I’m from L.A. — Tax Me

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Taxpayers in the Los Angeles area are facing an amazing array of tax increase proposals on the November ballot. The question is how will voters respond when faced with multiple requests for more of their dollars?

The MTA wants a ½-cent sales tax hike for thirty years to cover various transportation projects. When implemented (if passed), L.A.’s sales tax will be 8.75%. That assumes there will be no state sales tax increase that may come along in a state budget deal. If that happens, along with a successful MTA sales tax increase, Los Angeles residents will be looking at a sales tax over 9%. A quick search reveals that only certain parts of Tennessee have a sales tax above 9%, but Tennessee has a small income tax, taxing income only derived from dividends and interest.

The City of Los Angeles put a $36 dollar a year parcel tax on the ballot to fund anti-gang programs. No question the gang problem is serious and must be met. But city officials are just now trying to coordinate better oversight on current gang program funds. Many programs will be brought under the Mayor’s office. Some observers claim the reorganization of current gang programs should be given a chance to work before new funding is called for.

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Name That State

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

The state budget hole is huge but familiar ideas have been put forward to deal with the problem:

  • lease the state lottery
  • cut Medicaid aid
  • possible layoff of state workers
  • sell state assets
  • public/private partnerships
  • hiring freeze
  • across-the-board agency cuts

And, oh, by the way, it’s not California.

Name that state.

Click here for the answer

(A tip of the hat to Jack Dean for pointing this out.)

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Trading Deadline

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Today’s trading deadline for Major League Baseball has approached with a flurry of trades, and one wonders if this same furious kind of trading activity is making any headway in negotiations over the state budget. In the case of the budget, California also has a trading deadline, it’s in the state constitution, but it is ignored every year. Major League Baseball is more responsible in adhering to its rules.

Still, you can imagine what’s going on in the heated negotiations.

REPUBLICANS: OK, we’ll give you new revenue. But you can’t call them taxes. You got to call them fees. You give us a spending limit tied to inflation and population.

DEMOCRATS: Make the revenue come from loophole closings and we’ll throw in a rainy day fund but no spending limit.

REPUBLICANS: And, what are those loopholes?

DEMOCRATS: Businesses, rich folks and yachts.

REPUBLICANS: You can have the yachts. Those other things make our team weaker if we let them go so we say no.

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New Legal Action Possible Over Minimum Wage Dispute

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

The Howard Jarvis Taxpayers Association is considering jumping into the legal fray over the question of whether Controller John Chiang can resist Governor Arnold Schwarzenegger’s proposed order to pay public employees the minimum wage if no budget is in place.

Lawyers at the Jarvis Association feel the group has a good understanding of what can and cannot be paid under state law. The law was interpreted in a case handled by Jarvis attorneys, White v. Davis, which took five years to run through the courts with a final decision by the California Supreme Court in 2003.

Controller Chiang said his constitutional powers allow him to ignore the order from the governor. Schwarzenegger has yet to sign the order, but his office said he plans to do so on Thursday if no budget agreement is reached, meaning there is no legal basis for making appropriations. The governor is trying to force the legislature to make a budget deal.

The legislature’s legal counsel, Diane Boyer-Vine, backed Chiang with an opinion that argued court decisions indicate the controller can wield power independent of the governor.

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New Players, but Still the Same Old Play

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Taking a long weekend, I didn’t have time to prepare a blog for today, so I figured why not use something I wrote years ago about the state budget debate. You see, very little has changed when it comes to the budget deliberations. A few cross-outs here, a new word there, a changed name and, presto, I have an up-to-date article.

The original, slightly longer opinion piece is from 2002 and the sad truth is we’ve all seen this play before—only some of the actors are different.


For suspense and thrills this summer, forget the Spiderman BATMAN movie or the latest Grisham JAMES PATTERSON novel. Follow the attempt to solve this year’s state budget crisis. The hole in the state budget is getting deeper. And with it, suspense builds like any good political thriller – how are the governor and legislators going to get out of this one?

Who the good guys and bad guys are in this drama will depend on your political point of view – but it will be exciting. Really!

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Cost Overruns from Coast to Coast

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

I grew up in Massachusetts, and recently I’ve been reading stories about government projects in my home state that would be familiar to anyone who follows government in California. They deal with cost overruns of major public programs. Let’s be fair and say there are cost overruns in private as well as public efforts, as anyone who has remodeled a house knows.

