Yesterday Morning, I had the opportunity to attend the the California Chamber’s Business Legislative Summit in Sacramento, which featured a panel discussion on the state budget crisis with legislative analyst Elizabeth Hill, the Sacramento Bee’s Dan Weintraub and political strategist Dan Schnur.
The three panelists, all from varying political backgrounds, each brought a number of interesting ideas and perspectives to the table. Below are some of the thoughts, ideas and quotes they put forth which we felt F&HD readers might find particularly interesting. Each are, of course, the opinions of the respective speakers:
- California can not get out of this budget dilemma just with the lottery – we must reduce spending and increase revenues.
- In reducing spending, we must also try to maintain current service levels.
- Although somewhat unpopular, the most effective way to reduce spending is to eliminate duplicative programs and initiate targeted reductions of things that are shown not to work.
- Both Bass and Schwarzenegger have suggested a tax commission. Taxes should be reexamined – many of them were structured in the 1930s, and California has changed dramatically since then.
- Democrats are now pressing harder for taxes than they ever have during the Schwarzenegger Administration
- While they rejected the governor’s healthcare proposal, Democrats also envision various tax increases in the future when revisiting the healthcare concept. Therefore, they don’t want to use up all of their "Tax Incrase" capital just yet.
- On the May Revise lottery and sales tax proposal, It’s not either/or – the proposal the governor has on the table for the sales tax may still pass in addition to gains from the lottery to supplement the balancing of the budget.
- Burton, Lockyer, and Perata have all been a little bit wacky in their own ways – each of them, either deliberately or through their personality, had a way of keeping people off balance. Steinberg could not be more different – he’s a normal person, very grounded, and will be a breath of fresh air to deal with. The same with his Republican counterpart in Cogdill.
- Nunez was very erratic, but became a fairly capable leader in his last year or two. Everything we’ve seen about Bass shows that she’s capable, a very good consensus builder, and very liberal. It remains to be seen where she will draw pragmatic lines. She may have something to prove, and as a result, in the first months she will give her opponents less leeway to cut deals.
- The Democrats are desperate right now – we’ve faced year to year drops in revenues, while spending continues to increase. Dems are looking at cuts in programs hat they deeply value. If the GOP comes to the table with any sniff of permanent revenue, they could demand any price in exchange for that. If they actually did come to the table, they might be surprised what the Democrats might be willing to give up.
- The volatility issue has been around for a while. Other than 1999 tech boom, it hasn’t been the huge problem that we sometimes make it out to be. Clearly, the income tax system is heavily weighted toward high-end income tax payers. When they do poorly, the whole state budget goes into a rash. What is the potential solution? Cutting taxes on wealthy and raising taxes on mid class – neither is likely to happen.
- Republican legislators learned two lessons during budget stalemate. One, they do have the power to stop the budget process dead in its tracks if they so choose. Two, they must carefully figure out what exactly they would want to stop the process for.
- Mike Villines and Dave Cogdill should be given credit because this year, whether or not you agree with them, they have been forthcoming on what they would like to see in the state budget.
- They have also talked about ways to save money in terms of education spending – reforms rather than cuts.
- Not many Republicans will say "Yes we will raise taxes in order to pass these reforms," but Republicans may be convinced to support minor increases in order to pass a budget.
- We know that Arnold believes that some type of loopholes will be closed, however, "Our friend Admiral Ackerman will miss the Yacht Tax greatly."
- "Senator Steinberg is a marketed upgrade from Seantor Perata because he is, at the very least, understandable."
- We will, however, still have Perata through this budget cycle unless it draws out past Thanksgiving.
- The real danger – Tax reform always becomes a stepping-stone for Tax Increases.