On cuts, fees and priorities

Given Insight

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Maybe you’ve heard it shrieked from a protester’s megaphone as you cross Sproul Plaza. Maybe you’ve seen it chalked on building as you walk to class. Regardless of the method of communication, you’ve likely come across the catchphrase sometime in the course of your Berkeley education: “No cuts, no fees, education should be free.”

The student movement for higher education has trumpeted this motto across campus as its solution to the public funding crisis faced by the University of California. But looking past its catchy rhyme, does the slogan have any substance? Let’s dissect this sucker.

State support of the university has dropped by 19 percent over the past two decades, with hundreds of millions in cuts in the past four years alone. However, if the protesters want neither cuts nor fees, how exactly do they propose to balance the university’s budget, much less make their education free? After all, as the economist Milton Friedman often said, “There’s no such thing as a free lunch.” Every good or service must be paid by someone, and education is no exception.

Their answer, unsurprisingly, is the almighty tax dollar. Indeed, it seems as if the student movement wants the best education money can buy — with other people’s money! For the short term, Gov. Jerry Brown has proposed a ballot initiative to increase income taxes for the wealthy by two percent for the next five years, which is expected to generate $7 billion for education and public safety. For the long term, numerous pundits have advocated repealing Proposition 13, the 1978 ballot initiative that capped property taxes at 1 percent.

The problem with these solutions is that they assume our state has an endless well of taxpayer dollars to tap into. But, like any well, this source can run dry — especially when the state has been withdrawing “water” at an increasingly rapid pace. In fact, the well may already be dry. High-income individuals and companies have begun to pack their camps and flee the Golden State by the bandwagon because of its titanic tax burden.

Thanks to claiming the nation’s third highest top income tax rate, the number of Californians earning more than $500,000 a year or more fell from 146,221 in 2007 to 98,610 in 2009. According to the Tax Foundation, California is the second least friendly state to conduct business in, which incentivizes companies to emigrate. Amazon, for example, shocked Sacramento last summer when it announced that it will severe ties with 10,000 small businesses in California because of the state’s new requirement for the online retailer to collect sales taxes. Who would have thought that individuals and businesses would respond to economic incentives?

But the wealthy won’t be the only class feeling the taxman’s wrath under these proposed policies. Property taxes would soar upon Prop. 13’s repeal, affecting all socioeconomic statuses — particularly people living in towns with high property values like Berkeley! That’s right, fellow students, if your anti-Prop. 13 professors had their way, we all would be paying more for our already expensive housing. Perhaps that explains why the 1978 proposition still enjoys a 63 percent approval rating from California voters.

Rather, to truly restore a fiscally sound UC, we need to overcome the myth that the state’s underlying problem is one of revenue shortfalls rather than spending. Contrary to popular perception, state tax revenue has about doubled, when adjusted for inflation, since Prop. 13’s passage. This rate of growth is especially impressive considering the population has not yet doubled in the time hence.

Instead, what has shifted is not revenue but the state’s priorities in allocating funds to services other than higher education. Between the War on Drugs and the state’s three strikes law, Californians now spend more on prisons than on higher education, with $9.6 billion going to the former and $5.7 to the latter in 2011.
One may counter with the argument that this increased spending toward criminal justice has kept California safer than otherwise. However, a sizable portion of the state’s prison population has been convicted for nonviolent crimes. Nearly 25,000 inmates today, for example, are being held for drug-related felonies. Other colossal state expenditures like the $65 million state DREAM Act, $98 billion high-speed rail project, and $500 billion unfunded public servant pensions don’t exactly help either.

So instead of shouting about how “education should be free” courtesy of other people’s money, I suggest that protesters change their slogan to “education should be a higher priority.”

But, alas, it certainly isn’t as catchy.