Mr. Newsom Goes to Santa Monica

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

San Francisco Mayor Gavin Newsom said he would be the “worst advocate” for measures on the special election ballot. Speaking to about 500 people at a town hall meeting in Santa Monica High School’s gym last night, Newsom said he supported the idea of a rainy day fund but would not be a champion for the ballot measures. He singled out Proposition 1C, the lottery modernization measure, saying it was bad policy to encourage gambling as a way to pay off the state’s debt. However, he said, he recognized that if the measures did not pass, the budget situation would be worse.

Newsom, however, was a strong advocate for a constitutional convention to deal with California’s dysfunctional government. On his list of reforms was Proposition 13 and the two-thirds vote to pass the budget and raise taxes.

Declaring that unlike Warren Buffet, who was warned away from a discussion of Prop 13 by then candidate Arnold Schwarzenegger, Newsom said that Californians needed to have a conversation about Prop 13. He backed off a little and said that at least there should be a conversation about property taxes on commercial property. Newsom told the audience members they were paying for Proposition 13 in the highest income taxes in the nation and the high and regressive sales tax.

As a gubernatorial candidate, he pledged to “deliver the message” that we’ve “got to reduce that (two-thirds vote) threshold.”

I heard a lot of tax and spend rhetoric from the San Francisco mayor. He insisted that’s not what he was about, but as he ran down his record of achievements on health car, education, and the environment, and how he would bring change to the state, the main thing missing from his presentation was the cost of his ambitious agenda.

Newsom declared that AB 32, the landmark bill that set California apart in dealing with climate change actually sets the bar too low for changes that must be made. Business interests have expressed concern at the costs of AB 32. Later, he said he supported a carbon tax.

Newsom promised to create education reform after his San Francisco model of raising teachers’ salaries but securing concessions from the unions for a mediation strategy to move teachers who were not performing out of classrooms. He declared that all children should get a college education but pledged not to increase tuition costs for University of California, CSU, or Community College students.

Taking on political questions from reporters, the San Francisco mayor denied that he was holding his town hall meeting in the backyard of Los Angeles Mayor and potential gubernatorial rival Antonio Villaraigosa to score political points. He was making his first campaign foray into Southern California with additional town hall forums scheduled in Santa Barbara, Palm Springs and San Diego.

Newsom said he would make his decision to run in thirty to sixty days, admitting he was leaning toward taking the plunge. He also estimated it would take $60-$100 million to run for governor against either potential billionaire Republican rivals Steve Poizner or Meg Whitman.

In arguing that a constitutional convention would be a good thing, he declared that not enough money is being spent on schools so people who support school funding guaranteed by Proposition 98 should not be fearful of his goals and a constitutional convention.

Listening to Newsom’s presentation last night I thought that, perhaps, taxpayers should be.

Newsom misses the point.

While I think there are some fundamental problems with Prop 13 in the area of transfer of title (homeowners get re-assessed when purchasing a property while a corporation does not when title is transfered through a merger or acquisition,) the 2/3 requirement for raising taxes has been a saving grace for the taxpayers of California. What really needs to be addressed is the State's Personal Income Tax structure, currently the highest rate in the country that kicks in at the lowest threshhold. We are running out of "rich people" to support the tax structure as currently implemented. When a small percentage (roughly 10%) of taxpayers are responsible for 75% of the tax revenue, anything that negatively impacts them grossly impacts the state -- i.e., the "dot com" bubble and, more recently, the stock market bubble. A flat tax would provide more consistent revenue. By spreading the tax burden across a broader spectrum, you get a more consistent stream of tax revenue. We also need to trim spending as the increased tax burden reduces disposable income, hurts the local economy and encourages savvy taxpayers to find new and creative ways to avoid the tax increases such as Internet purchases out-of-state and evading the use taxes. I know people who own homes out of state and are planning to re-register their vehicles and change their driver's licenses to out-of-state residency. The state will be hard pressed to determine whether these people are in-state residents or visitors without complicated (and costly) court proceedings. Collection of use taxes is also virtually impossible.



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