Author: Loren Kaye

An
old friend is back in town, at least according
to George Skelton. He shows up every so often trying to settle in, but
after making an initial good impression, the neighbors usually politely ask him
to keep moving on.

I’m
talking about the proposal to extend the state sales tax to services, which is
apparently a tax reform being considered by the Governor’s Office.

We’ve
been through this before, most recently when the Commission on the 21^st Century
Economy ("Tax Commission") began to consider reforming the tax
code to make it more stable and "fit with the state’s 21^st century
economy."

Editor’s Note: I asked both Loren Kaye and Cal State Sacramento professor and former legislative staffer, Tim Hodson, to review “California Crack-Up” by Joe Mathews and Mark Paul in an attempt to get two perspectives of the book. Unfortunately, Tim disclosed recently that he is battling an illness. We want to take this opportunity to wish Tim and his family well. Loren’s review of California Crackup is below. JF

In California Crackup, Joe Mathews’ and Mark Paul’s provocative yet breezy prescription for what ails the Golden State, the authors exhaustively survey the history of governmental and political reform that has long defined the California polity.

They convincingly argue that five separate efforts over more than 150 years to make and remake the California Constitution "would prove no more successful than its predecessors."

Their solution: another round of reform to remake the California Constitution.

"What’s
the deal with Mel Gibson?" is probably the most common question being
asked by Californians.

But
in the six blocks surrounding the State Capitol, the most common question is,
"When will we have a budget?"

I’ll
leave the mysteries of Mel to the deep thinkers on ETV. But for the rest of
you, here are simple answers to your questions about when the state’s
budget will emerge.

Legislative
leaders released their latest budget proposal, called the "Jobs
Budget," which again is heavy on tax increases and light on boosting the
state’s economic competitiveness. Touted
as "saving 430,000 jobs," the plan would increase taxes by more
than $5 billion and continue speculative and one-time spending to support
ongoing programs.

Key
tax changes include:

• A
  permanent tax rate increase of one percentage point for every personal income
  tax bracket except the top bracket. This increase in personal income tax rates
  would be for the 2010 tax year, so would in effect be retroactive to all income
  earned this year, even thought it would be implemented in the fourth quarter.
  Also, the one-quarter percentage point "temporary" increase in PIT
  rates enacted in 2009 would be made permanent.

The
White House, as part of a broad policy review, has
asked business leaders to "identify specific regulations that they
believe are obstacles to job-creating private investment."

The
Administration is responding to an increasingly forceful chorus of criticism
from national business organizations and individual companies, including a comprehensive,
54-page catalog of legislation and regulations prepared by the Business
Roundtable and Business Council.

The organizations claim that these measures’
"cumulative effect will help defeat the objectives we all share –
reducing unemployment, improving the competitiveness of U.S. companies, and
creating an environment that fosters long-term economic growth."

An
initiative sponsored by government
worker unions has qualified for the November ballot – and it may well
be the most threatening issue facing businesses and taxpayers in 2010.

So
what does it do? According
to sponsors, Proposition 25, the "On Time Budget Act," merely
reduces the legislative vote requirement to pass the state budget from
two-thirds to a simple majority, and stops paying legislators if the budget is
late.

But
when you think about it, why would the California Federation of Teachers,
California Faculty Association, California School Employees Association,
California Professional Firefighters, Professional Engineers in California
Government, American Federation of State, County and Municipal Employees, and
California Nurses Association invest millions of dollars in a measure simply to
reduce the vote on the state budget? What else does it do that its sponsors are
not talking about?

On
the last day of the just-completed fiscal year, the Assembly Speaker and Senate
President Pro Tem announced agreement on what
they call a unified Democratic budget "framework" that purports
to reconcile their different approaches and "signals the next step of
negotiations" with the Governor. 

It
does no such thing.

But
don’t take my word for it; read the previously-confidential paper here.
You will find that this is not a document that anyone could negotiate from.

Unemployment
ticked down a little in California in May. Good news? Well, maybe –
depends on where you work.

The California
economy is struggling to recover, so what are the top public policy
priorities of legislative Democrats and the regulatory bureaucracy?

• Increasing taxes by billions to maintain an unsustainable spending appetite.
• Raising the cost to hire new workers by mandating new employee leave benefits, restricting the use of credit checks and credit reports, criminalizing employment disputes, and increasing litigation expenses in employment cases.