The federal budget is in similar shape to California: it's completely unsustainable. Democracy, whether direct or indirect, seems to lead to this sort of irresponsible policy. The voters really prefer short-term thinking, just like participants in market bubbles do. Whether budgeting is by the legislature or by special election, the result is going to be similar. Second, money really is fungible. Voters long ago caught on to the game of special taxes for popular programs coupled with shifting general revenues over to unpopular programs. Voters will not trust a promise to dedicate revenue source X to program Y. Some months ago the Tax Notes people posted a paper on the history of property taxes in California. The crucial change was a court decision breaking the link between local property tax collections and local school funding. In effect, all property tax money began flowing to the state, which doled it out to cities based on a formula. When that happened, people in cities with higher property taxes realized that they were no longer getting the benefit of those extra taxes. Proposition 13 quickly followed. My point is that property tax is actually a state-level tax, not a local tax, and it has been that way for over 20 years.