Over-taxed and over-spent

One of the myths swirling around the California budget deficit is a claim that tax rates in the Golden State are modest. This is hard to swallow when we look at neighboring states. Oregon has no state sales tax, and an income tax rate that peaks out at 9 percent. California’s peaks at 9.3 percent.

Washington, which has no state income tax, has a state sales tax of 6.5%, plus local taxes. California has a state sales tax of 7.25% plus local taxes. In Santa Clara, CA, I pay 8.5% sales tax; in Vancouver, WA, I pay 7.3% sales tax.

It’s odd that California, which charges both sales and income taxes, would charge these at rates that exceed nearby states that manage to get by on only one; perhaps the property tax is lower thanks to the infamous Prop. 13.

But no, not even that’s the case. While California’s property tax rate of $1.05 per $100 is lower than Oregon’s $1.35 and Washington’s $1.10, the higher prices of California real estate push it though the roof. A 1200 sq. ft. home in Portland is going to run you about $150,000, give or take a few, and about $120,000 in Vancouver, WA. But that same house would run you at least $450,000 in Santa Clara, and your property tax bill will reflect that. So you’re gonna pay 2 to 3 times as much property tax in California along with your double taxation on income and sales.

California tax revenues took a big jump in 2000, and have been essentially flat since then, except for a slight upward creep this year:

1998-99 …. 58,615.3
1999-00 …. 71,930.5
2000-01 …. 71,428.1
2001-02 …. 72,238.6
2002-03 …. 81,527.4*

*Includes $10,675.4 million for the Deficit Financing Bond

But spending exceeded revenues in 2000-01 and stayed there until this year’s budget, aided by the big bond sale:

1998-99 …. 57,827.1
1999-00 …. 66,494.0
2000-01 …. 78,052.9
2001-02 …. 76,751.7
2002-03 …. 78,141.7

This in a state that has a balanced-budget provision.

Now why is it that a state that taxes so much more heavily than its neighbors can’t balance its budget as its own laws require?

One reason is a wuss governor, another is a legislature that’s far to the left of the people thanks to Gerrymandering, and another is a media establishment that doesn’t cover Sacramento. At least one of these things is going to change, and perhaps two.

For the last, Ted Costa will have to be successful with his latest initiative, but stranger things have happened.