Moving “California Forward” to Higher Taxes?

By [post_author] –

A group dedicated to reforming California government tested its taxation and revenue proposals before a supposedly “friendly audience” at a facilitated “Town Hall” consensus-building meeting in Santa Cruz in mid-March, 2009. They encountered surprising resistance, even from a room filled primarily with self-identified “liberals,” as it dawned on attendees that the proposals would at least grease the skids for higher taxes. Time will tell whether that resistance is echoed or amplified in subsequent meetings held in the Fresno area and Los Angeles.

Posted on Freedom Advocates on April 21st, 2009

Near the end of the “California Forward: Paying Forward, Community Dialogue on Tax Reform” town-hall style meeting on Thursday night, March 19th, 2009, an ominous rumbling started to build among the attendees in the well-packed room. This seemed to inspire co-host Fred Keeley to say, in several different ways and in no uncertain terms, that nobody among the organizers and presenters was talking about “raising taxes.” But Keeley’s multiple assertions didn’t seem to satisfy or calm the crowd, which continued rumbling until another presenter hurriedly launched into a new question for everyone to consider. Keeley, after all, appeared as the current Santa Cruz county Treasurer & Tax Collector, as well as a termed-out former State assemblyman and County Supervisor from the area, during whose tenure taxes inexorably rose (whether or not due to his own efforts). The evening’s topic — under discussion for almost three hours at this particular point — had been how to “fix” California’s allegedly “antiquated” and inadequate system of taxation, so that State and local governments could have more reliable sources of funding to pay for, as Mr. Keeley put it, “our ambition.” As a practical matter, Keeley was talking about the ambition of the State’s ruling class of politicians, which had already pushed California’s budget into the stratosphere. Could anyone in the room doubt that the goal was not only to create a reliable revenue stream, but also to allow for increasing the flow of that stream to a raging torrent?

Context for the Evening’s Proceedings

Beginning the meeting with a word of welcome, Keeley said he was pleased to draw such a large crowd – well over 100, not counting those working the event in various capacities – on a midweek evening. He didn’t acknowledge that any in the room, who had arrived closer to the event’s official starting time, also had to trudge up the very steep hill from Cabrillo College’s Perimeter Road to the Koppes Community Room in the college’s Horticultural Center. In view of the several problems inherent in simply getting there, the big turnout seemed an impressive demonstration that people view taxation – the means and basis for collecting it, as well as the amount collected – as a hot-button topic.

Upon entry to the venue, attendees received a folder of background material. One of the pamphlets declared that the March 19th event was the first of three planned “broader outreach” meetings to be held by California Forward throughout the State, in connection with their “Paying Forward” project. The other two were scheduled for the Fresno area on April 28th, and Los Angeles on May 13th. Four other “regional meetings with area leaders” had already been held in prior weeks, presumably to elicit support for and comment on the material to be presented at the “public” gatherings. Even the “Town Hall” meeting in Santa Cruz on the 19th was probably a form of rehearsal for the Fresno and Los Angeles events. An article run by the Santa Cruz Metro on the day before the meeting quoted Keeley as saying, “I want to hear what my homies have to say,” which suggests that he expected to test his material before a friendly audience at home, before taking it on the road.

According to its charter document at the California Forward website, the “Paying Forward” (Responsible Revenue Reform) Project seeks to answer the following questions:

•    What are we going to tax?
•    How do we make those choices?
•    Where will the money go?
•    Who decides how to spend it?

These seem to be reasonable questions to ask. On its “About Us” webpage, California Forward declares that the “…mission of California Forward is to transform our state government through citizen-driven solutions,” so it would seem that the point of the organization is to determine how citizens would answer those questions. Unfortunately, from the material that they have published, and from some of the comments made by speakers at the Santa Cruz event, there also seems to be clear evidence of bias, suggesting perhaps that the goal of California Forward may not be so much to find citizen-generated answers and represent them in Sacramento, as to sell pre-determined answers to the citizenry. “Community Dialogue” events, such the one on March 19th, can serve as key vehicles in such a sales effort: They promote citizen investment in conclusions “drawn” from a participatory “dialogue,” which itself has been structured and managed to lead attendees in a direction deemed “forward” by the organization and its backers.

For instance, in their Vision and Commitment statement (pdf), California Forward takes for granted government’s importance to California’s past success and, in particular, assumes that the effects of Progressive-era politics have been benign – or at least responsive to the needs of California society.

