We're not like California–are we?

Stateline.org is an indispensable–and free–source of news and analysis on just about every aspect of state government. Last week, staff author Pamela M. Prah provided an excellent analysis on the state of California’s budget crisis and–more importantly for us–what other states can learn from it.

California has always been a trendsetter. What happens in California often pops up elsewhere. Which raises this question: Are the perpetual billion-dollar deficits that haunt California state government unique to the Golden State or the harbinger of what other states can expect?

Here’s a quick rundown of what’s gotten California in trouble–a budget deficit left wide open by voters’ rejection of several tax and budget measures yesterday– and our take on how Oklahoma compares:

  1. California depends too much on a small group–wealthy taxpayers–for its revenue. In California, a higher tax rate for very high income families and businesses and a capital gains tax are great when the economy is strong, but revenue from the rich plummets when the economy turns down. Oklahoma doesn’t have this problem. If anything, we go too far in the other direction. We depend too much on lower-income taxpayers since our income tax applies at very low income levels.
  2. California’s budget has been gridlocked lately due to divided government. Republican Governor Arnold Schwarzenneger and a legislature dominated by liberal democrats disagree fundamentally on what government should be doing. The result is nasty partisan battles, short-term fixes, and a growing gap between revenues and promised spending. Oklahoma has divided government, too, though the parties are reversed. This year’s budget agreement–which took weeks to negotiate, helped some interests while cutting many core services, and ignored long-term problems and opportunities–shows we have a little California in us, too.
  3. California is one of 16 states that requires a super-majority vote to increase taxes. So is Oklahoma, thanks to State Question 640. According to Prah, this requirement makes it harder to modernize the tax code to keep up with the changing economy and growing public expectations.
  4. California’s legislative term limits keep members from acquiring the budget knowledge needed to make the best long-term choices for the state. Oklahoma’s term limits are longer–12 years–but we run the same risk.
  5. California’s active citizen initiative process locks in money for some programs, leaving legislators to worry about the rest of state government. They must either raise fees and taxes or cut programs that may not be public favorites, but are still essential to the society and economy. Oklahoma has shown this same tendency. We have increased narrowly-based revenues like tobacco taxes and gambling and earmarked money for favored causes like health research and education. The upcoming State Question 744 will give us the opportunity to guarantee funding for education at great potential expense to all of our other public structures.
  6. California has an antiquated tax system that does not tax most services, which are the fastest growing part of the economy. So does Oklahoma. In both cases, this widens the gap between revenue collections and the cost of maintaining services like public safety, health and social services, and economic development.
  7. California rarely deposits money into its Rainy Day Fund and depletes it early in recessions. Oklahoma does the opposite. We filled our Fund up during the recent boom and now delay spending it during a serious economic downturn, preferring to cut essential services instead.

Are there lessons for us from California? Definitely. While we do better in some areas, we should be more careful about relying on short-term fixes, making policy through initiatives driven by special interests, and maybe rethink state question 640 and term limits.There’s another important lesson as well:

Scott Pattison, executive director of the National Association of State Budget Officers, said other states can learn from California’s mistakes by making sure they have flexibility in their financial management systems and “avoid walling things off” so that cash reserves can be tapped during a downturn.

Oklahoma has done a lot of walling off lately. We’ve created several special funds for education and carved out funding for scholarships and roads without regard to how the rest of our public services are affected. In the coming budget year and for several years after, Oklahomans will see many of these services decline. If we think to ask why, we’ll discover we did it to ourselves. So did California. Let’s hope we can learn from their mistakes.


Paul Shinn

Paul Shinn served as Budget and Tax Senior Policy Analyst with OK Policy from May 2019 until December 2021. Before joining OK Policy, Shinn held budget and finance positions for the Oklahoma House of Representatives, the Department of Human Services, the cities of Oklahoma City and Del City and several local governments in his native Oregon. He also taught political science and public administration at the University of Oklahoma, University of Central Oklahoma, and California State University Stanislaus. While with the Government Finance Officers Association, Paul worked on consulting and research projects for the U.S. Environmental Protection Agency, the U.S. Department of Transportation, and several state agencies and local governments. He also served as policy analyst for CAP Tulsa. He holds a Ph.D. in Political Science from University of Oklahoma and degrees from the University of Oregon and the University of Maryland College Park. He lives in Oklahoma City with his wife Carmelita.

