SBAC: Hold The Line
As I have written many times before the current budget is not a cuts-only budget. Taxes were raised in February but now is not the time to raise more taxes and drag down the economy. In fact, the way to do long term repair to our budget problem is to make California more business friendly. The Small Business Action Committee is putting this ad on TV around the state urging voters to tell legislators to “Hold The Line.”
Another Commission to Nowhere?
Like so many commissions created to deal with intractable state problems, the new tax commission may be on a road to nowhere. Ideological divides have undermined the hope of Commission Chairman Gerald Parsky to present to the legislature a new state tax structure proposal with unanimous support from the commission.
Working toward a plan that included a flat income tax, a reduction in the sales tax and an end to the corporation tax, offset by a new value added tax called a Business Receipts Tax, the commission will now consider a second plan built on a different chassis. The proposal fathered by Commissioners Fred Keeley and Christopher Edley includes a tiered income tax, an increase in the property tax on commercial property and a carbon tax, to name a few elements of the plan.
Ironically, both plans aim for similar results: a less volatile tax system that will produce more revenue for government as years go by. But each would take diametrically opposed routes to get to that goal. The original plan, apparently backed by Parsky, expects to grow the economy throwing off new tax revenues as it goes, using the flat tax to reduce volatility. The Keeley/Edley plan wants to raise taxes or make it easier to raise taxes to gain revenue, arguing that property tax increases on business are a stabilizing influence on tax revenues.
Finally, a State Budget Deal May Be Near
State budget talks turned serious Tuesday as Gov. Arnold Schwarzenegger and legislative leaders met late into the night in an effort to reach a final agreement on how to close the state’s $26.3 billion budget gap.
Karen Bass, who no one has ever accused of being Pollyanna when it comes to seeing the bright side of the long-running budget talks, startled reporters Tuesday afternoon by saying that an agreement finally was within sight.
“We think today’s the day,’’ she told reporters before stepping into the Big 5 meeting in the governor’s office. “We should finish this today; there’s no reason for it to go on any longer.’’
The fact that legislators are slated to begin their month-long summer recess on Friday also could be a factor in the long-awaited rush to agreement, but at this point, whatever works.
The Language of Budget Deal Optimism
All sides continue to report progress in budget talks in
Sacramento. But don’t get too excited. Nothing they’ve said indicates that a
deal is close.
Here,
drawn from reporter’s experience, is a handy language guide for the real
meaning of politicians predicting when a budget will be done.
– "A
deal could come within a few days" (which is what Democratic legislative
leaders predicted this weekend). TRANSLATION: "We don’t have a deal and we have
no idea when we’ll reach one."
– "Tomorrow."
TRANSLATION: Within a few days.
– "Could
be something later today." TRANSLATION: "There is real progress. Tomorrow."
– "The
press conference is in at noon." TRANSLATION: "Call your wife and kids and tell
them you’ll be home late. We’ll announce a tentative deal this evening."
Divided Over Taking Both Sides
L.A.’s Occidental Petroleum Corp., which is known for producing oil overseas, now wants to turn inward and extract more oil from its own state of California. Of course, that’d be good for business in the state. But according to an article in last week’s issue of the Los Angeles Business Journal, the company is wary about the effort in Sacramento to slap a big tax on the value of any oil that’s extracted from California.
Indeed, there’s a spirited debate about whether California should impose a so-called severance tax on oil. On the one hand, the pro-tax crowd says it would be “moral” to tax oil that comes out of California’s ground and off its shores. Such a tax would sure help the state in its hour of desperate need budgetwise. But the anti-tax crowd says a severance tax would discourage the oil industry and kill jobs in California. That would only hurt the state.
This is an important matter, and now is the time for people of conscience to take a brave stand.
But not me. I stand on both sides of this issue.