By Ken Masugi Posted July 16, 2004

Arnold Schwarzenegger's governorship could be the most important in California history, the one that unlocks the stranglehold of liberal interest groups on the governance of the Golden State and revives the fundamental principle of self-government. In the case of California, that requires major surgery, not two aspirin. In his inaugural address, Governor Schwarzenegger spoke to the point of wanting to "blow up the boxes." Let us help him light some fuses.

In the current dispute over the budget it is easy to overlook what is at stake: the principle of self-government. Entangled in the budget debate, the current proposals for local government reform are not only inadequate—they actually aggravate the problem. Without such principles we will lose all direction and be unable to distinguish between compromises over tactics and trivia, and compromises over principles.

Let us first acknowledge the fundamental role of local governments in revitalizing the California dream. If Americans can't govern themselves locally, how can they govern themselves on the state or federal level? If self-government is gone, so is our entire way of life.

Responsible local self-government cannot occur unless citizens have the authority to permit cities and counties to tax themselves. Then local governments have authority, responsibility, and accountability. Those who elect them—often from their neighbors—can determine whether the monies collected are spent wisely or foolishly. Those who tax should also be those who spend. And the voters who pay the taxes should have the ability to vote out those local officials who fail them. As the governor knows, California's present financial arrangements have undermined this common-sense notion of responsibility.

In 1978, Californians wisely limited local governments in raising the property tax by passing Proposition 13. An unfortunate, unintended consequence of the measure was the deterioration of local governments' responsibility. A premium was put on their ability to lobby Sacramento for their property tax funds—and as you well know the increase of power there has done nothing to increase Sacramento's accountability. Far from it. The whole state gradually went out of kilter. But the proposed remedy for Californians' drastic actions, Proposition 65, the ill-named "Local Taxpayers and Public Safety Protection Act" does not bring us back to self-government.

For one, Proposition 65 does not get to the heart of the problem—the lack of accountability. For 25 years, the lure of sales tax revenues set local government against local government, in the pursuit of revenue-raising businesses. Again, the local priorities became distorted. Redevelopment agencies flourished under such temptations, which too often prove to be fanciful condemnation of supposedly "blighted" areas. They wielded arbitrary power in local communities and invited corruption by virtually seizing private property for alleged public benefit. A lack of local authority has begotten not just irresponsibility but injustice, as some see homes and businesses gone, to please a majority on the local redevelopment agency.

A further injustice is that Proposition 65 aggravates the problems of unfairness and unaccountability. Under current law, it would return Orange County only 7% of the property taxes received from it. (By comparison, Los Angeles County gets 21%, San Francisco 64%.) While many parts of southern California should be outraged by this bullying, no community should be satisfied with such meager returns.

What has been missing in this debate, and from public action for many years, is a respect for property rights—not the rights of the wealthy but the rights of everyone to acquire and retain the wealth of their labors, whatever their occupation. Sacramento's concern has instead been to expand government programs and reward its favorites. In doing so it has distorted the housing market, increased regulation, and driven out businesses. If Sacramento had instead respected individuals' rights to their property and labor, they would have protected the homeowner (and the would-be homeowner), the entrepreneur, and all others who are raising their families, and many more would now be enjoying the California dream.

Any system of reforming the place of local government should keep in mind these concerns—local accountability and respect for property rights. They form the heart of self-government. At the end of a great action movie, the great treasure of the Ark is buried in a pile of boxes in a government warehouse. That Ark is self-government. The boxes are the barriers and programs Sacramento has created over the years. Let's blow up those bureaucratic boxes and retrieve self-government.