Generation war is driving California's budget woes

 

By Mike Males

San Francisco Chronicle, 3 March 2003

 

Contrary to short-term analysts, California's $30 billion budget shortfall is not due to recent government overspending exceeding falling tax revenues. The budget crisis results from decades of tax-cutting by my older, wealthier baby-boom generation, which benefited handsomely when we were growing up from the same tax-subsidized services we now refuse to pay for.

 

Long-term California Department of Finance figures detail older Californians' relentless tax-cutting even as our wealth ballooned. In 1970, Californians paid 14% of their incomes in state and local taxes; today, it's just 12%. Meanwhile, our real household incomes (adjusted for inflation) rose from $39,400 in 1969 to $48,500 today.

 

Californians' enrichment over the last three decades was very lopsided. Bureau of the Census reports show real incomes of Californians over age 45 surged 40%, while incomes of residents under age 25 dropped 11%. Older Californians owe our rising opulence in large measure to superior state education and other tax-supported services our poorer parents and grandparents generously funded for us. Until 1970, California primary and secondary schools ranked in the top 10 nationally in per-pupil spending, matching our wealth.

 

Students back then enjoyed free junior colleges and annual university tuition ranging from $150 to $300 (1968 average, in constant 2002 dollars), California Postsecondary Education Commission figures show. We were privileged to attend less crowded, better staffed schools and to graduate from low-tuition universities largely debt-free, ready to buy homes, launch businesses, get rich.

 

Today's legislators who propose cutting education funding exemplify how generous school and university funding helped young people in their day. A few examples: Assembly Republican Leader Dave Cox (UC San Diego, 1961, $206 in annual tuition); Assistant Republican Leader Keith Richman (UC Davis, 1972, $664); ranking budget leader John Campbell (UCLA); and Senate Republican Leader James Brulte (Cal Poly Pomona).

 

Yet, Republican lawmakers, led by Democratic Gov. Gray Davis, propose boosting already high tuition paid by today's students to triple what older generations paid. When it came our turn to foot the bill for tomorrow's students, elders dealt ourselves huge tax relief instead. Census and U.S. Department of Education figures show we pay less than half as much of our incomes to support higher education as our counterparts of 1965.

 

As a result, California children today suffer the nation's most crowded classrooms in schools now funded in the bottom third nationally (and due to fall further). Two-thirds of college and university students carry education debts averaging $17,000 each. Four in 10 students, including 55% of blacks and 58% of Latinos -- bear "unmanageable'' education debt, the USDOE reports. Instead of buying homes and establishing businesses while in their 20s, they'll struggle to pay off loans.

 

How do we rectify this intergenerational rip-off? The math is easy. Restoring California primary and secondary schools' funding to its former high ranking would require additional expenditures of $1,900 for each of 6 million pupils -- $11.5 billion more than now budgeted, DOF comparisons show. Likewise, returning higher education funding to historical parity would require annual tuition cuts of $1,800 per university student, $1,300 per state college student and $500 per junior and community college student, requiring $1 billion more in state funding.

 

Where would this $12.5 billion in "intergenerational education equity'' funding come from? Well, today's elders incessantly extol our superior "moral values'' and "civic virtues'' compared to supposedly selfish modern kids. Let graying Californians match our pieties to our pocketbooks.

 

I propose an "intergenerational equity tax'' to erase the shortfall. Incorporating progressive schedules, it would impose an average 3% tax increase on the incomes of Californians age 45 and older, earmarked to restore education funding to levels sustained for a century before 1970. We can afford it. The total income of Californians 45 and older ($413 billion in 1999) equals the entire gross domestic product of Australia.

 

If appeals to morality, fairness and rescuing a state that enriched them don't sell older folks on an intergenerational equity tax, perhaps self-interest will. Younger workers and their employers pay a whopping 15% of their modest incomes and payrolls to help fund Social Security and Medicare -- welfare programs directly benefiting senior citizens and

middle-agers relieved of having to support aging parents.

 

If younger generations continue suffering stagnating or declining incomes, they'll assuredly balk at paying high taxes for our senior welfare. Conversely, the more we codgers invest in education and jobs for today's young, the better they'll fund our beachside retirement condos tomorrow. The old may start generation wars, but the young finish them.

 

Mike Males, age 52, researcher for the Center on Juvenile and Criminal Justice in San Francisco, teaches sociology at the University of California at Santa Cruz.