Prop 13 and Politicians Ruined California

Paul Krugman worries that as California goes, so does the nation. He suggests the limp--yet now extreme--republican party has helped plunge the state into dire straits:

And while the party’s growing extremism condemns it to seemingly permanent minority status — Mr. Schwarzenegger was and is sui generis — the Republican rump retains enough seats in the Legislature to block any responsible action in the face of the fiscal crisis.

Will the same thing happen to the nation as a whole?

The root of the state's crisis was the passage of Prop 13 and California's politicians have yet to rise up to meet the state's challenges.

The seeds of California’s current crisis were planted more than 30 years ago, when voters overwhelmingly passed Proposition 13, a ballot measure that placed the state’s budget in a straitjacket. Property tax rates were capped, and homeowners were shielded from increases in their tax assessments even as the value of their homes rose.

The result was a tax system that is both inequitable and unstable. It’s inequitable because older homeowners often pay far less property tax than their younger neighbors. It’s unstable because limits on property taxation have forced California to rely more heavily than other states on income taxes, which fall steeply during recessions.

Even more important, however, Proposition 13 made it extremely hard to raise taxes, even in emergencies: no state tax rate may be increased without a two-thirds majority in both houses of the State Legislature. And this provision has interacted disastrously with state political trends. Read the whole column at NYT

Republicans are aiming for a national comeback and part of that strategy is winning the governor's race in California next year. California doesn't have a Barack Obama-like candidate in the running, and most of the announced democratic candidates are weak, so republicans might win the state because the people of California are fed up. The state's government needs to be structurally overhauled. The candidate who seems to have the best chance of winning at this point is republican Meg Whitman.
I'm not sure if she has any answers, but politically she seems to have the best shot at winning. I'm not sure if anyone has any answers for California. But democrats need to offer some better choices--fast.