Taxable Talk

The Los Angeles Times has a story today on how government agencies in California have been forced to lay off workers. The Times calls the cuts “ravaging.” I’d call them necessary and the tip of the iceberg.

There’s a basic fact of budgeting that I and other small business owners must live with: We can’t spend more than what we take in. If I spend $50,000 more than my revenues, I’m either going to have to use my savings or tap a loan or line of credit. The latter is a short-term solution; the former causes most business owners consternation.

Government agencies have considered themselves “self-perpetuating” organizations. Some politicians talk about the “Government Sector.” The last time I checked, government is supposed to be of the people and for the people, not for the government. While I do feel sorry for the workers who have been laid off some portions of California’s government are starting to learn about basic economics.

California faces an interesting choice in the election on November 2nd. The Republican candidate for governor, Meg Whitman, touts her experience in running eBay and her business acumen. The Democratic candidate, former governor Jerry Brown, says he’s never increased taxes. The negative advertising has been loud and furious (by both candidates, and their surrogates). My mother said it’s one of the worst barrages of political advertising she can remember.

Yet there’s an obvious truth that must be noted. Jerry Brown’s biggest supporters are public employee unions. Public employees (especially their contracts and pensions) are a huge part of the problem in California. If Jerry Brown wins, will he be willing to fight the unions? Like it or not, the next governor will be faced with the choice of drastically raising taxes to pay for public employees’ largess or fighting the unions. Somehow I doubt that Jerry Brown will fight the hand that is feeding him.

California is short of money, so according to Spidell, all California tax refunds have been suspended. The suspension is due to “cash flow difficulties.” California does have a budget so, in theory, refunds should resume soon. Of course, that depends on how collections go with the October 15th extension deadline…

It would be helpful if the Legislature were to pass a budget whose outflows matched the inflows. That, though, appears to be asking too much.

Lots of bills signed and vetoed by Governor Schwarzenegger. Most of these do not have tax implications though a few do. Here goes:

SB 1244 was signed into law. This fixes a major conformity issue between federal and California law regarding LLC payroll (non)conformity. This is a huge win for California LLCs. One note of caution: Conformity under this measure starts on January 1, 2011; the bill is not retroactive.

AB 2418 was vetoed. We’re now into humor: The bill would have removed the apostrophe in the Contractors’ State License Law. Here’s Governor Schwarzenegger’s veto message:

To the Members of the California State Assembly: I am returning AB 2419 without my signature …

-Number of legislative committees that took time hearing this bill: 3

-Number of pages in this bill needed to remove an apostrophe: 184

-Taxpayer dollars used to pass this bill through the Legislature: $ thousands and thousands.

-The outrage the public should have that the Legislature is spending its time “working” on bills like this instead of focusing on California’s real problems: PRICELESS.

The massage industry is thrilled that the Governor vetoed a measure that would have mandated law enforcement members on the California Massage Therapy Council. I have to wonder why there’s a California Massage Therapy Council.