One thought on “We're not like California–are we?

  1. OVERPOPULATION–HIGHER TAXES– E-VERIFY should be classed as the paramount issue when it comes to illegal immigration. The corporate elitists who are partnered with many corrupt politicians do not live in the real world. The business entities who lobby for cheap labor are isolated from the traffic chaos on our highways. They do not live in the pollution of our cities, amongst the gangs and criminals who have swarmed across the borders. Only mainly the middle class will be subjected to a new push for a second path to citizenship or better known as AMNESTY. This revised so-called immigration reform will sweep across America, without any voice allowed to repudiate it from—THE PEOPLE–who must pay for everything. Business pay NOTHING, nor the farmers and using slave labor at cheap rates without any benefits, that lowers American wages across the board. Here are the issues that voters must consider:

    1. Are Americans expected continually to pay for the hiring practices of businesses and farmers? 2. Why have the agricultural community not advanced in using mechanized machines to harvest crops, when they are well subsidized by government agencies? Sen. Feinstein is reintroducing an AGJOB bill that would allow at least 2 million foreign nation legalization. The issue here is 3. Why are our legislators drafting a 2nd AMNESTY, when the 1986 Simpson/Mazzoli bill was weakened on not even enforced and full of fraud? 4. If another AMNESTY is forced on Taxpayers are they expected to cover the costs of an almost impossible regimen of processing 20 million plus foreign nationals? 5. Who is going to pay for the–CHAIN MIGRATION–for the extended family members who will want to live with newly legalized migrant? Then Sen. Chuck Schumer (D-NY), stated “the borders are now safe enough to take a step forward. We can pass strong, fair, practical and effective immigration reform this year,” he said. Perhaps he should take a trip to the fence and reverse his initial statement. The border is definitely not secure. It’s a place of death at the hands of criminal drug cartels that have even infiltrated the American communities. 6. Isolated border sheriff’s voices of alarm, fell upon deaf ears for years in Washington, repeatedly stating of their limited manpower, could not stem the tide of drugs crossing our border.

    Our Washington elitists, who are adamant free traders and open border zealots, have not only ruined small Mexican farmers living standards, because of the inception of CAFTA, but now unable to scratch a living have poured across the border along with other impoverished peoples. 7. If millions illegal aliens are legalized, why should honest potential immigrants waiting patiently for years, bother with a employment visa and not just slip past an undermanned, poorly erected border fence? 8. Why are taxpayers forced by mandated law to support hired illegal labor, when businesses pay nothing for them being here. 9. Although not the illegal children’s fault, why should our own children suffer under the controversial Dream Act? This gives an academic education within state lower tuition fees, while American students must pay higher fees? 10. In conclusion, should the anti-sovereignty, pro-illegal immigrant, open border pass AMNESTY, how are they going to halt the next daunting waves of indigent people looking for a better life in the United States and placing in jeopardy poorly skilled American workers, who should not have to compete with alien labor?

    We now know the major Democratic culprits who under funded, weakened or otherwise killed strong immigration legislation such as E-Verify. Sen. Harry Reid, Speaker Pelosi, Sen. Burris, and others, including even Republican Party members involved in this travesty to cut-out the Real ID Act, 247(g) giving the power of arrest to the police. NUMBERSUSA is the site to reveal the poor grades of Senators and Congressman. They are the ones who approve the laws and added weight to your taxes. California–A Sanctuary State–is a great example of out-of-control illegal immigration, where taxpayers have been stung by higher taxes to pay for the benefits by an unfit Sacramento Liberal Democrat assembly. Next in line is New York that is staring into a chasm of potential bankruptcy. IF THIS IS NOT “TAXATION WITHOUT REPRESENTATION” what is?

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.