For a century and a half, California has prospered as an epicenter of innovation – from the creativity of Hollywood to the ingenuity of aerospace to the inventiveness of Silicon Valley.

In many ways, California’s government has supported this ambition with physical infrastructure and investments in education. At times, the government itself has been reinvented – such as when the Progressive Movement revamped the political system to better respond to the broader public interest. [author’s italics]

Today California is still a home to innovation, but government’s contribution to that prosperity is waning. Education, transportation, and health and human service systems have largely missed out on the management and technology revolutions that have transformed other essential elements of modern life.

Californians see their government as out-of-date and out-of-touch – handcuffed by partisan gridlock and stuck in a fiscal quagmire. In turn, California’s leaders – in government, business and civic sectors – have become convinced that the very governance of the state must be retooled for necessary public programs to be revived.

Reading the above, one easily gets the sense that, whatever the State has done so far, and whatever it has cost, is not enough. So, whatever going “forward” might mean, it very likely includes higher tax revenues.

California Forward was created through the cooperation of four civic groups – California Common Cause, Center for Governmental Studies, New California Network and The Commonwealth Club of California’s Voices of Reform Project – at the behest of five major foundations – The California Endowment, The Evelyn and Walter Haas Jr. Fund, The William and Flora Hewlett Foundation, The James Irvine Foundation, and The David and Lucile Packard Foundation. The stated purpose of the organization on the “About Us” webpage is “to contribute to improving the quality of life for all Californians by creating more responsive, representative and cost-effective government.” It is hard to argue with such a high-sounding, seemingly reasonable goal, but of course, the reasonableness depends on what is meant by “more responsive” (how and to whom?), “representative” (token representation or an effective voice, and again, for whom?), and “cost-effective” (although big government, even “on the cheap,” can hardly be considered a bargain). Does California Forward seek citizen engagement and input to determine the type and parameters of government that California needs now, or does it already assume that this question is answered?  Certain paragraphs in the Vision and Commitment Statement seem to indicate the latter. For example [author’s italics],

We assert that for California to be a good political democracy it must be a good economic democracy. The governance system needs to enable Californians to be leaders in the knowledgebased global marketplace, which will require the underlying public safety, educational and economic development efforts to restore hope and progress in the most persistent pockets of despair and poverty.

This takes for granted a number of disputable things: First, that government investment in “infrastructure,” such as public safety and education, will help Californians be leaders in the “knowledgebased global marketplace.” Also, that government intervention in or management of the economy, through “development” programs, can actually be a net-positive force in “the most persistent pockets of despair and poverty.” And finally, that “economic democracy” – the meaning of which is assumed and not defined – is not only desirable, but attainable through government effort. California Forward goes on:

We affirm that tomorrow is more important than today. A sound governance system must ensure that public priorities and policy decisions are predicated on the long-term interest of all Californians. If we want essential programs to get better over time, major policy and fiscal decisions need to be steered toward outcomes and guided by evidence, rather than dominated by self interest and political expediency. From bridges to broadband, we need to pursue the smartest ways to develop infrastructure that secure our economic position.

Again, the deep assumption appears to be that government development of infrastructure is an effective – preferred? – way to “secure our economic position.” But even if so, which programs are “essential” and who makes that decision? The California Forward “Overview” handout for the March 19th meeting indicates that the class of “essential” programs has been pre-determined to include those that target certain goals for the State, in particular:

•    Compete effectively in the global economy;
•    Value the increasing diversity of its people;
•    Support children as its future;
•    Promote fundamental improvements in the health status of all Californians;
•    Preserve and protect its natural resources; and,
•    Advance social and economic equity.

To politicians-as-usual, that shopping list implies a great deal of government intervention. The Vision and Commitment Statement adds:

To achieve this vision, Californians need to rethink how we select and guide our leaders, how they make key fiscal and policy decisions, and how government agencies organize cooperative efforts around shared goals. This vision will require more Californians to be more meaningfully involved, as consumers of public services, as taxpayers, as voters, as neighbors, as citizens.

It is hard to argue with the last sentence: More people do need to be meaningfully involved with politics and good government. But on the other hand, the usual method for agencies and localities to “organize cooperative efforts around shared goals” is to create “regional authorities,” the members of which are not directly elected by the populations for whom they make binding decisions. Such indirect relationships between the people and governing agencies make it harder for citizens to exert constituent influence. Indeed, the creation of inter-agency, inter-jurisdictional regional government entities (such as LAFCO and AMBAG) has been seen by more than one observer as central to the “Sovietization” of our government (regionalism) – the situation in which the illusion that political authority comes from the grass-roots is maintained, but decisions are actually made “at the top,” and sent down through the regional agencies formed to promote inter-governmental “cooperation,” ultimately to be implemented by local elected governments that have little or no authority to reject the edicts.

