Another national list, another nearly rock-bottom ranking for California. It’s become too predictable.
When WalletHub, a prolific producer of lists, says that California is 48th among the states on “taxpayer return on investment” (forget for the moment that taxes are not investments but funds to operate government, and a drain on economic activity and true investments). The financial website tries to answer “the question of whether people in high-tax states receive superior government services.” According to WalletHub, Californians are being shortchanged.
The state is 45th in “total taxes paid per capita,” meaning that only five states have heavier tax burdens. For that kind of money, California residents should be enjoying terrific government services. Yet the state ranks 33rd. It’s a poor tradeoff.
WalletHub’s own survey found that “60% of U.S. adults feel they pay too much in taxes” while “88% don’t think that the government uses tax revenue wisely.” The results weren’t broken down by state, but given California’s stiff levies and its relatively poor delivery of services, no one should be surprised if both of those figures here were higher.
Scholar, farmer, classicist, military historian, and columnist Victor Davis Hanson has labeled California “America’s First Third-World State.” Like Third World nations, it “suffers from high taxes and poor social services.” The state’s “Department of Motor Vehicles is perhaps the worst public-service entity in the United States,” he says. “To enter any branch office is to venture into a Dante’s Inferno of huge lines, chaos, unkept rest rooms, and rude and often incompetent unionized employees.”
At least there is some “service” taking place at the DMV. In various locales, services are being sharply cut. According to a 2017 Stanford study, public employee “pension costs have crowded out and will likely to continue to crowd out resources needed for public assistance, welfare, recreation and libraries, health, public works, other social services, and in some cases, public safety.”
As we reported in the not-too-distant past:
Oroville had to cut its workforce by one-third just a few years ago. Santa Barbara County let almost 70 social service workers go in 2017 because of $700 million in unfunded pension liabilities. Layoffs due to the pension crowd out have also hit Laguna Hills, Monterey County, Tuolumne County, Kern County, and Riverside County, where all but one of the 32 employees who lost their jobs last year was a non-union worker.
More recently, Transparent California Executive Director Robert Fellner said “rising pension costs will force working class Californians to pay higher taxes, while receiving fewer public services.” The League of California Cities has also warned that “given that police and fire services comprise a large percentage of city general fund budgets, public safety, including response time, will likely be impacted.” Earlier this year, the Petaluma Argus-Courier reported that the city, which has “looked under every rock” for a solution to its pension crisis, has been left with the reality that “current retiree benefits will continue to eat into the city’s budget, leaving less money for street maintenance, public safety and other city functions.”
Lost services aren’t the only downside for taxpayers. Too often, they’re hit with higher taxes to pay for the freewheeling contracts politicians have agreed to with public employee unions over the decades.
“More than 100 local governments in California asked voters for tax hikes on Election Day, double the 56 the Bond Buyer said it recorded in November 2016,” PRI’s Rowena Itchon wrote in the fall of 2018.
Naturally, she added, “many local elected leaders depicted the additional taxes as necessary to pay for public safety and other services” rather than try to convince voters to “fund the pensions of government workers that are likely more generous than their own.”
Knowing better times are ahead can make difficult experiences easier to endure. But there’s no relief for taxpayers from the public employee pension crisis in the foreseeable future. The Sacramento Bee reported last year that “median pension costs for local governments grew nearly six times as much in California as the rest of the country over a decade, according to new data compiled by a UC Berkeley professor.”
This is California, where the taxpayers don’t get what they’re paying dearly for.
Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.
