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Cullen

I was able to balance the budget without cutting any services. It was easy. I just raised the gas tax by a dollar or so.

EJ

While you're at it, you can fix the Federal Budget too:

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html

Which puts into perspective just how little is spent on domestic discretionary.

Dan W

I agree, Cullen. I balanced the budget with a $1 gas tax too.

Agustin

The underlying assumption in this game is that each cost and revenue is independent of the other. Clearly this is not true, and that's one aspect of what makes real life much more complicated.

The analogy between household and government budget management is tenuous, and not constructive. Thinking about government this way pushes people to cynicism and reactionary voting.

Thinking "I balance my household budget! Why can't government figure it out?" is disenfranchising. Disenfranchised voters will tend to be more reactionary (witness the Tea Party in the USA).

We have to remember that we are governed by people. Hopefully those people are smarter than us, but they are not super-human. If a problem in government has not been solved for a long time, that probably means it is very difficult to solve.

Sasha

how did you guys balance by raising the gas tax? The max option +$1 only eats up $15/30 billion.

jmh

Hey,

I guess they mean that raising the gas tax was the largest component in a package of measures. I implemented 10% cuts across the board (as Jared has previously mentioned in the context of transit services, a moderate budget cut can be useful in eliminating less efficient services - 'a good crisis should never go to waste').

Note that such an increase of the gas tax isn't what we'd normally talk about as transit advocates. There's no matching increase in public transit spending to provide alternatives (else it wouldn't be nearly so effective, as 'tax avoidance' by taking public transit would occur). Increasing the gas tax is also rather regressive, since many people (in California) have to drive to work, and the rich and poor will pay roughly equal amounts. Indeed, the poor are less likely to be able to afford to live in the sort of community where driving can be avoided, nor to work for the kind of employer who will provide a luxury bus to work. Still, I didn't feel I had a choice but to raise the gas tax, since it was one of the few ways I could distribute the hit to everyone, rather than disproportionately damaging future employment and tax revenue by drastically (i.e. more than 10%) cuts K-12 and state college education.

jmh

Danny

The problem with these interactive choices is the lack of creativity. For example, I failed to see an option for reverting school administration budgets to the share that they had back in the 1970s. I failed to see an option for renegotiating pension obligations.

You see, there are thousands of ways to pay less and get more. As consumers, most of us do it every day without even thinking about it. We do ourselves a disservice by assuming that the only options we have available come in the form of tradeoffs.

Jarrett at HumanTransit.org

Danny.  I disagree completely, but your comment speaks for many.  While we do all kinds of negotiation in the course of daily life, we are also used to the economic limitations of our own lives.  Most of us cannot, say, quit our jobs and spend a year by the pool without some serious negative impacts.  Yet for decades the message from California voters, in individual intiatives, has been: "Cut taxes!"  "Now, raise spending!"  "Now, cut taxes!"  "Now, raise spending!" 

Your comment is true, on one level.  You can always dig deeper into detail, and you can always imagine that if things get bad enough, you can run over the public employee unions to a degree that hasn't been possible until now. 

But I think the more urgent need is to understand the big-picture shape of a budget problem, and to help voters understand that they can't demand tax cuts and spending increases forever.  People only understand a problem if they play with it.  So I think it's a reasonable tool.

Alon Levy

Agustin, I disagree that disenfranchised voters are more reactionary. Often, the effect is the opposite: disenfranchised blacks, young people, and Hispanics vote for Democrats, often for progressive ones - though the ones who feel the most disenfranchised just give up on voting, feeling that no politician represents them.

For all I know, they may be right. Government is frequently more incompetent than individuals. If it can't control the organizational dysfunctions that afflict large hierarchies - which American governments can't - then it will come to decisions that are worse than those any single member would come up with.

By the way, the gas tax may be regressive, but the effects of cars on people are even more regressive. The people who suffer the most from car pollution are disproportionately poor.

Aaron

I can't believe that a $1 per gallon tax hike would raise $15 billion in California! (Think of the entire US)

That's only 25 cents per liter (for us non-Americans). It might sound like a lot, but really, gas prices (at least here in Canada) have risen by this much in the past 4 or 5 years. Sure, it costs a bit more to fill up your tank, but the sky didn't fall.

EngineerScotty


The problem with the California Budget Balancing Game is it ignores the 2/3 supermajority required to raise taxes of any sort, recently strenghtened in the last election to include fees as well. And the Contract Clause in the US Constitution prohibits a state from legislative abrogating its own contractural arrangements, such as voiding its pension obligations.

The fundamental problem isn't a matter of policy choice; it's a matter of an irresistible force about to collide with an immovable object.

Municipal bankruptcy ("Chapter 9") is an option under the law for sub-state entities; but not for entire states. The financial troubles of California, and other high-debt states, should make for some interesting case law in the future.

jmh

Hey,

There's a brief comment above on efficiency. Individual and small businesses tend to be more efficient than government and large businesses. One substantial - and slightly stupid - reason for this is inefficient small businesses quickly go out of business, removing themselves from the statistics. A large business has the 'strength' to support an under-performing division - but the inclusion of that inefficient division causes a slight reduction in the overall efficiency of the whole organisation.

Jon

Agustin

Alon: you are right: "reactionary" is the wrong word. I should have said something like "more likely to vote emotionally" (as many people did for Obama; he just happened to be the better candidate as well).

I also agree that it drives people away from voting, which is a very bad thing.

...

I don't see a way out for California, given the shackles they've put on themselves (as EngineerScotty brings up). But I really hope they can figure it out.

Andrew

Repeal Prop 13. This will provide more money to cities and help them balance the budget, so they will become less dependent on the state for money.

TransitPlannerMunich

For gasoline you pay currently in Germany 2$US per liter, that should be about 7.6 $US per gallon. Seems to me that it would be a serious option for the U.S. - and would aslo stimulate some thinking if a senseless waste of gas and oil is really a good option.

But seriously: Politicians do like to talk a lot about leadership and responsibility. But exactly that is, what is missing. When it comes down to it, everyone is afraid to change anything, cause it could costs some votes next time. Instead they should do what is needed - regardless of polls - and if it was a good decision generations will be thankful for their brave move. And with that I do not mean the invasion of just another country (what seems to be an always easy to make decision) but real politics for people.

Agustin

@TransitPlannerMunich: the trouble is that one person's "leadership and responsibility" and "[doing] what is needed - regardless of polls" is someone else's "reckless hubris" and "not listening to the people".

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the firm

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