However, what made me take notice of these cost overrun stories is that one had to do with a big infrastructure project and the other had to do with the Bay State’s effort to implement a universal healthcare system.

California is involved in many infrastructure projects, but may get behind a massive proposal if the voters approve Proposition 1 on the November ballot to support a $10-billion high-speed rail. And, anyone following California politics knows that last year was supposed to be the Year of Health Care Reform. The governor’s pet project was derailed, but perhaps only temporarily. Rumor has it he wants to resuscitate the program as soon as the budget is resolved—whenever that occurs.

Thinking about these California proposals I read these recent reports about Massachusetts with trepidation. That big infrastructure project in Boston — the most expensive highway project in United States history is facing – you guessed it, a cost overrun. And, the Massachusetts health-insurance-for- everyone plan is up and running and one of the first things state officials noticed was – it cost more than expected.

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The Minimum Wage Gambit: Deja Vu

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

When Governor Arnold Schwarzenegger announced that he would sign an order to pay state employees at federal minimum wage until the budget is resolved, I got that Yogi Berra feeling: It’s déjà vu all over again.

You see, the court ruling that the governor is relying on came out of a lawsuit I filed a decade ago during another budget crisis in 1998. The case of the Howard Jarvis Taxpayers Association vs. State Controller Kathleen Connell was intended to pressure legislators into coming to terms with the budget. We contended that the state constitution prohibited any spending in the new fiscal year without the authorized budget in place.

A Los Angeles judge agreed, ordering Controller Connell not to pay employees or contractors. The next day, the Legislature passed an emergency spending plan that allowed the employees to be paid.

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Jump into the Pool – the Small Business Insurance Pool

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

This morning’s column by the Sacramento Bee’s Dan Weintraub tells the impressive story of small businesses creating the heart and soul of the new California economy. The spirit of entrepreneurship and the desire to be your own boss is leading many workers to set up their own shops.

As Weintraub points out in the article, “firms of five employees or fewer now represent nearly 90 percent of all businesses in California” and these firms are growing at a rapid pace. Indeed even the smallest of firms, sole proprietorships increased by 24 percent from 2000 to 2005 to more than 2.5 million.

But along with this success story comes the question of how so many workers in small businesses deal with exploding health care costs? According to the National Conference of State Legislatures, only 47% of firms with three to nine employees offer health care insurance. Sole proprietors often skip health care as an expense they cannot handle.

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Don’t Let the Water Crisis Get Bad Enough

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Yesterday on this site, Senator Dave Cogdill argued that it is “absolutely essential … that we pass a comprehensive water bond now.” In response, Jon Fleischman on his popular FlashReport website argued that the cost of the bond will be too high if it comes out of the legislature with an environmental agenda from a “Sierra Club wish list.” Instead of acting on a legislative measure now, Jon proposes we wait until the situation gets “bad enough” and then put forth by initiative a cheaper, more directed bond measure dealing exclusively with water storage and conveyance.

It is hard to argue with Jon’s analysis of how money has been ill spent in Sacramento. Government officials have been irresponsible in not adequately funding infrastructure to serve the water needs of the people. But I have problems with his conclusion that we allow the situation to get “bad enough” in hopes that the people will pass a leaner bond measure sometime in the indeterminate future.

While some would argue it is a principled stand to vote against a water bond that doesn’t exclusively provide for more water storage, watching principle crash into reality will not solve the pending water crisis.

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Gay Marriage, the Peripheral Canal … and Bo Derek

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Catching up on a number of items at week’s end …

The Field Poll indicates a close election on Proposition 8, the gay marriage elimination amendment. The poll says as of now 51% oppose the amendment and 42% favor it. Surprisingly, the highest percentage of opposition to this measure was the baby-boomer generation, although by only a close 2% over the 18-29 year olds. Fox & Hounds blogger Joe Mathews has opined that gay marriage will eventually be accepted because of the strong support for the issue by the younger generation, yet here are the baby-boomers leading the way.

There will probably be a number of ballot proposition issues that will go down to the wire in November. Given that the Field Poll says at this point Sen. Obama is ahead of Sen. McCain by 24% in the presidential race, wouldn’t it be ironic if what drove voters to the polls in California this historic election year was not the presidential election but ballot issues?

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