Sex Trumps Water and Prisons
Hey, the legislative conference committee signed off on all five water bills Wednesday, but the Senate still didn’t do anything on the prison bill.
Is anyone listening out there? Hello? Hello?
Way back in the day, newspapers had a whole category of news that was dubbed DBI or “Dull, But Important.”
That included things like council meetings, planning and infrastructure concerns, budgets of all sorts and, yes, most of what comes out of the state capital every day.
The idea was that while readers might not care much about that stuff, it was important, dammit, and there was an obligation to put it in the paper with a screaming headline designed to convince people to pay attention.
Let’s call it the eat-your-vegetables style of journalism.
Old 13 Props Up California
Proposition 13 is routinely reviled by those in the political class. But if they were fair, they should admit some gratitude for it now.
That’s because property-based tax revenues to governments in California haven’t dropped much at all, even though property values have plunged sharply. That’s thanks to Proposition 13’s stabilizing effect on property taxes.
Let’s stop for a moment and let this soak in. I mean, how amazing is this? We’ve seen property values in California plunge faster and further than anytime in our lives, further even than Manny Ramirez’s batting average, yet the tax revenue based on those properties has declined just a couple of percentage points this year statewide.
Considering that many businesses and households have seen their revenue or income swoon by 10 percent, 20 percent, 30 percent or more, and have chopped their budgets accordingly, a little trim of a couple points should feel like a complete and utter victory.
Tax Commission Puts Forward its Plan
The Commission on the 21st Century Economy debates and perhaps votes on the new tax plan it has shaped over the past nine months at a Los Angeles meeting today. I say “perhaps” because I suspect the final product won’t be agreed upon so quickly. There’s a lot to discuss in the proposal. Since a back-up meeting is set up for Monday just in case, the betting here is the Monday meeting will be called.
The plan’s ingredients have been bantered about for some time: A new Business Net Receipts Tax (BNRT), a form of a value added tax; elimination of the state corporation and franchise tax; elimination of the state sales tax; and reducing the number of personal income tax brackets to two at 6.5% and 2.75%.
You can read the outline of the plan here.
Many hurdles exist for the plan to become a reality, not the least of which is the reaction of taxpayers. Business taxpayers are not certain what the effects of the new business net receipts tax will be. One thing they do know, the BNRT started out with a tax rate of 2.77% when it was first drawn up, increased in later discussions to over 3%, and is presented in the committee documents at 4.2%.
Tort Reform = Healthcare Reform
In the Weekly Standard, Fred Barnes tackled the issue of tort reform and healthcare reform. It seems that ever since former DNC Chairman Howard Dean (a former doctor) stated that tort reform was not part of the bill because Congress did not want to have to take on the trial lawyers in addition to everyone else, people have been talking about this more and more.
How can you discuss a massive overhaul of our healthcare with out looking at one of the biggest drivers of cost in healthcare? Barnes points to a study that was done in the Massachusetts Medical Society where 83% of doctors say they practice defensive medicine. He also looked at medical malpractice insurance. If doctors have to pay $200,000 annually in malpractice insurance, you can be assured that patients will be paying more.
Renewable power mandate’s best-case scenario: 7% rate increase
Governor Arnold Schwarzenegger could get a Renewable Portfolio Standard (RPS) bill on his desk after the state’s legislative session ends this week. SB 14 by Sen. Joe Simitian would deny California utilities access to the most cost-effective energy and, according to the Public Utilities Commission, raise the state’s industrial electricity costs at least 7 percent. The Energy Information Administration states that existing rates are already 45 percent more expensive than the nation and 80 percent higher than the western region.
California industry can barely compete with its neighboring states and energy costs play a major role in that imbalance. The AB 32 greenhouse gas law that passed in 2006 already allows the California Air Resources Board to implement RPS in a cost-effective manner. Gov. Schwarzenegger should veto this bill because it will impose huge new costs and threaten high wage manufacturing jobs in California.