Author: George Runner

Tax revenues received by the State Board of Equalization last month exceeded projections.

Although I continue to remain deeply concerned about California’s economic recovery, I’m pleased to report that our state’s budget picture—at least when it comes to sales tax—isn’t quite as bleak as it might seem.

On Tuesday, the State Controller reported that sales and use tax general fund revenues for the month of July were $977.6 million, 12.5% below the Department of Finance projection of $1.12 billion.

However, BOE actually received $1.64 billion in July, more than half a billion dollars above the budget projection.

It’s really comparing apples and oranges to talk about the state’s budget picture without acknowledging every dollar we received last month.

It’s not every day a government program becomes less burdensome for small business owners and entrepreneurs, but it can happen.

In my recent op-ed “A Qualified Mess,” I described the many problems plaguing the “Qualified Purchaser Program” — a use tax collection program targeting small business owners. I invited impacted business owners to send me their feedback via a survey on my website, and I shared this feedback with my colleagues and BOE staff.

I also joined small business owners and taxpayer advocates at a press conference urging reforms to this program. This NFIB-sponsored event was well-attended and led to stories by CalWatchDog, Capital Public Radio, The Orange County Register, The Sacramento Business Journal and others.

California taxpayers are celebrating a rare victory. Despite Democrat efforts to extend them, the sweeping “temporary” tax increases of 2009 have gone away. This is an uncommon treat, as many prior tax hikes sold as “temporary” are still with us today.

As Californians enjoy the benefits of this victory, this month also marks the 20th anniversary of a prior sales tax increase that is still with us. On July 15, 1991 Californians were impaled with a "temporary" sales tax increase of 1.25%. This measure was enacted by the Legislature to address the state budget shortfall during the early 1990s economic downturn.

Fast forward to June of this year. A 2009 sales tax rate increase of 1% was set to expire on July 1, 2011. Despite a vote of the people against extending this and other temporary tax increases, Governor Jerry Brown and Democrat legislators unsuccessfully sought a five year extension of these taxes.

Two years ago, the California Legislature enacted an onerous
law requiring business owners dubbed "qualified purchasers" to register with
the State Board of Equalization for the purpose of reporting "use tax." Like
many bad laws, this one was cooked up in an attempt to help balance the state’s
budget. As you might suspect, it hasn’t worked.

I was serving as a senator at the time and voted against
this legislation. Now, as an elected member of the State Board of Equalization,
I’m seeing firsthand the mess this law has created.

The "Qualified Purchaser Program" was supposed to bring in
$200 million in new revenue during its first two years; so far, it has yielded
only a fraction of that total, barely covering related expenses, including new
staff and other program costs.

Years of overtaxation and overregulation have given
California the second highest unemployment rate in the nation. Even so some of
our state lawmakers still believe that punishing success is a recipe for job
growth.

Efforts by Assemblywoman Nancy Skinner (D-Berkeley) and
other Democrat legislators to increase taxes on high income earners will
actually punish California job creators and worsen volatile state revenues.

According to the Tax Foundation, California already has the
third highest income tax rate and one of the most progressive tax structures in
the nation. The top one percent of California’s income earners have incomes of
$500,000 or more per year and pay up to 50% of all income tax revenues received
by the state each year, according to a report by the non-partisan Legislative
Analyst’s Office.

This decision is a historic attack on the constitutional rights of states and the liberty of all Californians.

By flooding our neighborhoods with criminals, the Court will make one of highest taxed states in the nation among the most dangerous as well, further tarnishing the California dream.

At a time when law-abiding Californians cannot find jobs, it’s hard to imagine how convicted felons will do anything other than return to a life of crime.

But at least Justice Kennedy can sleep easier at night knowing that none of these dangerous felons will be released in his neighborhood.

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Treasurer Bill Lockyer caused waves last month when he suggested that given Republican lawmakers’ opposition to higher taxes, their districts should bear the brunt of spending cuts. He said, “The people who want less government ought to be at the front of that line to get less government.”

Senate Democrat Leader Darrell Steinberg expressed openness to the idea, saying, “You don’t want to pay for government, well then, you get less of it.” He added that any district-targeted cuts should not hurt “kids or the vulnerable” but instead be limited to “convenience services that affect adults.”

Outrage to the proposal—appropriately so—came fast and furious.

Senate Vice-Chair Bob Huff said the proposal was “just nuts.”

Jon Coupal of the Howard Jarvis Taxpayers Foundation compared the idea to the strong arm tactics of an organized crime protection racket. He also suggested it might violate the equal protection guarantees found in both our state and federal constitutions.

Even the Los Angeles Times called the plan “ham-fisted and wrong.”

They’re at it again.

Lawmakers in California, in a desperate attempt to generate revenues are again seeking to force out-of-state retailers to collect taxes for online purchases made by California shoppers. If they are successful in passing this legislation, not only will they fail to raise even one more nickel in tax revenue, they will cost the state thousands of jobs.

It’s a bit complicated, but allow me to explain: California has a cutting edge industry of internet entrepreneurs called “affiliates.” You’ve seen “affiliates” while surfing the web: blogs and websites that provide “click through” ads to online retailers. If you click through and make a purchase, the affiliate gets a small percentage in payment from the retailer.

According to the Performance Marketing Association, there are nearly 25,000 California-based affiliate businesses that provide information to California consumers and improve the ease and thrift of their shopping experience online or with remote retailers and their catalogs.

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%.