Blame Institutions for the California Budget Mess

Kevin Drum says California has been the victim of fantasy budgeting:

Californians are living in a dream world. Prop 13 slashed property taxes and nobody wants to amend it, even for commercial property. Arnold Schwarzenegger got elected in the middle of a budget crisis by promising to cut taxes. When that proved to be an unsurprising disaster, the voters approved billions in borrowing, making the budget situation even worse. It’s easy to blame Sacramento for this mess (and I do!), but the public has been complicit every step of the way.

This is true. Kevin observes that you have your high-tax, high-service states and you have your low-tax, low-service states “but over the past few decades we Californians have somehow concluded that we can be a medium tax/high service state.”


I suppose it strikes me as unlikely that California’s budget problems are unusually intractable because California’s citizens as unusually unreasonable. The crux of the matter, as best I can tell from the East Coast, is that California has a set of political institutions that don’t work. The 2/3ds rule in the state legislation doesn’t make sense, the profligate use of the initiative process doesn’t work, the combination of the two is disastrous. There seem to me to be other sources of institutional dysfunction in California (LA County is almost twice as big as the country’s second-largest, and five of the fifteen top population counties form a contiguous belt in southern California) but those are the big obvious ones. Voters and politicians suffer from similar pathologies all the world ‘round. But differences in history and institutions can lead to very different outcomes. California needs not only to come through this budget apocalypse, but to adopt a different institutional model that forces some level of decision-making.