Placing Sales Taxes on Services Creates Upward Mobility for Few

Justin Adams
President and Chief Economist of Encina Advisors, LLC

Some have called Senate Bill (SB) 8, Senator Robert Hertzberg’s proposal to impose sales taxes on most services in California, needed tax reform. The basic argument made is that while California’s economy has shifted over the past 50 years from being based on agriculture and manufacturing to information and services, the state’s tax policy remains mired in the past. Consequently, a revamped tax system – one that focuses on services rather than personal income, as is the case today – would better reflect this new reality.

Californians can, and should, have an open and honest debate over tax reform. That’s because replacing our current tax system with one focused on services involves real tradeoffs for the state: It would help reduce the volatility of government revenue while at the same time placing a larger burden on low-income families and adding substantial new compliance costs for businesses and taxing agencies.

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Governor’s Budget Is Good News Not Because It’s Bigger—But Because It’s Better

Lenny Mendonca is Co-Chair of the California Forward Leadership Council and former director of McKinsey & Company. Pete Weber is Co-Chair of the California Forward Leadership Council and former Executive Committee Chair of the California Partnership for the San Joaquin Valley.

For almost 20 years, California’s state budget has been locked in the same cycle: In bad times, governors divide the pain. When dollars are flowing again, they divide the spoils—often at the cost of the state’s long-term fiscal stability.

As it was, so it shall be, say the cynics. It’s just politics, right?

Maybe not. In a remarkably refreshing budget proposal released last week, Governor Jerry Brown has demonstrated another way to build a state spending plan—using billions of dollars in unexpected revenue this year to make the budget not just bigger, but better.

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“Hose Rage” and Other Odds and Ends

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

We all know about “Road Rage” but because of California’s dire drought conditions we may need to get ready for “Hose Rage.” This term was used in Australia during long periods of drought when neighbors would turn on neighbors who were using excessive amounts of water to wet lawns. There was even a reported homicide attributed to “hose rage” in Sydney.

Will the “hose rage” psychology hit California?

Speaking of the drought, I heard someone suggest that the dying lawns in California will soon give new meaning to the term “Golden State.”

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CA Could Lose Congressional Seats if Supreme Court Changes Law to ‘One Citizen-One Vote’

Scott Lay
Higher education Lobbyist and Publisher of The Nooner

While the immediate reaction to the U.S. Supreme Court taking up the “one-person, one vote case” has been liberals and minority groups saying “Oh, S***” and conservatives getting excited, the case is much more complicated than that. If the Supreme Court rules in favor of plaintiffs, it would affect two distinct (and often confused) processes. Most articles I’ve read have focused on the affect of district lines.

However, the (and perhaps most significant) effect would be on the apportionment of congressional seats among the states. As Paul Mitchell has pointed out, states with a greater percentage of undocumented immigrants or documented non-citizen residents or even more kids (California, Texas) would lose congressional seats–since they are not considered in the Census’s Citizen Voting Age Population (CVAP).

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Stock Market Soars — And So Do Public Pension Costs

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

The way our government accounts for public employee pension promises is nothing short of fraud, yet no public official has gone to jail or paid a price for what surely ranks among the largest muggings of citizens in US history. Let me explain.

As the stock market reaches record levels, little is heard anymore from public officials who used to blame market declines for rising pension costs.  A few years ago, the CEO of the California State Teachers Retirement System (CalSTRS) attributed his pension fund’s deficit to the 2008-09 market decline. Yet despite a stock market that now stands 2.5 times above its 2009 low, CalSTRS’s shortfall is so large that to help address the deficit, California recently enacted legislation that will divert at least $170 billion from classrooms over the next 30 years.  That means current and future schoolchildren are paying off past pension promises.

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Will The Supreme Court Remake California Politics?

Tony Quinn
Political Analyst

Like a bolt out of the blue the US Supreme Court has suddenly thrust front and center the most important question in a democracy: who should exercise political power.  Should it be all the people, or should it just be those citizens qualified to vote?  The Supreme Court has agreed to hear a case out of Texas that challenges the 50-year methodology of using all the people in drawing legislative districts.  The ruling could drop on California politics like a brick on a tea cup.

Beginning in 1962, the Supreme Court under Chief Justice Earl Warren handed down a series of rulings that said legislative and congressional districts must be drawn on the basis of equal populations – one person, one vote.  This did away with the old rural-based State Senates, including California’s where three small counties had one senator and Los Angeles had one senator.  “Legislators represent people, not trees or acres,” said Warren in explaining why malapportioned districts were unconstitutional.

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Crippling the Initiative Process by Jacking Up Filing Fees

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

No one should be fooled — the Assembly bill passed to raise the filing fee for an initiative proposal to $8000 is an attempt to squash the initiative process. The argument that the fee has not been raised in over seventy years rings hollow when any on-line inflation calculator will tell you that inflation over that time has risen no more than one-fourth the amount that the bill, AB 1100, co-authored by Democratic assembly members Richard Bloom and Evan Low demands.

Legislators generally do not like the initiative process. They don’t like the “masses” playing in their backyard of lawmaking. An opportunity to cripple the process was presented when an Orange County lawyer filed a despicable measure that on its face authorized the killing of gays. As I noted previously on this page, “Shame, chastise and rebuke authors like Matt McLaughlin who submitted the Sodomite Suppression Act, as he so much deserves for his heinous proposal. And, don’t give bizarre initiatives the attention they crave. Most will disappear without a trace. But the legislature should not use the righteous outrage people feel over the filing of one particular initiative proposal to undercut the people’s initiative power.”

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GOP Builds Infrastructure To Train Candidates, Keep Legislative Seats

Ling Ling Chang
California State Assembly Member, 55th District

If you’ve read or watched political news reports over the last several months, you might think Republicans are nearing extinction in California, and it’s unlikely conservative leaders will ever regain leadership in the Golden State. Public opinion research and registration data shows the GOP has a mountain to climb to regain confidence from voters, no doubt; however, the prospect of a Republican comeback is much brighter. GOP leaders are working hard to recruit, train and elect the next generation of Republican leaders to state legislative office. And that’s important for the future of the GOP, and the future of our state. A thriving democracy relies upon robust debate and exchange, not one-party rule, which can often dominate the legislature.

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The Corinthian Colleges Debacle—And the Continued Shortcomings In Our Higher Ed System

Michael Bernick
Former California Employment Development Department Director & Milken Institute Fellow

In late April, Corinthian Colleges, administrator of the Everest College, WyoTech and Heald College campuses, abruptly closed its California sites, leaving more than 10,000 students out in the cold.

corintheancolleges3As described by Chris Kirkham, most of the students engaged in Corinthian’s vocational classes find themselves with no clear path to training completion. The federal government will lose at least millions of dollars of government-insured education grants.

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How the 2016 Senate Race Will Divide California

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

Are you a Kamala or a Loretta?

Attorney General Kamala Harris and Congresswoman Loretta Sanchez—the two leading candidates for the state’s open U.S. Senate seat next year—confront Californians with a choice. But it’s not a choice about competing policies or political visions. Californians don’t have political arguments about what we believe anymore. Harris and Sanchez are both Democrats, and we’re a one-party state (Republicans are dying faster than our fisheries), where most people agree on all the big issues. Our disputes these days are over just how many resources to devote to the causes we favor.

No, this is a choice about identity, personality, manners, and culture.

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