Author: Joel Fox

Call a cop. A law is being broken. A bunch of legislators are trying to raise taxes using a simple majority vote. That is against the main law of the land, the California Constitution.

Unfortunately, the track record of the California legislature in abiding by the constitution is not so good. Legislators make a practice of breaking the law of the land on a regular basis. I draw your attention to Article IV, Section 12, paragraph C (3): The Legislature shall pass the budget bill by midnight on June 15 of each year. How often does that happen?

Some legislators feel they can treat the law like a unique puzzle, arranging the pieces so as to reach their goal, regardless of what the rules say.

Based on the example set by the legislature, I guess its okay to run a red light. Just tell the officer who pulls you over, I know the law but I’m late for an appointment and I thought it was more important to get to the appointment than to stop at the red light. That’s what the legislature would do. Ends justify the means.

The governor has put the question of out-of-control public employee pensions square in the middle of the budget fight. Good for him. The pension question must be tackled and there is no better time.

While public employee unions create a list of 31 tax increases and cry “corporate greed,” in justifying some of the tax increase proposals, it is time to balance the discussion with an examination of what might be labeled “pension greed.”

I don’t know of anyone in the private sector who enjoys retirement benefits anywhere close to those offered to retired public employees in health care benefits or early retirement age. Many who use Social Security as their retirement fund are doing the math and putting over retirement not at age 62 or 65, but hoping they can reach age 70 to get a fuller benefit. That payout still pales against the public retirement dollars paid out at age 55, or even 50 for many public employees. Let’s not even talk about the health benefit.

The “kick the can down the road” cliché is making the rounds in Sacramento as the governor and legislature try to get a handle on the budget mess before the state runs out of cash. The can has been “kicked down the road” too often in the past using budget gimmicks to delay the hard choices necessary to fix the budget.

But some Democratic politicians see a strategic advantage in stalling real fixes to the budget problem now. They want to employ temporary patches to the budget like deferrals and accounting maneuvers until after the next general election when they anticipate Democrats will not only keep strong majorities in both houses of the legislature, but see one of their own elected governor. Then Democrats can implement their agenda of budget solutions.

However, even in this Democratic leaning state there is no guarantee that a Democratic governor will be elected in 2010. In fact, over the last 45 years Republicans have served in the executive chair more than two-thirds of the time. This phenomenon has similar precedents in an even bluer state than California.

Can Tom Campbell be serious about running for governor? After all, the guy has a detailed plan on how he’ll handle the budget mess. And he says we need to temporarily raise taxes! No one REALLY running for governor puts that stuff in writing, or tells it to an audience of business people at the Los Angeles Chamber of Commerce.

But that’s exactly what Campbell did yesterday.

Campbell knows he is running an unorthodox campaign. He readily admits that every political consultant would tell him not to talk about raising taxes. Campbell told a lunchtime gathering at the L. A. Chamber that voters want to vote for someone who is optimistic and uplifting. Well, Campbell admitted with a smile, his candidacy was testing that proposition.

As the debate heats up over budget proposals, the legislators and public must be reminded that the current budget is not a “cuts only” budget. The budget deal passed in February and designed to deal with this year and next year’s budgets included a whopping $12-billion worth of new taxes. Since the tax increases implemented so far have not brought in anticipated revenue, more tax increases to solve the immediate crisis is futile.

As the majority party brings its budget plan up for a vote, arguments ring through the capitol that some of the deficit must be closed with taxes…that cuts cannot do the job alone. Increased sales taxes and vehicle license fees are already paying for the current budget. The sales tax increase kicked in April, VLF in mid-May.

Raising any taxes now would not produce the revenue needed to balance the budget before the state runs out of cash the end of July.

The California Journal of Politics and Policy, published electronically by the Berkeley Electronic Press, is out with its edition on California’s Budget Crisis. The editors asked experts and insiders from many different perspectives to write a short essay on how to deal with the budget crisis.

My solution was summarized in the title of my article: Cut Spending and Restructure. You can read my essay here.

To read other ideas and perspectives go to the contents page here and click on the title and author you want.

Listening to the discussion on complex tax restructuring proposals floating around the UCLA meeting hall at the Commission for the 21st Century Economy, I concluded, in the end, the commission’s plan better pass the Rotary test. That is commissioners better be able to succinctly explain the plan to a Rotary Club meeting in 20 minutes. They’re not there yet.

That last comment is probably unfair, since there is no plan, yet. There are pieces of a plan. Many pieces in fact, and how they are glued together will determine if the final proposal comes out looking like a sleek speedboat or an awkward Junk.

A Milken Institute study focused on the Chevron Corporation shows the effect on both job creation and tax revenue when a business runs successfully. Milken economists measured the ripple effect of doing business using the Chevron Corporation as an example. The study showed jobs were created not only by the company, but also jobs that came about to service both the company and its employees. With the legislature looking at a tax on oil, they should consider the possibilities of a reverse ripple effect: tax increases resulting in the reduction of jobs at Chevron and those that service the company.

Click Here to read my full commentary on the Milken Institute report that appears in the Sacramento Bee today.

Once upon a time, when a major sports team from Los Angeles won its league’s championship there was no question that the city would cover the costs of a celebratory parade. However, in these difficult financial times, questions have been raised about springing for a parade to honor the 2009 NBA Champion Los Angeles Lakers.

The city has agreed to split the cost with the team for a two-mile parade and rally at the L.A. Coliseum. (The rent for the Coliseum will work toward reducing the state’s massive deficit by a few dollars because the governor hasn’t gotten around to selling it, yet.)

The Police Protective League issued a news release that declared it was “foolish” for the city to spend one million dollars on a three hour parade while every tax dollar is needed for essential services. It’s hard to debate that logic. The city council is considering major cuts and layoffs to deal with the hole in the city budget.