Getting Started

The format chosen for the “Community Dialogue” events was a facilitated group consensus meeting, also called a “visioning” meeting by one of the introductory speakers. Most attendees sat in groups around tables, where they began the evening by introducing themselves to their tablemates, while enjoying a buffet plate of typical, but tasty conference fare. Once the tables were filled, new arrivals had to settle for overflow seating in the rows of chairs that had been set up in an alcove area at the back of the room. Every participant found a handheld wireless keypad on his or her chair, which allowed for poll-taking in real time. To check the keypads for proper functionality, organizers asked the crowd to use them to supply demographic information, including such tidbits as sex, race/ethnicity, age, relative leanings toward liberalism or conservatism, and political party. Modern technology instantaneously reported that, to nobody’s surprise, the room was filled with older white liberals, mostly affiliated with the Democrats, although there were a fair amount of conservatives and/or Republicans, as well as a smattering of Greens and Libertarians. The male-female ratio was about 50-50. The wireless polling and automatic results display mechanism would be used throughout the meeting, to present the group consensus (or lack of same) on a number of questions that were flashed on a large screen at the front of the room.

Participants were to express their views not only by real-time, high-tech polling, but also by indicating in a workbook their relative levels of agreement or affinity between pairs of choices. Several sessions of “facilitated group discussion” were included in the schedule of activities, to help groups sort out their thoughts on major topics. Meeting leaders announced that local people had volunteered as facilitators; attendees could recognize any such people at their tables by the green ribbons that were hanging from their name-tags.

Keeley and his co-host, Assembly member Bill Monning, opened the evening with relatively brief introductory speeches. Keeley likened California’s current situation to a trip down the road that is interrupted by a car problem that requires service: When “Bob the mechanic” arrives, it turns out that the otherwise likable and competent guy has nothing in his bag but parts and tools for repairing old Model T’s. However helpful he wants to be, he can’t fix the car because he lacks the proper equipment. The purpose of the evening’s work, Keeley explained, was to consider various new tools that the people could give our legislators, in order to prevent or repair the breakdown of the metaphorical car that was our State’s government. Keeley introduced Monning as the poor new guy who (after term-limits swept away California’s experienced hands in the legislature) was bravely stepping-up to the challenge of wrangling our State’s budgetary mess. Monning introduced himself as “Bob the mechanic,” the fellow who wants to help, but who has a bag full of obsolete, inadequate tools.

The two co-hosts then handed off to California Forward’s Jim Mayer and Susan Clark, who conducted the majority of the meeting’s business. According to biographical information at the California Forward website, Mayer is the current and founding executive director of the organization, formerly executive director of the Little Hoover Commission, as well as a former journalist for the Sacramento Bee and other publications. Perhaps it was his time in the news business, along with his careful grooming, which lent him the serious but affable air of a major-market local news anchorman. Clark was described by the Santa Cruz Metro as being a “director” of California Forward; if that is true, the appointment must be recent, as she does not appear on either the “Leadership Council” roster or the “Staff” list at the California Forward website. The website for her own consulting firm, Dynamic Competence, LLC, states that, soon after completing a Doctorate degree in Biophysics, Ms. Clark concentrated on a subject that fascinated her more: “researching and identifying the causes of the many problems that arise when scientists, government agencies, and the general public are unable to effectively communicate and interact with each other.” Dynamic Competence teaches such methods as “Strategic Facilitation” and “Dynamic Meeting Planning” to corporate and governmental clients.

The Meat of the Meeting

Attendees spent most of the rest of the time considering and answering questions that were flashed on the big screen, or posed in the workbook. Occasionally, people at floor level were given opportunities to speak, as when one fellow rose to denounce the proceedings as a “Delphi method” sham and the organizers as “globalists” who were dedicated to undermining American sovereignty and instituting a new world order.

