How much different is the Brown budget of yesterday from the Schwarzenegger budget in 2009, which raised temporary taxes and made big cuts? Yes, there is a plan for realignment. Yes, there is a move to undo redevelopment agencies. That’s Good. And, a proposal to do away with enterprise zones? Not so good.
But the two budgets are really not much different. Both contain deep spending cuts and so-called temporary taxes, but the big structural reforms on spending, taxes and pensions are missing.
The central issue of the Brown budget, like the Schwarzenegger budget, is taxes. Despite the $12.5 billion in cuts announced by Governor Brown, taxes were the key to the governor’s budget presentation. Questions about taxes dominated the governor’s briefing. Taxes appeared in nearly every early headline above news reports on the budget. While many Californians are directly affected by the budget cuts, every Californian is directly affected by the tax increases.
The realignment proposal will leave local government officials in a sweat and that, too, is all about taxes. The governor promised a tax increase for five years to pay for the realignment, but what then? Brown’s answer: He hopes the economy comes back in time to cover local governments’ costs. If the economy still founders, does Brown try to seek new taxing authority for local governments?
Voters turned down extending the Schwarzenegger taxes and little has changed in the voters’ perception of Sacramento since then. Why would they support tax extensions this time?
The governor believes he can convince the voters with the help of business and the public sector. Business may not be ready to join the effort.
He would have a better chance of convincing voters if he announced major governmental structural reforms. That could have been the focus of yesterday’s announcement instead of taxes. Voters need to feel progress is being made on the problems that foster dysfunctional government. Big reforms would have made this budget look quite different than the Schwarzenegger budget.