If there’s to be a short-term deal…
The new Republican line – advanced by Steve Poizner among others – is that the legislature should do a short-term budget deal that attempts to resolve the cash crunch. That’s not a good idea. The lack of a real budget plan is at the root of the state’s inability to borrow. But it’s better than nothing. And right now, we’re stuck at nothing.
However. However. However. If there is to be such a deal, Republicans need to swallow their reality pills and realize that they’re not getting out of town without raising taxes. No responsible Democratic leader would let them get away with that. A package would still have to balance spending cuts with an equal amount of tax increases. The gas tax and vehicle license fee increase would almost certainly have to stay in. To make the numbers work, the sales tax might have to be there too. Republicans could claim victory by saying they held off the income tax surcharge, but that’s the only victory they’d have. And they’d have to fight again. If nearly all GOP lawmakers stick to their “We’re Fiddling Against Taxes While Rome Burns” position, a short-term deal is impossible.
Time for Change Begins Now
With new Republican Senate leadership installed overnight, no one can be certain which way the budget negotiations will go.
Under Dennis Hollingsworth’s new leadership, the Senate Republicans may search for short-term fixes to the budget rather than the 18-month fix included in the current package. Senate President Pro Tem Darrell Steinberg said he is not prepared to renegotiate. And, some Senate Republicans who did not vote for the leadership change may still come around to vote for the budget package on the table. But, even if the current package of cuts and tax increases becomes law, it would only be a temporary fix to a long-term problem.
One principal point that all involved in the budget question should remember is that resolving the budget crisis is only the first step in a long journey to restructure California’s government. Even in the current budget package, taxes and many cuts are temporary. That means that over the course of five years, at most, a government plan for the 21st century must be put in place. Those hoping that the interim will allow the economy to bounce back so we can return to business as usual are making a big mistake.
Depression Talk Falls Flat
Is this really the worst economy since the Great Depression?
We’ve heard that phrase endlessly in recent months, but it’s idiotic just to put today’s economy in the same sentence as the Great Depression. Unemployment hit 25 percent in the depression, the stock market lost 90 percent of its value and the gross domestic product fell by one-third. We’re nowhere near those numbers. You couldn’t drive a Model A from those numbers to today’s.
OK, OK. The phrase is this is the worst economy since the Great Depression. But even that’s hard to swallow.
I can’t help but remember years ago when my aunt died and her property was put up for sale. I wanted to buy it – keep it in the family and all. The price was fine, but I decided I couldn’t buy it for one reason: Mortgage interest rates were 18 percent.
Cal-Tax Files Suit to Repeal Unlawful “Penalty” on Law-Abiding Taxpayers
Yesterday, the California Taxpayers’ Association filed suit to invalidate the 20 percent "understatement penalty” provisions included in SB X1 28 of last year.
Our lawsuit alleges that in addition to federal Due Process, Equal Protection and Commerce Clause defects, the "penalty" operates as a tax, and thus violates Proposition 13, because it didn’t receive at least a two-thirds vote.
This broad-based constitutional challenge, filed in Sacramento Superior Court as California Taxpayers’ Association v. Franchise Tax Board, also notes that the process by which the legislation was enacted was defective and unconstitutional.
Capitol observers will recall that the legislation was rushed through both houses of the Legislature on September 19, before the bill was even in print. The proposal was described by proponents as a doubling of an existing penalty on tax scofflaws, but when the language later was revealed, it was discovered that it actually proposes a new penalty – one that affects law-abiding taxpayers as well as tax cheats, with no distinction between the two.
The legislation is retroactive, and it applies strictly without exception (such as for good faith or reasonable cause). Even worse, it allows for no appeals!