Author: Joel Fox

I doubt if you’d see an analysis such as the following in a California editorial page. But, the Las Vegas Review Journal had a lot to say about the way California is handling its fiscal mess.

The editorial headline reads: If Only We Could Tax More
The subhead reveals what the editorialist really thinks: And Other Fairy Tales From Our Neighbor to the West

And, yes, of course, one of the reasons I’m reprinting the editorial here because it quotes me!

Here’s the editorial from July 11:

As California teeters, Democrats are left to contemplate how this living laboratory of liberalism — with its smothering taxes, intrusive regulatory apparatus, generous social services and well-fed, heavily unionized public sector — could now find itself on the brink of collapse.

As I have written many times before the current budget is not a cuts-only budget. Taxes were raised in February but now is not the time to raise more taxes and drag down the economy. In fact, the way to do long term repair to our budget problem is to make California more business friendly. The Small Business Action Committee is putting this ad on TV around the state urging voters to tell legislators to “Hold The Line.”

Like so many commissions created to deal with intractable state problems, the new tax commission may be on a road to nowhere. Ideological divides have undermined the hope of Commission Chairman Gerald Parsky to present to the legislature a new state tax structure proposal with unanimous support from the commission.

Working toward a plan that included a flat income tax, a reduction in the sales tax and an end to the corporation tax, offset by a new value added tax called a Business Receipts Tax, the commission will now consider a second plan built on a different chassis. The proposal fathered by Commissioners Fred Keeley and Christopher Edley includes a tiered income tax, an increase in the property tax on commercial property and a carbon tax, to name a few elements of the plan.

Ironically, both plans aim for similar results: a less volatile tax system that will produce more revenue for government as years go by. But each would take diametrically opposed routes to get to that goal. The original plan, apparently backed by Parsky, expects to grow the economy throwing off new tax revenues as it goes, using the flat tax to reduce volatility. The Keeley/Edley plan wants to raise taxes or make it easier to raise taxes to gain revenue, arguing that property tax increases on business are a stabilizing influence on tax revenues.

The lawsuit filed Friday by former UCLA Chancellor Charles Young has all the appearance of an act of desperation on the part of spending interests. The basis of the lawsuit claims that Proposition 13 did not merely amend the constitution but revised it, which an initiative cannot do.

Where has Chancellor Young been these past 31 years? Why, all of a sudden, did he and his attorneys “discover” this constitutional flaw?

The fact is the California Supreme Court, the same court Young wants to take original jurisdiction over his lawsuit, addressed the argument that Proposition 13 was a constitutional revision in 1978.

In its ruling on a case brought by the Amador Valley School District and joined by many Prop 13 opponents, the court confirmed that an initiative may not “revise” California’s constitution. However, the court then said that Prop 13 did not amount to a revision.

THIS ARTICLE WAS PUBLISHED IN YESTERDAY’S LOS ANGELES TIMES:
http://www.latimes.com/news/opinion/la-oe-fox9-2009jul09,0,2413264.story

The “Blame 13” chorus is at it again. You can always count on it to sing “It’s all Proposition 13’s fault” during difficult economic times. The story has gone national, with columns in Time magazine and the New York Times taking shots at Proposition 13. The attacks are probably best summed up by an editorial cartoon picturing Proposition 13 as the beginning of the end for California civilization.

Let’s get the facts straight. Despite the cap instituted by Proposition 13, property taxes have increased dramatically in California. According to Board of Equalization data, property tax revenue has increased 800% since the measure passed in 1978 — from $5.6 billion a year to $50 billion. Compare that with general fund revenue — made up largely of sales, income and corporate taxes — which has increased 500% over the same period.

A Superior Court decision preventing refinery expansion to move ahead in Richmond may have added a thousand workers to California’s unemployment rolls. Contra Costa County Superior Court Judge Barbara Zuniga told Chevron to close down the refinery expansion in a dispute with environmentalists over the type of crude oil to be refined at the plant.

According to the San Francisco Chronicle, those who sued Chevron to cut off the work then demanded that workers be kept on the payroll until a resolution of the dispute occurs.

That’s if there is a resolution. One way to prevent the remodeling from ever happening is to stall negotiations one way or another. Meanwhile, Chevron is supposed to be paying the workers? That’s not how the world works.

A poll was distributed yesterday that indicated voters would support a tax on cigarettes. The American Lung Association, American Cancer Society and the American Heart Association, three organizations that want to cut down on the number of smokers, commissioned the poll. So, it’s hard to understand the poll’s conclusion: “At a time when the state of California faces an unprecedented budget crisis, a tobacco tax increase receives overwhelming public support as part of a potential solution.”

A tax on cigarettes is intended to partially solve the budget crisis? Is that the goal of these reputable organizations? Using a tax on cigarettes to help solve the budget crisis seems highly unlikely, since a cigarette tax is a notoriously unreliable source of revenue. The higher taxes often cause smokers to search out ways to avoid the heavy tax. Purchasing them over the Internet, crossing state lines to acquire smokes, or even getting smuggled cigarettes.

At a Los Angeles press conference this morning, Governor Arnold Schwarzenegger pleaded with the press to write a complete story about the budget stand-off.

Challenged by a reporter’s question on why he wouldn’t raise taxes during this budget crisis while his Republican predecessors going back to Ronald Reagan raised taxes, the Governor seemed surprised. With a short laugh, Schwarzenegger reminded the reporter that California had raised taxes a record amount, $12.5 billion, just four months ago.

The Governor went on to lecture the reporters at the conference on the importance of presenting a complete story in their papers or broadcasts — Tell the tax increase side of the story when they report on the budget cuts.

While there were budget cuts in the February budget plan along with the tax increases, many of those “cuts” were for projected budget increases, not actual cuts as measured against the previous year’s spending.

The campaign to oppose the Governor’s budget plan asks for a common sense approach of budget cuts and tax increases — then forgets to mention the record tax increases from just four months ago.

Would Pete Wilson run for governor against Jerry Brown if term limits did not deny that opportunity? “Hell, yes,” the former California governor said firmly, when asked that question by Fox and Hounds Daily contributor Joe Mathews before an audience earlier in the week. Wilson is the only Republican to defeat Brown in a statewide contest when both ran for the United States Senate in 1982.

Wilson attended a Zocalo Public Square event moderated by Mathews at Santa Monica’s RAND Corporation on Monday. During the one-hour discussion, Wilson relived the difficult early days of his governorship, which are eerily similar to California’s current circumstances.

Dealing with a budget deficit that equaled about one-third of the entire budget, Wilson agreed to equally cut spending and raise taxes, although he said he warned Democratic leaders the taxes would not bring in the revenue expected from the tax increase. For three budget years following the tax increase, Wilson said, the revenue was lower than the previous year.

Wilson argued the only thing worse than raising taxes was deficit spending, which he refused to do, claiming such an action leads to utter irresponsibility.