Author: Joel Fox

Governor Jerry Brown promised to present any tax increases
to the voters. Now members and allies of his party along with some columnists are
pressuring him to renege on that pledge and attempt to pass taxes by
legislative action. I don’t think Brown will budge.

Despite headlines that seem to indicate voters would pass a
tax increase that the governor advocates, that is no sure thing and the public
unions and Democrats know it. The recent USC Dornsife/LA Times poll had the
governor’s plan passing by a small majority. Yet, on a call with reporters, the
pollsters and poll sponsors all admitted after looking at all the data that
passing the taxes would not be easy.

Yet, in the poll, voters clearly said they want an
opportunity to vote on taxes.

Brown will not want to go against those wishes, especially
since he is aware that highly visible promises that are compromised can
undercut a politician’s credibility.

Discussion about changing California’s property tax system
is never far from the surface when talking taxes in this state. But, in other
parts of the country there are some moves to change the traditional property
tax system that may be surprising even to California’s would-be property tax
reformers. In Boston, Massachusetts the city is asking for a set amount of
volunteer property taxes from non-profit landholders such as universities and
hospitals. And, in North Dakota, initiative signatures have been filed to
abolish the property tax all together.

Boston is rich in non-profit organizations that, along with
federal and state government facilities, occupy 52-percent of the land in the
city.  To deal with its budget shortfall,
the city sent a letter to 40 top non-profit organizations asking them to commit
to paying property taxes for the next five years equivalent to 25-percent of
what they would owe if their property were not tax exempt.

According
to the Boston Globe, the 25-percent figure was arrived at because that is
roughly the portion of the city budget that pays for basic city services like
public safety, emergency medical treatment and snow removal.

According to the USC Dornsife/Los Angeles Times poll released over the weekend, voters want to
vote on taxes. The poll says they also like the idea of spending limits (80%
support), and pension reform (70% in favor.) The poll did not ask respondents
if they wanted to vote on spending limits and pension reforms, but I’ll bet
they are just itching to do so. So here’s what we do: let them vote on all of
them.

Some argue that if the voters think they can solve the
current budget situation with tax increases and long-term structural budget
problems with spending limits and pension reform they may be a step ahead of
their elected representatives in Sacramento.  

Of course, just because the poll cites voters’ positions
today, campaigns on all these issues could change their minds before the voters
actually mark their ballots.

Applying the same criteria in which Major League Baseball (MLB) stepped in to take over the operation of the Los Angeles Dodgers, MLB decided it needed to rescue the State of California from a similar crisis, baseball commissioner Bud Selig announced in a statement.

“Like the Dodgers, the state of California is on shaky financial grounds and there is a question of who is in charge.” Selig said. “Under these same circumstances that forced us to rescue the Dodgers, we decided to step in and help California.”

Selig explained that, like the Dodgers, the state has borrowed to meet its payroll and is potentially facing the need to use IOUs to pay its obligations as it has done in the past. “We could not stand by and watch that happen again,” he said.

Selig noted other similarities between the Dodger situation and the woes of the state.

Pointing to safety concerns faced by fans at Dodger Stadium and the need for beefed up security, Selig said he is similarly concerned with the safety of California residents after hearing Governor Jerry Brown say there could be layoffs of police officers if the budget is not resolved.

If you needed more evidence that the Republican legislators
are right to push Governor Brown for long-term fiscal reforms in the current
budget face-off, look no further than the public sector contracts negotiated by
the governor. Giveaways in the contracts will only make budget matters worse as
time goes on.

At the end of last month, Daniel Weintraub reported
on this site that the Legislative Analyst’s Office review of contracts made
by the administration and public safety employees found that the promised ten-
percent cost savings were not there. Weintraub wrote: "The analyst believes the contract will
actually increase costs this year, save just 2.8 percent next year and then
start adding to the state’s payroll costs again the year after next."

Weintraub added that the contracts were "chock-full of concessions by
the state." Among those concessions were big costs to the state on changes to
employees’ time off and holiday pay. The contract allows for nearly 8 weeks off
even for new hires. The legislative analyst doubts employees will use all that
time off and will bank the time to be paid later when the employee leaves the
job.

There is a lot of conversation about taxes lately, perhaps
not strange since taxes are due to both the federal and state governments
today. But, the tax chatter is about potential new taxes that some or all citizens
will have to pay if certain politicians or interest groups have their way.

President Barack Obama last week called for a tax on the
wealthy, which he described as tax filers making over $250,000 a year. Governor
Jerry Brown continues his campaign to re-start the state income, sales, and car
taxes the legislature and Governor Schwarzenegger put in place in 2009. And, as
noted by Steve Harmon in yesterday’s Contra
Costa Times, labor unions are organizing a number of approaches to tax
increases in California, including ballot measures to tax such products as oil
and tobacco.

One tax that received attention in Harmon’s article is the
California Federation of Teachers’ proposal to tax the wealthy. The president’s
proposal on taxing upper end taxpayers could put a crimp in that approach here
in California. On the other hand, should congress stall the president’s plan, the
debate to tax the rich would move front and center here if the union qualifies
a ballot measure.

Imagine if there were two Californias. There have been 27
attempts to break up the state by one accounting, and in one instance the
people actually voted to create two states out of California. I bring this up
as the 150^th anniversary of the attack on Fort Sumter occurred
yesterday because the Civil War is probably the reason there is only one
California today.

Of course, Governor Brown has
been saying of late that California and the country is as divided today as
it was during the Civil War, but that’s an issue for another column.

Kam Kuwata was a genuinely nice man. The Democratic political consultant was a great strategist who had a passion for the political arts. He and I were on the opposite sides in campaigns a number of times including the high-speed rail bond and the San Fernando Valley secession effort, to name a couple. As with all the campaigns he worked on, he loved the politics and the strategy.

Kam spoke to my Pepperdine public policy class last fall and I had him on my list to invite back when I heard the terrible news of his sudden passing.

Over dinner after the class, he spoke of the exhausting grind of running then-U.S. Senator Barack Obama’s 2008 Democratic Convention in Denver. But he was up to the hard task, not surprising for a guy who would wake as early as three in the morning to begin catching up with overnight political stories.

Preventing a
shutdown of the federal government, Republicans and Democrats in Congress and
the White House managed to reach agreement on the budget against seemingly
insurmountable odds. Are there any clues in the budget deal that could lead to
California’s politicians reaching agreement on a stalled budget plan?

The
particulars of a budget deal in Washington and Sacramento are different, of
course. California’s budget debate centers on taxes and the governor’s promise
to allow the people to vote on those taxes. Just as important is the question
of major budgetary reforms and the willingness of special interests, lead by
the public employee unions, to give the green light to friendly Democrats to allow
votes on those reforms.

The unions
have said no to putting reforms on the ballot. Republican legislators have felt
pressure from certain sections of their party not to even put tax measures
before the people.