Monday, April 13, 2009

California Budget - Proposition 1C

Of all the weird ballot propositions that came out of the California Lege's late budget standoff, I have the most trouble with this one. Data on the proposition in this post came from the San Francisco Chronicle's article on Proposition 1C today.

To begin with, I have serious reservations - and had at the time, I voted against the state lottery - about using gambling money to fund our education system. Our education system is a major and mission-critical investment for the future of this state, we should be funding it out of normal revenues. We as a state should not be profiting off gambling, which at its worst destroys lives.

The sad fact is that our state government regards the school system as a drag on it, and never misses an opportunity to cut education funding - as they've done in the current crisis. This is why, in case you wondered, California has so many ballot initiatives locking in education spending. It's because we can't trust the Lege (as Molly Ivins used to call it in Texas) to fund it properly.

Now they want to do two
colossally stupid things:
  1. They want to borrow $5 billion (that's with a B, folks) against future lottery revenues, and put the entire amount into this year's operating budget.
  2. They want to remove the requirement that lottery money go directly to the schools. If this passes, schools will be funded from the general fund. They'll get "approximately" the $1 billion a year they get now, adjusted in future for inflation and student population.
What's wrong with this picture?

First, as far as I'm concerned, the lottery's only moral justification is to fund the education system. If we aren't using the money for education - and if this passes we won't be - then we should not be in the lottery business.

Second, they want to borrow money for operating expenses. This means the state will be paying down that $5 billion that we use to run the state this year, for the next thirty years, out of the lottery profits. The two objections to this are:
  1. Borrowing money for operating expenses is colossally stupid (ask anybody who did a cash-out refi to finance a vacation, or a flat-screen TV), and
  2. What happens if the lottery doesn't produce enough revenue to pay down the bonds? Nobody discusses this, but the proposal commits the state to pay $400 million a year for 30 years out of lottery revenues. But lottery sales have been "anemic," according to the article. Only addicted gamblers will buy lottery tickets if they're out of work; everybody else cuts back. And a lot of people are out of work. If the lottery doesn't produce that $400 million a year, who does? We do, folks. Us taxpayers.
Third, this is going to cut education funding. Again. The schools currently get about $1.1 billion a year from the lottery (that's all that's left out of $3 billion in lottery sales, after payouts and administrative expenses); so Prop. 1C will already remove $ .1 billion from the school allocation - that's $100 million, folks. And in future, the lottery profits will go into the general fund, and education funding will come out of the general fund. Yeah, sure it will. And increased as inflation and school population go up, too. Right. Just the way they always do.

There's an old military joke about the general who turns to his aide and says, "Bring me a rock." So the aide goes out, looks around, picks up a rock and comes back. And the general says, "Wrong rock." The legislature's carefully hammered solution to the budget crisis is the wrong rock. If we defeat these propositions, they'll have to have another emergency session to do it again; and I'm sorry, but I think they should. I can't support Prop. 1C.

1 comment:

  1. Back to first principles:

    Why are states, and the Federal Government running out of money?

    Because revenues--in relative terms--are down.


    Because people are paying less taxes than they used to.


    Two reasons:

    1) Because people make less money--in relative terms--than they did a generation ago.

    2) Because the people (and businesses) who have the most money pay a lot less in taxes than they did one or two generations back, either because their tax rates have declined, or they're avoiding paying through loopholes or offshoring.

    The actual effect of less revenue is that our expectations of what government can do for us must be revised downwards.

    Since Americans have more or less accepted that our jobs are going to be obsoleted or shipped to other countries, we need to accept that what government used to do for us, it may no longer be able to do.

    That means less money for schools, cops, sewage systems, prisons, roads, welfare, and all the other things we've come to depend on.

    When times are good--boy, were they good, we didn't know how good!--there's money to pay for these things. When times are bad, you do without, or borrow.

    The problem with our borrowing now is that there is no generally acknowledged scenario in which our income (revenue) is likely to rise, or even stay level, in the coming decades.

    We're all going to be poorer, soon enough. If you measure poverty by the money you have, and the money you pay in taxes, you'll definitely be poor(er).

    My solution is raise tariffs, make the exportation of jobs illegal, and close down the loopholes, tax breaks, and hemorrhaging of capital away from America.

    There is NO chance any of this is going to happen.

    The lottery--like the Indian "gaming" operations--is inherently regressive. It's just another tax, camouflaged as a game, which hurts those least able to afford it. Lottery, and all other forms of betting, should be publicly outlawed; that way, at least, it's an underground thing, a crime, which can't thrive openly.