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California Voters: Please Tax Us

Boeing's new 787 Dreamliner passenger jet gets a visit from California Governor Jerry Brown in Long Beach, Calif.
Boeing's new 787 Dreamliner passenger jet gets a visit from California Governor Jerry Brown in Long Beach, Calif.Photograph by David McNew/Getty Images

Congress, five million Californians may have a message for you: Don’t be afraid of raising taxes to rescue the budget. In Tuesday’s election, 54 percent of California voters approved Proposition 30, a $6 billion tax hike that staves off dire spending cuts. If the measure had failed, trigger reductions would have forced schools and community colleges to trim their budgets by $5.3 billion and made the state’s colleges and universities cut $500 million. Governor Jerry Brown staked his legacy on Prop. 30, betting that when consequences are clear, people are willing to pay.

Because of the automatic cuts that would have occurred, “this is the California equivalent of sequestration at the national level,” John Ellwood, a state budget expert at University of California, Berkeley, told me last month. Sequestration—aka the fiscal cliff—will trigger $600 billion in U.S. tax hikes and spending cuts in 2013 if Congress can’t reach a debt deal. Republicans have been rejecting any tax increases, while some Democrats oppose reforming entitlements. California’s case can provide an example that after lots of spending cuts, which California has embraced over the past few years, voters may be willing to fork over more money to keep government services running. “You can’t simply get more efficient” and trim spending more, Ellwood said; at some point, additional taxes must be on the table.