The Threat of Oil Severance Tax and Split Roll Ignores Reality
Threats to major businesses are becoming a key strategy for those who support Jerry Brown’s budget solution. Businesses have been warned quietly that if a June special election does not occur, or if it comes off but the tax extensions fail, there will be renewed efforts to pass an oil severance tax and/or a split roll property tax on commercial property. As reported on the website Educated Guess, under the headline “Watch out, biz, if taxes lose in June,” Senator Joe Simitian more publically suggested oil severance tax or split roll initiatives if the June taxes fail.
Frankly, certain spending interests may proceed with an oil severance tax or split roll whether taxes are passed in June or not. Putting aside the merits of Brown’s tax extension policy for a moment, however, let’s question this strategy of pursuing an oil severance tax or split roll.
What makes the supporters of such taxes so confident that voters will rally around these tax increases?
The Punishment Consensus: Can Budget Torture Save Us?
Who says Democrats and Republicans are divided over how to fix California and its state budget? The recent rhetoric from right and left suggests we have a consensus on a way forward:
The people of California need to be punished more.
That is, the public needs to feel much more budget pain, firsthand, before they’re willing to make and accept the tough choices necessary for budget balance.
On the left, Treasurer Bill Lockyer leads the pain caucus, having suggested all manner of ways to inflict pain (from the psychic pain of offering provisional cuts in the event of the failure of Gov. Brown’s plan, to the targeted pain of cuts in Republican districts) so that the public makes the hard choices of cuts and tax extensions. On the right, Steven Greenhut is suggesting that Californians need to be hurt more by government cuts before they come to understand the price they’re paying for the power of public employee unions – and agree to back reductions in labor power.
The theory is that difficult decisions will come only through pain. But is that true?
Don’t Kill California’s Recovery
With jobless numbers still at record highs, it wouldn’t be right to declare California’s economic downturn over anytime soon. Even so, glimmers of hope are beginning to emerge that the Golden State is inching its way toward economic recovery.
Let’s hope the politicians don’t mess it up.
In his recent State of the State address, Governor Jerry Brown said “we will not create the jobs we need unless we get our financial house in order.”
Unfortunately the Governor’s proposals to put California’s financial house in order are starting to look more like a wrecking ball than a rescue plan. His budget proposes billions of dollars in taxes on the private sector—the very folks he wants to create more jobs.
It may seem like a distant memory, but merely two years ago, a different Governor and Legislature tried taxing their way out of a similar budget mess. Since then California has lost more than half a million jobs and our state’s unemployment rate has grown by 20%.
California Budget: Think You Can Do Better?
Newly
elected Governor Jerry Brown took office on January 3, 2011 and inherited a
$25.4 billion budget deficit. He quickly went to work proposing a budget that
balances revenues and cuts with a combination of tax extensions and cuts to
health and human services programs and higher education.
Californians
are aware that there are some big issues at stake including a proposal to
realign certain services from the state to counties and a proposal to eliminate
redevelopment agencies, but few understand the complicated specifics that may
have a very real impact on their lives.