Here’s an I-Told-You-So: A Move toward Creating New Local Taxing Authority
Earlier this month, I argued that some of the cost of Proposition 1A’s defeat could be the state directing property taxes to cover state obligations and giving the authority to local government to raise new taxes.
Now, Assembly Budget Committee Chairwoman Noreen Evans is pushing a bill, AB 1342, to allow counties to tax income and cars on the local level with voter approval. While Evans argues the move is to help local governments shore up their finances, it is just a short step for the state to see a way toward balancing a big hole in its budget by throwing off responsibility and tax battles onto local governments.
As I suggested before, defeat of Prop 1A doesn’t mean that government will melt down and suddenly arise like a phoenix healed of its ill-spending ways. There will be much maneuvering to raise revenue through permanent fees and new taxing authority.
You can read more about the Evans’ bill, which has already passed its first committee, in the Santa Rosa Press Democrat article here.
The Same Old Tune: Pay Raises and Fee Increases
I guess the kindest way to put this is that we have a tone-deaf legislature. Out of town for a few days, I came back to read that the Assembly leaders were attempting to justify pay raises for assembly staff while the state deficit is growing. On top of that, other legislators were proposing targeted fee and tax increases at a time that the tax question is weighing down attempts at budgetary reform.
Now Speaker Karen Bass and Assembly Republican Leader Mike Villines have cancelled the pay raises. Bass said the pay raises caused a distraction from the discussion about the May ballot measures. No kidding. But that doesn’t change the fact that legislators somehow lose touch with the public they represent.
Bass and Villines argued at first that many of the staffers who received increases have not seen a pay raise in a number of years. With the budget problems of the last couple of years, that is appropriate. Many taxpayers haven’t seen a pay raise, either. On top of that they have been asked to pay more in taxes to keep the government solvent. While the pay raises are a small part of the overall budget, the symbolism was of monstrous proportions.
A Constitutional Convention Q&A with Jim Wunderman
The Bay Area Council’s Jim Wunderman kicked off a whirlwind of activity and interest around the possibility of calling a California Constitutional Convention with an op-ed piece he published in the San Francisco Chronicle last August. Since then he has held a summit on the idea in Sacramento and has traveled around the state generating interest for the idea of a Constitutional Convention.
Fox and Hounds Daily caught up to Jim recently to ask him what progress he sees in this quest eight months later.
Q. Your idea for calling a constitutional convention garnered a lot of attention at first. Has that interest grown since August?
A. The interest in holding a constitutional convention has grown substantially since the Chronicle first printed our op-ed piece calling for it in August. The longer the budget debacle played on, the more groups, individuals and the media became interested, many excited. Over the months we’ve had the chance to make quite a few presentations and many of those groups have signed on or are likely to do so.. We’re by no means alone in this, we get lots of pats on the backs from the strangest places.
Tea Parties, Television and the Two-thirds Vote
The Tea Parties went off around California and the nation Wednesday, gaining attention for those concerned about tax increases and federal bailouts. They were certainly a success by the measure that they displayed an anger simmering amongst many voters throughout the country. But, controversy was stoked by the way some media outlets portrayed the events as a front for Republican activism.
A CNN reporter claimed the event was “anti-government” and “anti-CNN” because the tea parties were so heavily promoted by Fox News. The Los Angeles Times coverage of the TEA Parties focused on the charge that it was a Republican inspired event. Meanwhile, Fox News broadcaster Neil Cavuto, covering the Sacramento event, stated over and over that there was no political party agenda to the rallies and that Republican as well as Democratic officials were criticized for supporting big spending and higher taxes.
Judging by some polling I’ve seen, Democrats are also concerned about tax increases and the consequences of the federal bailout. However, I expect the debate over the media coverage may overshadow the rallies in some quarters.
Notes on an Extra Special Tax Day
Tax Day hits this year with a heavy punch. Because of a plunging economy, far-reaching federal government economic programs and hot discussions about state ballot propositions, taxes are foremost on the people’s mind.
With TEA (Taxed Enough Already) Party rallies scheduled around the state and across the nation, the heat has been turned up another notch. What will the tax day events be like? We expect to have reports on a couple of TEA Party events in Fox and Hounds tomorrow.
