State Deficit Requires that Legislators Make Responsible Choices

John Kabateck
NFIB State Director in California

Day after day, we see the spending-induced budget deficit grow in California. As the year began, it quickly rose from $14 billion in January to an estimated $17.2 billion today, and who knows where it will be by the time the budget is due (though rarely delivered on-time) in June. The need to fix the budget is urgent, and our state legislators need to work with the Governor to address the problem before it is too late. But it needs to be a thoughtful discussion, and one that does not place the burden of additional taxes on hardworking small business owners and families.

There are some in the legislature that are chomping at the bit to raise taxes to cover this massive budget gap. But how would you go about generating $20 billion into the state coffers? It would look something like this: each family would have to pay $1,100 in additional taxes, the state sales tax would have to increase by two to five cents, and property taxes would also go up.

So far, the vast majority of the legislative budget-balancing schemes involve tax increases on California businesses, including:

  • A Proposition 13-eviscerating split-roll property tax that will raise taxes on California businesses and push more out-of-state or out-of-business.
  • An increase in the Personal Income Tax rate that will hit the more than 80 percent of businesses that file personal returns for their business.
  • Elimination of business tax credits for purchasing new equipment and investment in research and development of new technologies.

However, increasing revenues is not the answer that will solve this problem. Our state leaders who spent our state into this problem now have a responsibility to reduce expenses, like any small business or family would be forced to do. We need to continue to have budget hearings and take action on the additional budget reductions proposed by the Governor, since that is the minimum needed to achieve a balanced budget.

Now is the time to make our government leaders accountable for how they spend our money. The budget in California has increased by $25 billion over the past five years, but what has resulted from those increases? Is the education system in California better? Has the health care system improved? Are our roads better maintained? Is there a "rainy day" fund that we can tap into during trying economic times? With a 32% increase, we should have something tangible to show for it.

If spending had been limited to population growth and inflation, the state would not be facing a budget deficit at all. In fact, we would be facing a multi-billion dollar surplus.

This budget crisis was entirely foreseeable and preventable. Hardworking families and small business owners should not be punished for the legislature’s failure to maintain responsible spending habits.

Comment on this article


Please note, statements and opinions expressed on the Fox&Hounds Blog are solely those of their respective authors and may not represent the views of Fox&Hounds Daily or its employees thereof. Fox&Hounds Daily is not responsible for the accuracy of any of the information supplied by the site's bloggers.