Sunday, January 30, 2011

Redeveloping Our Ideas

When Jerry Brown produced his first budget for the State of Calilfornia, I figured he'd gotten it about right:  enough cuts to annoy the Democrats, enough tax increases to fry the Republicans, and no hallucinations of money from the Feds that wasn't going to come.  He managed to gore almost everyone's ox, and that's good.  But apparently the most painfully gored ox belonged to the Redevelopment Agencies.

He released the budget on January 10.  It didn't take 24 hours for articles to start appearing (they're still coming, see Google) with the general theme, "Redevelopment money?  You can't take away our redevelopment money!  How can we live without redevelopment money??"  Other groups have since chimed in on the general chorus of "how can you take away our money?", some of them with more justice than the redevelopment agencies.  The argument about in-home care support is particularly poignant, because some of these people will have to stop living at home if the state support stops.  Everyone says, "but it's cheaper for the state to keep them at home than put them in a nursing home," which is true; but they miss the point that the state probably won't have to pay for the nursing home - the families will, or Medicare will. 

But I digress - back to Redevelopment Agencies.  In a print exclusive in the Sunday S.F. Chronicle (look for it online on Tuesday 2/1), Willie Brown floats a rumor that Jerry and the California mayors are privately cutting a deal on the Redevelopment Agencies, details to be revealed later.  If this is true, I think it's a mistake.  Everyone is screaming, "How can we live without Redevelopment Agencies?"  This is a rhetorical question.  The real question they ought to be asking is, "How can we live without Redevelopment Agencies?"  How can we do what we need to do, in a new way?

Albert Einstein once said, "The definition of insanity is doing the same thing over and over again and expecting different results".  Redevelopment Agencies are part of doing the same thing over and over again.  We've been doing the same thing over and over again in this state for 40 years, and the result is that the state is bankrupt, the cities and counties are bankrupt, and everybody is screaming that their ox is being gored.

I'm not the first person to say this but it's still true:  We have to start asking ourselves the hard questions.  What services should the state provide, and how should we pay for them?  Ditto counties and cities - what services should they pay for, and where do they get the money?  I think most people would agree that repairing the streets is a service that cities should provide, but there are streets in Oakland in such bad shape that your car's shocks are at risk.  You'd think you were in a third world country.  Oakland has committed to paying employee salaries and benefit packages well above the local market; and they can't afford to pave the major streets; the street I'm talking about is Broadway, hardly a side street.  We used a stretch on Broadway to test the all-wheel-drive on a new SUV we just bought.  I question these priorities.  We have a new mayor in Oakland; I hope she's capable of asking these hard questions; but since she has been part of the problem for the last 5 years (as head of the City Council finance committee), I'm not optimistic.

City, county, and state:  we all have to stop and ask:  what are we doing?  What should we be doing?  Where do we get the money to do that?  What are we doing that we really should find someone else to do on a contract basis?  If we don't ask these questions, we're insane by Einstein's definition.

1 comment:

  1. Hedera:

    I admire your lusty matter-of-fact approach to social problems. It sounds responsible and decent and unselfish.

    I don't know what the historical record shows with respect to the percentage of gross income versus taxes in our fair state, but I suspect that it hasn't changed very much over the last 30 years. What has changed is the amount of income subject to income taxes. The reason is plain and simple: America, across the board, has been sending its jobs and investment capital overseas, in ever increasing amounts. My favorite examples are the auto assembly plant in Fremont, and the Hersey factory down in the Central Valley, which were closed because the companies could get cheaper labor "elsewhere." The decay of American industry and manufacturing--the effects of that decline--were masked by technical innovations, and the stock market and real estate market booms. There's been a real decline in per capital income of Americans over the last 50 years. In 1955 a single wage-earner family could live handsomely on a middle class income. Throughout this whole period of (fake) "prosperity" government has continued to raise the ante by taxing right up to the limit. We can argue over comparisons, but most people in the middle class pay a total tax burden that's between 30-40% of their income, in all forms. The problem hasn't been that that burden is necessarily too high, but that the numbers of middle class earners has been steadily declining.

    In the last five years, we've finally begun to experience the real pain of this trend, and we can expect it to continue downwards. The answer isn't "innovation" or "competitiveness" or "more education" or less taxes or more taxes. The paradigm which led to America's dominance in the world economy has changed, and it's not going back. "Globalism" is here to stay because it serves its masters (the international entrepreneurial exploiters) very well.

    Bottom line is the American standard of living is moving downward, compared to other growing economies. It isn't a pure zero sum game, but it is to the degree that the most successful economies will succeed to the degree that their competitors don't.

    And as growth declines, so does tax revenue. Government at all levels has been spending as if the prosperity of the post-War period were still going on. The commitments it has made to pensioners, for instance, is far in excess of what it should be, given the power of jurisdictions to fund it through taxes.

    This isn't the whole story, but it's the biggest piece of the puzzle. No one talks about it, because it's really bad news and people don't want to hear about things which can't be "fixed."

    You can't pay retired policemen and bus drivers and security guards and teachers 80-125% of their last take-home pay and balance the budget in hard times. The money simply isn't there. You can be angry about this or not, but it doesn't matter. Those pot-holes will never be filled at this rate.