Proposal 5, and why you should vote against it

by: Eric B.

Sun Oct 28, 2012 at 12:08:19 PM EDT

Now that we've all agreed that Proposal 1 provides a harsh but necessary tool for the state to prevent municipal and school district bankruptcies, and since we all agree that Proposal 6 enshrines a monopoly into the state Constitution under the lying guise of "letting the people" decide, let's address the stupidest -- yet perhaps most likely to pass -- ballot question of this year: Proposal 5.

I know people who are undecided on the ballot proposals. I tell them that if they vote against all of them, I wouldn't object. Why? Well, I think people ought to learn about the ballot proposals and vote on them as individual questions -- an old-fashioned notion I have about casting informed ballots -- but I recognize that lots and lots of people won't do that, and defeating Proposal 5 is so important that defeating it is more important than seeing the ones I like pass and the other ones I dislike fail (although voting no on every question would certainly help that). 

The key reason is not because it would prevent tax hikes, but because it would for intents and purposes etch in stone a revenue system from 1976. I still think the state needs to extend the sales tax to services. I say that because services are a growing piece of the economy and because it is not a vital good like food. A few years ago, when the Legislature came up with its first and despised service tax, people made fun of it because it taxed baby shoe bronzing.  Know what? I don't think taxing baby shoe bronzing is such a bad thing. If you can afford to bronze your baby shoes, if you can afford to even think of bronzing your baby shoes, you can afford to pay a tax on it. I say that as someone who had to pay for a child's infancy.

Proposal 5 would make that next to impossible. Yes, "The People" could vote to do it. There's probably a reason why the backers of Proposal 5 put that in there, which is that it's probably nearly as likely as getting two-thirds of the Legislature to sign off on it. Put it this way, polls show that the state's citizenry favors amending the constitution for a progressive income tax, and no one's even seriously discussing putting that on the ballot.

It would also make it next to impossible to rework how we fix our roads in this state. You couldn't repeal a tax and replace it with a revenue neutral fix without going through the mechanisms laid in place by Proposal 5, which as we know are next to impossible. Like a functioning road system? You shouldn't like Proposal 5.

Some of you have noted that declining revenues from the state and property values have exacerbated local budget problems, which is true (still doesn't explain why some cities fail, and others -- like my own Mt. Pleasant -- have managed both without approaching a fiscal cliff). Someone in comments down below suggested Chapter 9 as an alternative. There's a real, living laboratory to see how that's turning out ... in California, which is a fine laboratory to also see how a Legislature so ham-strung from doing its job turns out (this is what makes this different than Proposal 3 ... the Legislature's primary job is to create a state budget, and revenue is part of that). Right now, credit agencies are planning to take a wholesale look at municipal finances in California, and could issue a sweeping downgrade from the rising number of fiscal emergencies. Part of that is undeniably an inability of the Legislature to respond promptly to the needs of cities. If benevolent overlord Rick Michigan's fine, excellent corporate income tax fails to make good when things again get really bad, it will be next to impossible to fix things.

Lots of people think that we ought to vote no on 5 because Matty Maroun is backing it. It's a good reason to think it through, but in the end if it was good policy it would be worth pursuing. It's not. It's terrible policy, perhaps the worst policy question on the ballot since term limits. 

Vote No on Proposal 5.