For Californians, there’s no sign of a budget compromise. The Democrats are proposing massive tax increases; the Republicans won’t consider a penny in new taxes; and Governor Schwarzenegger wants a solution but isn’t putting any pressure on anyone.
The latest:
1. The Wall Street Journal ran an op-ed piece that proclaimed California is #1. But it’s not number one in a good way; rather, it’s leading the country in the tax rate. The Journal noted:
California faces a $15 billion budget deficit and Democrats who rule the state Legislature have proposed closing the gap with a $9.7 billion tax hike on business and “the rich.” There’s a movie that describes this idea: Clueless…
This latest tax gambit was unveiled, ironically enough, within days of two very large California employers announcing they are saying, in the famous words of Governor Arnold Schwarzenegger, “hasta la vista, baby” to the state. First, the AAA auto club declared it will close its call centers in California, meaning that 900 jobs will move to other states. “It costs more to do business in California,” said a AAA press release, in the understatement of the year.
2. The Contra Costa Times published an op-ed piece from the “Proposition 13 Reform Tax Force” that advocates a split-roll property tax scheme. The op-ed doesn’t mention that a split-roll has been defeated by the voters of California before. And that relatively low property taxes is about the only favorable tax factor in California.
3. Governor Schwarzenegger on Thursday broached the idea of a sales tax increase to balance the budget.
4. The Los Angeles Times published an article noting that economists are unsure of whether the Democrats’ proposed income tax increase would actually bring in the revenue that the Democrats forecast. Patrick Fleenor, chief economist for the Tax Foundation, is quoted as stating, “But what is often missed is the firm that would have popped up in L.A. but is instead popping up outside Las Vegas. People on the cusp of moving to California or leaving California would certainly be affected by this [proposed tax increase].”
Meanwhile, Democrats in the legislature are stating that there are no cuts to be made in programs and that only revenue increases will be considered. Republicans state the only thing they’ll look at are cuts in programs. I’m leaving on vacation tomorrow. I’m very confident that California won’t have a budget when I return on August 4th.