Not even Republicans in the legislature believe the budget proposal they laid out for inspection yesterday will be implemented. Still, the plan has merit in showing where government has grown and combating the idea that automatic budget growth should be expected in these difficult times. In fact, freezing budget outlays to current levels make sense in a fiscal crisis.
What attracted my attention in the proposal was the revenue side, particularly the suggestion to move $6 billion out of quarantined funds for mental health programs and early childhood development. These funds came about because voters passed two ballot measures. Proposition 10 in 1998 raised cigarette taxes for the childhood programs. Proposition 63 in 2004 added a surcharge on high-end income taxpayers to pay for mental health programs.
I worked on the campaigns to defeat both measures, obviously unsuccessfully. To re-direct these funds to general fund purposes will require a vote of the people since it was a vote of the people that established these taxes and their special purposes in the first place.
I imagine if a cigarette tax or income tax were on the ballot for general fund purposes, Republicans would oppose those taxes. But, by asking for these taxes to be re-directed to general fund purposes aren’t they in essence supporting a general fund tax? At $6-billion the revenue amount would be about equal to raising the vehicle license fee back up to the 2% level Governor Schwarzenegger cut it from in 2003.
I understand why the Republicans want to do this. Frequent criticisms have been made about the success of the programs and use of the money under Propositions 10 and 63. But, if this plan is carried out it will have Republicans campaigning for tax propositions they undoubtedly opposed when they were first on the ballot.
If the sales tax and income tax increases found in Props 10 and 63 were general fund increases in the first place would the voters have approved them? I have my doubts.
The Republicans have actually hit on an important theme here. They have exposed the tax web we weave when we earmark funds and have no provisions for prioritizing spending. Categorizing funds without the ability to shift them around to current needs is not a good way to govern. The Republican pitch should be that we must untangle the web of earmarked taxpayer funds that come with little legislative oversight and discretion.
Securing changes in the way Sacramento deals with tax dollars would be a positive outcome from these budget negotiations even if the Republicans cannot implement their dream budget.