As per our post yesterday about California’s need for a TABOR, Professor Bainbridge backs us up on Tech Central Station:

Of course, this is precisely how California got into its current fiscal mess. Gray Davis and the Democrat majority in Sacramento assumed that the huge revenues generated by income taxes and capital gains taxes during the dot-com bubble had become a permanent part of the state's tax base and therefore made huge permanent structural increases in state expenditures. They were wrong. When the dot-com bubble burst and tax receipts nose-dived, the state went into a fiscal tail spin from which it has not yet fully recovered. Unfortunately, the tax-and-spenders will have additional wind in their sales from the strong showing made by public sector unions in the recent special election. The unions doubtless will put their political muscle behind new spending.

The Legislative Analyst's report makes clear that failing to use this breathing space to address California's long-term structural deficit would be very short sighted…

So the state faces a two-fold problem. First, there are four years of projected deficits that must be addressed unless the state is to plunge further into debt. Second, the state must meet the Legislative Analyst's projections of economic growth in order to assure that the state will in fact "just about" grow "its way out of its structural shortfalls."

Solving the latter problem also requires addressing serious structural shortcomings in the state's government and regulatory regime. According to the Tax Foundation, California's combined state and local tax burden remains above the national average. Also according to the Tax Foundation:

* California's tax system ranks 38th in being "business friendly"

* "California's taxes on small businesses higher than virtually every other state"

* "For taxpayers earning between $43,500 and $307,050 only Montana (which has no sales tax) has a higher [income tax] rate," which means a lot of middle class folks are paying very high taxes

* "Corporations looking to relocate, or even establish, a business in the West may shy away from California, as the state's 8.84% flat rate is the highest corporate tax rate in the West. Nationally, only 10 other states have a higher top corporate tax rate than California."

* "California's state and local sales tax rate ranges from 7.25% to 8.75%. Excluding local option sales taxes, California's statutory rate of 7.25% is the highest in the country. The sales tax affects not only consumers, but businesses as well."

Despite California's high taxes and high cost of living, which already make it difficult to attract and retain businesses, Rob "Meathead" Reiner has qualified a ballot initiative that would raise taxes on California's top income residents to pay for preschool programs. As the Tax Foundation notes, "most small businesses are either S Corporations or partnerships or sole proprietorships, they pay their business taxes at the rates for individuals." Accordingly, if passed, Meathead's ballot initiative will penalize small business, which is part of the engine of economic growth and technological development.

In sum, California has gotten a windfall that gives us a temporary breathing space. One can only hope that the Legislature and the Governor will seize this opportunity to address California's long-term structural problems in a way that promotes economic growth and encourages wealth creation. But I for one will not be holding my breath.

The only point the Professor neglects to mention is that a TABOR is the best, most targeted way to do this.

A constitutional amendment is the ideal way to rein in the legislators who spend taxpayer money like they’re shopping on Rodeo Drive; and ultimately, it would finally give California a chance to get out of the hole .

Hey, if Colorado can do it, where there are just as many granola-eating-Birkenstock-wearing-taxpayers, so can California.