Poll -- Californians down over finances again
How to finance California's water projects
Is even the richest US state decomposing into a two-class society? Not if they get behind geonomic tax reform. We trim, blend, and append two 2010 from (1) San Francisco’s Gate (home of The Chronicle), Jan 19 on attitudes sent in by Frank Walker and (2) Let California Prosper, Jan 1, on water works by Frank Walker.
by Frank Walker
Poll: Californians down over finances again
Excerpting from San Francisco’s Gate:
For an unprecedented third straight year, a majority of Californians are worse off financially than they were the previous year, according to a Field Poll released today.
Since 1961, there had been no consecutive years in which a majority of Californians said their finances had worsened until last year. The trend continued this year, according to the poll.
"This is a new era. California is usually bigger and better," said Mark DiCamillo, the Field Poll director. He attributed the trend to the myriad financial problems people are facing that extend beyond unemployment.
"It's not just affecting a certain population, but is affecting a broad base of people," he said, noting financial losses people have experienced in the values of their homes and their investment portfolios.
That broad impact is reflected in Californians' perceptions about the state's economy in general, as 95 percent of those surveyed said the economy is in "bad times." That is the second largest percentage of people to say that since 1978, and the only higher percentage was last year.
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JJS: Clearly, Californians, like people everywhere, are in need of economic succor. What would help in general would also help in particular, addressing infrastructure.
How to finance California’s water projects
Gov. Arnold Schwarzenegger and the Legislature recently placed an $11.1 billion bond measure on next November’s ballot to finance water-related projects. Another initiative, the Tax Reform Initiative, provides a common-sense method of paying off these bonds.
Los Angeles Times correspondent George Skelton quotes California Treasurer Bill Lockyear and writes as follows:
“Farmers essentially want subsidized water -- subsidized by the rest of the state,” says Lockyear, a longtime legislator from the east side of San Francisco Bay before being elected attorney general and then treasurer. “Guess I don’t blame them for asking, but shouldn’t users pay, then add it to the cost of their products?”
The agriculture lobby argues that much of the bond money would be spent for “public benefits,” such as Delta environmental restoration. Even so, under the bond provisions, taxpayers could wind up paying for up to half the cost of building new dams that would store water mostly for farmers.
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Construction of these water projects will raise land values -- both its rental value and its selling price -- tremendously in the areas benefiting from the new water supply. Collection of 75% of this increase in rental value will recoup much, perhaps all, of the construction cost involved. This is the revenue that should be used to pay off the bonds sold to raise the funds necessary to build the project.
The water itself could be sold in auction-style bidding to water districts which, in turn, will charge their customers for the water. The proceeds of the sale of the water should more than pay for the operating costs of the project and will likely also cover much of the interest on the bonds. Even when landowners must pay for water they receive, an assured supply of water makes possible many uses of the land which are not possible in the absence of a reliable water supply, thereby greatly increasing both its productivity and its value.
If much of the increase in land value resulting from the construction of the water projects financed by the people of California is not collected by means of a tax on land values, the owners of the land benefiting from the new water supply will be enriched at public expense. The 75% tax on the rental value of land proposed by Prosper California will collect the largest portion of the land value created by all public services (law enforcement & public safety, education, parks, libraries) and publicly-financed infrastructure (water projects, roads, highways & bridges, ports, airports, etc.). Without these publicly financed services and infrastructure projects, California’s land would have little value instead of its enormous current value.
JJS: “Nobel” laureate William Vickrey noted that there’s never been a desirable public works project that could not pay for itself from the resultant rise in nearby site values. Problem is, most governments don’t bother to recover much if any of the increase -- except for one over a century ago.
Then California did do something quite similar. The legislature passed the 1887 Wright Act, which allowed communities to create by popular vote irrigation districts to build dams and canals and pay for them by taxing the resultant rise in land value. Once irrigated, land was too valuable to use for grazing, and the tax made it too costly for hoarding. So cattlemen sold off fields to farmers and at prices the farmers could afford. In ten years, the Central Valley was transformed into over 7,000 independent farms. Over the next few decades, those tree-less, semi-arid plains became the "bread basket of America", one of the most productive areas on the planet. (magazine of the Historical Society of California)
However, as usually happens, once farmland got too valuable, it became an object of speculation and insider political forces ended what had worked. Why didn’t ordinary folk defend the tax? Perhaps in part because the revenue never entered their pockets directly.
Jeffery J. Smith runs the Forum on Geonomics.
A Major Newspaper Promotes a Major Reform
The data point to a recovery leaving some behind
Could other taxes on use of nature get passed this way?
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