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Apostasy on the West Coast: Californians back tax hikes

Voters cast their ballots in the garage of Tom and Carol Marshall, which was converted into a polling location during the U.S. presidential election in Los Angeles, California.

FRED PROUSER/REUTERS

Californians chose higher taxes over slashing school budgets this week as they turned back the clock on a decades-old anti-tax revolt that nearly bankrupted the country's largest state.

Voters approved a $6-billion (U.S.) package that includes a sales-tax hike and a surtax on the wealthy by a 54- to 46-per-cent margin. It was the first state-wide tax increase passed in California in two decades.

The improbable passage of Proposition 30 – one of hundreds of ballot initiatives held across the United States Tuesday – hints at a nascent mood shift as the country confronts an increasingly dire debt crunch and the dreaded fiscal cliff.

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In California, at least, voters are apparently now willing to pay more for the services they consider vital.

"Here we are … I think the only state in the country that says 'Let's raise our taxes, for our kids, for our schools, and for our California dream,'" said California Governor Jerry Brown, who championed the ballot measure.

California's dilemma could soon be replicated across the country as Americans are forced to make choices between losing cherished services or going deeper into debt.

"California was on the leading edge of the anti-tax revolt that was a dominant part of the political scene in the United States for more than 30 years," pointed out Jon Christensen, an adjunct history professor at the University of California at Los Angeles. "So it's tempting to see Prop 30 as a bellwether for change."

The urban voters in Los Angeles and the San Francisco Bay area, including women, young voters and Latinos, who led support for Prop 30 have a lot in common with the roughly 50.1 per cent of Americans who re-elected President Barack Obama Tuesday.

But exit polls in California suggest even many high-income earners voted yes.

"There are striking parallels here with the emergent national coalition that brought Barack Obama's re-election," Prof. Christensen said.

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California's financial problems can be traced to the 1970s when soaring home prices and rampant inflation spawned a property-tax revolt in the sprawling suburbs of Los Angeles. The movement swept across the state, and eventually much of the country.

The result was Proposition 13, which rolled back and froze local property taxes in California. The effect of Prop 13 was to put the state in a permanent straightjacket, forcing local governments to off-load financial responsibilities on the state. And in the wake of the real-estate crash, it forced the state to take on ever greater responsibility for schools, health care and welfare, while sapping funds available for everything else.

Political scientist Peter Dreier, director of urban and environmental policy at Occidental College in Los Angeles, said Prop 30 is a "step in the right direction." But he said California's problems won't be over until the state repeals Prop 13.

"If California – the richest state in the U.S. – can't get its fiscal state in order, then it doesn't bode well for the rest of the country," Prof. Dreier said.

Now, he said, there finally seems to be a coalition of forces in the state willing to challenge three decades of anti-tax sentiment. If nothing else, Prop 30 suggests people understand "you can't have a strong economy without education."

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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