And, you can bet state accountants are eagerly anticipating those last minute checks postmarked today, hoping to stem the tide of dropping revenue that have been projected by the Finance Department and the State Controller.
California Comeback Could Begin in Nevada
California Republicans announced a road trip yesterday. They plan to head to Reno, Nevada to hold a hearing about why businesses choose to leave California. Nevada is a good place to look for such businesses in exile.
The Republicans will not only have former California business people testifying at their hearing; Nevada’s governor and some of its legislators will also be in attendance. I imagine there will be a few zingers fired California’s way from that crowd. But, they have a right to crow – California businesses move out of state because of poor policy choices by our state’s lawmakers.
Not only can the condition of chasing businesses from the state be turned around, it must be turned around. The answer to solving California’s budget problems is to free up the job creating power of business. And the best way to do that is to encourage ENTREPRENEUR CALIFORNIA, a place where the entrepreneur can thrive without the burden of difficult regulation and high taxes.
Looking for Drama at a News Conference
The news conference supporting Propositions 1A to 1F at the Los Angeles Area Chamber of Commerce featuring Governor Arnold Schwarzenegger, L.A. Mayor Antonio Villaraigosa, L.A. County Sheriff Lee Baca, Chamber president Gary Toebben and other business and public sector leaders didn’t promise much drama. But, I attended the proceedings in hopes that some local color or unusual event would set this conference apart.
About forty teachers, business executives and carpenters stood behind the speakers, the carpenters in their hard hats and orange vests adding some color and visual impact for the cameras.
Mayor Villarigosa “humanized” the proceedings by revealing he was lobbied for support by the governor at Washington’s Gridiron Club over two beers and a stogie.
Villaraigosa declared that the propositions were the “only way out of the morass” in Sacramento, criticizing both the left and the right for trying to oppose the package.
Split Roll Property Tax Discussion Highlights Tax Commission Meeting
Taxing commercial property was the focus of the Commission on the 21st Century Economy in its fourth meeting, this one held at UC Davis yesterday. Commercial property and residential property are taxed the same under the provisions of Proposition 13. However, some advocates want to see the property tax roll “split” into at least two categories with residential and commercial property treated differently.
What a split roll would mean to the California economy and how business and commercial property have faired since the passage of Proposition 13 in 1978 depended how one reads the economic landscape. CSU Professor Terri Sexton said that residential property has taken on a greater share of the property tax burden in the last thirty years, although she admitted that could simply be the product of more residential home building or homes turning over during that time.
On the other hand, former Legislative Analyst William Hamm said there was no evidence of a property tax shift to homeowners. He argued that the ratio of assessed value to market value was higher for business property meaning that business properties are assessed closer to the full market value than residential properties.
Tax Commission Takes Pass on Prop 1A Endorsement
The commission studying California’s tax system decided to pass on a suggestion to endorse Proposition 1A, which will establish a spending cap and at the same time extend temporary taxes. At the tax commission meeting held at UC Davis today, Commissioner Bill Hauck asked the Commission on the 21st Century Economy to support Proposition 1A, arguing that it addressed one of the main concerns the commission is attempting to resolve—the volatility of state tax revenue.
However, Committee Chairman Gerald Parsky suggested that the commission as the whole should not go on record either for or against the measure. Parsky pointed out that the commission’s original deadline of April 15 was pushed back to July 31 to see how voters would decide on the ballot measures. Parsky also argued that the proposal to offer an endorsement would go beyond the charge of the commission.
Commissioners agreed with this position and did not take up the endorsement.
LA Mayor Gets Tough with Unions
Hard times are forcing former public employee union organizer Antonio Villaraigosa to play hardball with Los Angeles’ public employee unions. How Mayor Villaraigosa’s demands on the city’s unions play out could be a precursor to a coming give-and-take between the state and its unions.
In attempting to reduce a projected $530 million budget shortfall, Villaraigosa has told city workers that they have to share sacrifices to help balance the budget. The mayor is looking for major concessions, which could include foregoing cost of living increases or reducing the workweek for every employee. Villaraigosa plans to include public safety positions when requesting employee concessions.
Villaraigosa argued that the city workers sacrifice is the only way to avoid widespread layoffs although those layoffs could come if the city unions refuse to negotiate with the mayor. The unions can reject pay cuts that are controlled by contract. But, the contracts do not prohibit the mayor from firing workers.