Editorial - Room with a View

Room with a View: Subsidizing poor people

The progressive overlords of California like to complain that the Federal Government under the current Administration specifically targets progressive states like California.

For instance, recent Federal tax legislation capped the amount of State and Local Taxes you can deduct on your Federal income tax return. This caused howls of protest in California.

In practice, the uncapped deduction subsidized the high cost of living in California — the other 49 states were paying to enable middle class Californians to afford to live more comfortably in California.

Now the Trump Administration is recommending a change to the calculation of the Federal poverty line. Again howls of protest, this time against the unfair impact of the change on low income Californians.

The Federal poverty line is a foundation for calculating all sorts of aid to families and individuals who qualify for the aid by not bringing in enough household income to rise above it. Any slowing of its inexorable climb would result in some lower income Californians slipping over the line as it moved beneath them.

In practice, an uncorrected Federal poverty line subsidizes… the high cost of living in California. The other 49 states are paying to enable poor people in California to become a permanent dependent class of the government.

Budgets! We have State budgets!

The budget just approved by the State of California is $209.1 billion. The State coffers are so flush with cash that our ruling class in Sacramento has to be creative to spend all the money without solving anything.

How about using some of that money gusher to fix transportation infrastructure? Then the looming gas tax increase could be cancelled. Nah.

How about diverting more of that money to fund education under ERAF1? Then the property tax theft from counties and cities, enacted under emergency conditions, could be given back. Nah.

The total operating budget for 2019 for the State of Arkansas is $34,048,232,253 — that’s $34 billion plus a rounding error to the California State Legislature.2

To put it another way, the budget for the State of Arkansas is about one-seventh that of the budget for the State of California. But Arkansas is helping to subsidize California’s high-tax lifestyle indirectly through federal aid.

What would happen if we compared the cost of living in sunny California to downhome Arkansas?

I pick on Bella Vista, Arkansas, to compare to Cypress, California because I am reading The News from Arkansas: Sense of Humor Required by Valerie Katz, who relocated from the Los Angeles area (where all her family lived) to Bella Vista when she retired and remarried.

According to Salary.com’s Cost of Living Calculator, the cost of living in Bella Vista is almost 45% lower than the cost of living in Cypress. Employers pay about 21% less than in Cypress.

See that big gap? That means while you’d likely take a hit in income, that lower income would stretch much, much farther.

Guaranteed government-subsidized housing is not one of the enumerated rights in the United States Constitution. Or the California State Constitution.

If you can’t afford to live in California, you should move somewhere else. And a lot of people are doing just that.

According to the California Legislative Analyst’s Office (LAO), net migration out of California from 1990 to 2006 was about 2½% of the State’s population — and that was before the Great Recession. Where did they go? According to the LAO, “top destinations for those leaving California were Texas, Arizona, Nevada, and Oregon.”

According to a report published in May 2018 by Next 10:

  • Migration and income trends vary by region [within the State of California].
  • The main driver for net out-migration appears to be high housing costs, since migration rates are highest for those at lower-wage levels.
  • Migration trends suggest that the middle class is also being priced out of the state.
  • International migrants who move to California tend to be more educated and have higher household incomes compared to domestic migrants.

How is Valerie Katz doing after relocating to Bella Vista, Arkansas? The book ends with this News from 2017:

My magnolia tree and I have grown, and our roots seem to be well established. This is home.

Thanks for traveling with me.

Love, Valerie.

Personal history

Early in the 20th Century, my grandfather lost his job as an automobile painter in the Midwest and could find nothing locally that paid enough to support his family. That family, a wife and three children, depended on him. To make a long story short, he found a job in California that enabled his wife to follow him with their children.

At the border, in order to be allowed to enter the State of California, my grandmother had to show a letter from her husband’s new employer attesting his employment.

Their great-grandchildren, all college graduates, are looking to move out-of-state.

For anyone making less than $100,000 annually, California is not a golden place to live. Subsidized housing, rent control, and a higher minimum wage imposed from above by a State Legislature dominated by Democrats will not improve conditions.

  1. ERAF stands for Educational Revenue Augmentation Fund, enacted in 1996 as a way to pay for public education without further exploding the State’s General Fund. See Basics of Municipal Revenue (pdf). As a way to steal revenue from local entities, it worked so well that in 2004 voters approved a State Constitutional Amendment forbidding the State from further theft from counties, special districts, and cities. Unfortunately, the State Legislature currently has a Democratic supermajority that allows it to override conditions that were meant to force bipartisan support for tax increases.
  2. I was charmed to discover that the State of Arkansas funds individual fiscal years from a biennial budget. Further, they have a deficit prohibition law:

    The Office of Budget is responsible for the Administration of the deficit prohibition law through implementation of the Annual Operations Plans for State Agencies, preparation of the State’s Biennial Budget and providing technical and fiscal expertise to the various branches and agencies of government.


  1. I always enjoy your Editorials.

    1. Author

      Thank you!

      Shelley Henderson
      editor, Orange County Breeze

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