The War Over California - Ross Douthat Blog - NYTimes.com: "The argument about what went wrong with California is really an argument about the future of America. To the right, the Golden State’s ongoing crisis is a case study in liberal failure: A big-spending state that lived far beyond its means, and let its public-policy priorities be dictated by the appetites of liberal interest groups instead of the common good. To the left, it’s a case study in how a malign nexus of conservative intransigence and institutional sclerosis can thwart good governance. The problem in California isn’t the spending, liberals argue: It’s the supermajority requirements that prevent a liberal majority from raising the taxes necessary to pay for it."
Why do people think California is the only state going under? Illinois isn't far behind California. Neither are New Jersey, New York, Michigan, Ohio, and a few others. If you take them all together, I think some common factors are obvious:
1. Federal unfunded mandates in education, health, and other social services can be devastating to state and local governments that have to serve a large low-income population.
2. States with powerful public employee unions have been forced into assuming crippling pension and health care burdens.
3. The major sources of revenue relied upon by state and local governments are political dynamite. Property taxation has been a source of voter revolt for 30 years. Sales tax increases drive business elsewhere and in any event these revenues decline in recession. And just begin the conversation about increasing state income tax and watch the fireworks.
4. And the neat little privatization and special district gimmicks that state and local governments have been using--CIDs, TIFs, SIDS, SADS, BIDs, etc.--are proving to be short term wonders and long term problems.
The recession made things worse, but a whole lot of states were already in big, big structural trouble.