Mayer and Clark began with a series of questions intended to help congeal a consensus “Vision” for California’s future, which would inform subsequent deliberation. They asked attendees to rate various items, on a scale of 1 to 10, in ascending importance:

•    Effective and equitable education systems
•    Strong economies and high quality jobs
•    Good health outcomes
•    Clean energy and environment
•    Safe communities
•    Ongoing investment in infrastructure
•    More public involvement in public decisions
•    More efficient public services
•    Region-level planning and governmental cooperation
•    Efficient transportation and housing

Right away, some participants began to see problems with the questions, and to comment about them in low voices and whispers to each other. For instance, why were “effective” education systems combined with “equitable” ones? (More to the point, wasn’t the push for “equity” often enough at odds with the push for “effectiveness?”) Why was “region-level planning” combined with “governmental cooperation?” Or “efficient transportation” with “housing?” (A woman exclaimed to the person seated next to her, “Well, that’s an exclusionary fallacy, isn’t it?”) It seemed to some that these items could easily be considered separately and probably should be separated. Many people seemed to want more cooperation between the various governments and government agencies, for example, but some wondered aloud why this couldn’t occur naturally, on a case-by-case basis, rather than as the fruit of some long-term regional plan. Would achieving such cooperation require the establishment of yet another cross-jurisdictional, bafflingly unaccountable “authority?” The linking of “transportation” and “housing” seemed to provide convenient entrée to the larger topic of land use policy, perhaps by way of the idea of high-density “transportation villages,” even though some in the room wanted to promote transportation decisions that would allow anyone to live anywhere he or she pleased. “Strong economies” might offer “high quality jobs,” but not necessarily so; they could also be diverse economies, in which many jobs would always be available, but only a few of “high quality.” Some attendees reported difficulty in deciding how to rate these items, phrased as they were. Conflation of concerns didn’t just engender confusion – often enough, it put a “poison pill” into options that many would otherwise have supported without reservation.

The several objections from the floor prompted the organizers to separate some of the conflated items into separate questions, thus demonstrating the importance of speaking up with honest questions or objections in situations like these. Better that than casting a “vote” – even if only to express preference – on something that is ambiguous, contradictory, or just plain unintelligible. The organizers appeared to be responsive to participant complaints on the spot, but time will tell whether this experience prompted them to modify their procedures to allow for more separation of concerns in the forthcoming Fresno and Los Angeles “Community Dialogues.”

Group Discussion Follies

Whenever asked to consider a major topic – The Future Vision for California, or Statewide Tax Policy Alternatives, for example – attendees would also get five or ten minutes to talk it over with tablemates.  Anticipating some form of opinion shaping to be employed by facilitators in this “consensus meeting,” the author read up on the Delphi technique and other relevant topics before attending and was surprised to find that green-ribboned facilitators did not participate much in his group’s discussions (though at least one sat nearby and was frequently seen to be listening in).  Perhaps those facilitators who did overhear those discussions decided that no intervention was necessary, as they never probed deeply into the topics at hand. In the case of one group, for example, one participant monopolized a discussion with a lengthy personal anecdote, which didn’t leave much opportunity to consider the tax policy question that was before the group at the time. The group’s other discussion sessions were similarly derailed after only lightly touching on the questions at issue.

Tax Policy

In the last hour of the meeting, Fred Keeley (who was wearing dual hats, as a leader of California Forward and a member of the California Commission on the 21st Century Economy, to whom the Community Dialogue results would ultimately be submitted) engaged in a longish examination of California tax policy. He seemed particularly interested in selling several ideas:

•    We need and can get more tax revenues by exempting more property from Proposition 13 protection;
•    We need and can get more tax revenues by not exempting more goods – and a broad array of services! –
from sales taxes;
•    We need and can get more tax revenues, and do our part to save the planet and meet environmental goals
established by previous legislation, by instituting a carbon tax;
•    The Legislature’s 2/3 vote requirement for passing a budget holds the State hostage to a stubborn minority,
preventing “our” ambitious vision for California’s future from being realized, and causing a lot of other
mischief besides.

