California Budget Likely Only Temporary
California’s effort to close its $26.3 billion budget gap is stalled, at least temporarily, in the Assembly this morning as lawmakers haggle over school funding and borrowing from local cities and counties.
But even when the revisions pass — and almost all of them will — it’s not likely the budget will stay balanced for long. Even those legislators who helped put the agreement together sounded resigned Thursday to doing this all over again before the fiscal year ends next June 30.
“We’re likely to have to come back, probably in January, to deal with wherever the economy takes the budget,’’ Democrat Darrell Steinberg, the state Senate leader, told reporters.
His Republican colleague, Senate Minority Leader Dennis Hollingsworth, sounded like a man with his fingers and toes crossed for luck when he spoke to the Senate before the budget vote.
AB 469: Scaring Taxpayers into Overpaying Use Tax
Assembly Bill 469 is supposed to “increase awareness of the California use tax and increase compliance.” This bill creates more problems than it solves. AB 469, if passed, will only confuse and intimidate taxpayers into paying taxes they don’t owe.
Under current tax law, individuals and businesses are required to pay use tax (the equivalent of sales tax) on goods purchased out of state.
AB 469 would make it a requirement for individuals to report use tax on their income tax return, and require taxpayers to put a “0” on that line if they believe they do not owe any use tax. This puts taxpayers in a difficult position. Most taxpayers do not know the purpose of use tax, where it applies, or how to report it. Worse yet, they have to sign their return under penalty of perjury.
The worst part of this bill is that for individual purchases of items less than $1,000 dollars, taxpayers are not required to have receipts from which to calculate use tax. Instead, taxpayers are expected to use a “use tax table” to calculate the use tax due as a percentage of their taxable income.
The Real Problem Remains Hidden
To say the current California budget is irresponsible is an understatement at best. It relies wholesale on accounting gimmicks and borrowing to create the illusion of a budget in place. Some key components, like the $1.2 billion in corrections savings—are not even specified, just targeted.
It sells off precious, long-term assets in the worst real estate market ever to pay for current operations. It even sells a financial services operation at a time when everyone is suspicious of their value. Clearly prudence and wisdom flew out the window.
It cuts higher education, welfare, health and K-12 education, and leaves almost no one happy. But it misses the real problem facing the state—the irresponsible way in which public employee salaries and benefits are set.
For decades, city councils, county boards of supervisors, school district boards and the state have cut deals for public employees dramatically expanding their benefits and salaries while limiting their work responsibilities (the so-called “work rules”). When the governor allowed the pension rules to be removed from the table, he gave away the one positive development of the last round of negotiations.
Down the memory hole
The only thing in Sacramento shorter than a budget “solution,” is the memory of the previous budget solution.
Here, what happened only a few months ago, becomes ancient history. Some would attribute that to short attention spans; others would say it’s a cynical attempt to reprogram the public debate. In any case, in the past few days with all the hoopla over the latest budget solution that “does not raise taxes,” it is clear that the spinners have amnesia. Taxes have been raised on Californians to historically high levels in the previous solutions. And California’s employers and investors – those who provide and hope to create the jobs that will ultimately pull us out of the recession – are already paying significantly higher amounts to the state, driving us off the charts in rankings of states with the worst business climates.
Over the past nine months, taxes have been increased or accelerated on California taxpayers by more than $20 billion. Increased revenues account for more of the measures to reduce the budget deficit than have measures to cut actual spending. The result? Alarmingly high tax rates for California.