget is not the same as a just budget.

Today, California’s public schools rank 46th out of 50 in K-12 per student spending. Many aspiring high school graduates cannot afford the steep increases in college tuition. Cutbacks in child care programs mean that working parents cannot find quality, affordable day care for their kids. And, California’s physical infrastructure—our roads, airports and school facilities—have deteriorated for lack of investment. New revenue to our state has stopped further cuts, but we’re keeping an eye on our future to make sure we don’t slip back to where we were.

What got us into this mess?

Without a doubt, Proposition 13, passed by voters in 1978, is a major part of the problem. While it provided much-needed relief for many California homeowners, it also instituted a vastly unequal system of tax loopholes for many commercial property owners, including some of the richest corporations in the world. California loses an estimated $8 billion every year in commercial property tax revenues – monies that could help hire more teachers for classrooms, more police and fire protection, expand our libraries and more.

Proposition 13 also instituted a requirement that most tax increases need a two-thirds vote from the legislature or voters. This has made it extremely difficult to generate new revenues for the state treasury, leaving drastic budget cuts as the only alternative.

This has led to a wide range of band-aid solutions, like, for instance, raising debt, regressive taxes, piecemeal budgeting. They haven’t fixed the problem, just further complicated California’s budget woes.

The system is broken, but now, there’s a solution.