In support of these and other positions, our information packages contained a handout, “KEY FACTS About Tax Reform in California.” Working from his own notes and knowledge, Keeley pretty much covered the same material. One of the assertions inside, which Keeley seemed to accept uncritically, was especially noteworthy: When all sources of tax revenue and their rates are considered, California has an “overall” tax rate that, when compared to those of other states, is “pretty close to the middle.” This astounding, counter-intuitive conclusion came after admissions that California’s income tax was more progressive than in other states (i.e., that high-earners are taxed more heavily than in other income tax states – in fact, after this year’s budget deal, California has the highest marginal income tax rate in the country), that its sales tax rate was high (in fact, after the budget deal, also the highest in the nation, though applied to fewer transactions than in many other States); and that its Corporate Tax rate is one of the highest in the U.S. These high taxes were supposedly balanced by the fact that the Property Tax rate is one of the country’s lowest. On the next page, however, the handout states that California’s tax revenue situation is remarkably unstable because the state relies heavily on income taxes. In fact, the handout’s pie chart that illustrates sources of revenue shows that income taxes account for very close to 1/3 of the State’s total take, and Proposition 13-limited property taxes to only about 28%. Many more Californians pay income taxes and sales taxes than pay property taxes. Thus, it makes sense that economic conditions affecting the former revenue streams have an exaggerated effect on the State’s overall revenue situation, and also that the rates of income and sales taxes figure more prominently in Californians’ overall tax burden. In 2008, the Tax Foundation ranked California #6 in terms of State + local tax burden against State GDP – not even close to the “middle.” And, even though the nominal property tax rate is low when compared to property value, the take is high because the imputed property value is high, and so the effective rate is over 3% when compared with average property-taxpayer’s income.

It is hard to escape the feeling that the “Facts” reported by California Forward are intended to refute what every resident knows: California is among the highest-tax States in the Union. But that is precisely what supporters of “Tax Reform” must do, so as to justify the collection of even more revenue. If that hadn’t dawned on the citizen participants after an evening of talking about all the great things “we” might do with tax revenues, and the several obstacles “we” face to collecting additional revenue, then the specific proposals offered for consideration – weakening Proposition 13 protections, extending the Sales Tax to cover services as well as goods, and imposing a Carbon Tax – certainly got everyone’s attention, inciting the rumbling mentioned at the beginning of the article. Even in a room filled primarily with Santa Cruz liberals – Fred Keeley’s “homies” – the idea of making it easier to extract yet more revenue from the taxpayer, did not seem to sit well. But what would California Forward do in the face of that apparent resistance?

Two weeks later, California Forward’s FINAL REPORT from the March 19th meeting, provided an answer, surprisingly without characterizing the participant mood or statistical results of the meeting as indicating solid support for the tax reform proposals discussed that night. Indeed, the authors observed, “more time would be needed to see if broader common ground could have been discovered on the tax options.” But they certainly tried to spin the results toward the “glass half full” side – a spin that would have been more obvious, had the raw statistical data that was presented to meeting attendees been included in the report. For instance, participants reported seeing a wide variation in opinion on whether the Tax Policy items mentioned above were a good idea. That is to say, there were some apparent die-hards who were solidly for or against each proposal, but many respondents fell all along the line between the “strongly agree” and “strongly disagree” points of each graph. Looking only at the numbers, however, one could say – and California Forward did say – that majorities “indicated support” for all three proposals, although “…a significant minority opposed these options for various reasons.” One reason that the “minority” was significant was because it tended toward 50%, and another reason was that many in the “majority” indicated lukewarm or near-neutral positions. This is something that was very evident to participants on the scene, when “real-time” polling results were flashed on the screen, so similar spin attempts fell flat.

It will be interesting to see whether California Forward encounters even more opposition in Fresno and Los Angeles, or whether they will reformulate questions (or use better crowd control) in an effort to preserve or enhance the “majorities” who can then be said to “support” some momentous changes to tax policy. Certainly the “polling data” acquired at the “Town Hall” meetings will figure into the final presentation that California Forward will give to the California Commission on the 21st Century Economy, later this year. As long as California Forward cannot credibly characterize the data as indicating solid support for a sea change in taxation, taxpayers will enjoy a victory. Even better, of course, would be if the overall data indicated significant opposition, which is a distinct possibility, given the results from the Santa Cruz meeting.

If you are able to attend one of the meetings in Fresno or Southern California, do not hesitate to speak up. Among the most important things that were evident during the Santa Cruz “Town Hall” meeting, were that even in a room packed with self-described liberals, there was enough wisdom to be skeptical of sweeping tax changes, and that dissenting voices could make a big difference, even if all they did was inspire or contribute to a loud “hubhub” that expressed confusion and disapproval.

For a July 2009 commentary see Dan Walters Sacramento Bee Commentary “Ideology divides California Tax Panel” . Also see related article “CA Backward” 

Moving “California Forward” to Higher Taxes? by James Anderson Merritt


This article contains links to outside sources not controlled by Freedom Advocates and therefore are subject to change.

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