There is an old expression, “what am I, chopped liver?” that is employed – usually in a social setting – when one is being ignored. For all the harsh words, finger pointing and declarations of entitlement that fill the current budget debate, there is something strikingly absent from our political ruling class: An acknowledgement that taxpayers have been, and will continue to be, the sole driving force of any economic recovery.
Case in point: Governor Schwarzenegger told assembled lawmakers, “Together, we got California through the front end of the worst financial crisis since the Great Depression.” These self-congratulatory remarks are akin to crediting the arsonist for putting out the fire. The governor and the legislature took a difficult situation and made it worse for Californians by increasing their tax burden by $12 billion as part of the ill-fated budget “deal” struck nearly a year ago.
As for the current plan, despite the tax-and-spenders cries that the cuts are way too draconian, the new budget proposal is hardly a model of fiscal prudence. Let’s first dispel the myth that there are no tax increases in this plan. Homeowners and commercial property owners who carry insurance – and who doesn’t? – will pay a new “surcharge” to pay for Cal Fire – even if you live in an urban area which has its own fire department. The Governor calls this a “fee.” But there is not enough lipstick in the world to call this anything other than a tax.
Perhaps even more troubling are what can only be called “conditional taxes.” These taxes, falling mostly on businesses, would be triggered if the state does not receive the nearly $7 billion it wants from the federal government. Dianne Feinstein’s excoriation of Arnold for the tone of his demands is not a hopeful sign that California will get anything close to the money that leaders from both parties say we are entitled to. The proposed taxes on businesses are bad enough – taxes which eventually fall on consumers – but one of these taxes would also be an extension of the child tax which voters overwhelmingly rejected last May. Again, hitting the very citizens from whom our leaders expect help in getting out of the recession.
Taxpayers have another “chopped liver” moment when they see the regurgitation of the budgetary gimmicks that have been so discredited in the past. Let’s start with the obvious gimmick of proposing a constitutional amendment to require more to be spent on higher education than on prisons. Isn’t this just another example of “ballot box budgeting?” And, by the way, why is the governor trying to suck up to the powerful education lobby when nothing he will do will ever please them? Exempting education from spending reductions might poll well, but will we ever get real education reform without some sort of competitive pressure being applied to our behemoth educational bureaucracies?
Another disappointment from the governor is his pressing for the adoption of the recommendations of the Tax Commission. The key proposal is a “business net receipts tax” having many of the same characteristics of a European style “value added tax (VAT).” This method of taxation hides the actual tax from the view of the consumer. While the governor says we must be “bold,” it is neither bold nor wise to play a game of “hide the tax” with hard-earned taxpayer dollars.
Lest one think that taxpayers are wholly disappointed with the governor’s proposals, he should be given credit for tackling prison spending. His proposal to use the private sector to run prisons will surely anger the powerful guards’ union, but there is no excuse for California paying nearly twice what other states pay for incarceration.
Also good is the governor’s emphasis on jobs. Still, he needs to be reminded that government can provide few meaningful jobs. Streamlining the permitting of construction projects and creating CEQA exemptions will take the brakes off job creation and help bring down California’s astronomically high 12.3% unemployment rate. (Of course, the best thing he could do for employment is to acknowledge that the science over global warming is less than clear and maybe, just maybe, we ought to suspend AB 32 implementation until California finds its economic footing).
Finally, the governor is doing the right thing in sounding the alarm over California’s unsustainable pension system. As the governor stated, pension liabilities have increased 2,000%, while revenue has risen 24%. This is an albatross that will ultimately sink any hope for California’s future unless it is reformed.
And while the criticism of Schwarzenegger for producing another fantasy budget may be well founded, the reaction of the liberals in the Legislature has been a fantasy on hallucinogens. Karen Bass claims that “the budget amounts to a big pile of denial.” Who is in denial, Madam Speaker? Your party’s jihad against taxpayers has inflicted most of the damage to this state. Heck, even Bill Lockyer said as much. CRO
copyright 2010 Howard Jarvis Taxpayers Association
Jon Coupal is an attorney and president of the Howard Jarvis Taxpayers Association — California’s largest taxpayer organization with offices in Los Angeles and Sacramento.