Tax reform now, or at least a rough draft

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

It’s only been a month since the appointment of members of the tax reform commission that was the brainchild of Assembly Speaker Karen Bass. My question to the commission: you folks got any recommendations yet?

Because the state could sure use some thoughtful tax proposals. Right. Now. With the state facing a cash crunch (in fact, there’s already a cash shortage that will cause real pain even if the legislature and governor reach an agreement on a plan to address the budget shortfall today), California’s leaders have to raise taxes. So there’s no better time to advance tax reform. If we had strong recommendations from the commission, they’d have a chance of becoming law. And state leaders might be able to say, with some pride, that they took advantage of a miserable situation to make some important changes in how California is governed. The crisis was too good to waste and all that.

At the very least, recommendations from a tax reform commission might shape a more productive debate about the budget. Right now, the back and forth is all about brinksmanship and games of chicken. Will Democrats cut the budget more? Will Republicans finally back down and support tax increases? Can they reach a compromise, or can the Democrats find a way around the requirement of a two-thirds vote on budget and tax issues?

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Does California have a revenue problem or a spending problem?

Loren Kaye
President of the California Foundation for Commerce and Education

The answer is probably “both,” but it is usually informed more by ideology than analysis. The following may be useful in guiding policy makers’ decisions on how much in new taxes versus program cuts to implement:

1. Over time, California has stepped up its spending, after adjusting for population growth and inflation. That is, the absolute level of public services has generally increased over time. The following chart shows that inflation-adjusted per capita spending over the past thirty years – since the passage of Proposition 13. For the first couple decades, spending ranged from $900 to $1,100 per capita, over the past decade, spending has averaged $1,100 to 1,300 per capita.

Growth in General Fund SpendingGrowth in General Fund Spending


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New Nationwide Study Reveals Low Civic Participation in California despite High Election Turnout

Pete Peterson
Dean, Pepperdine University Graduate School of Public Policy

The British journalist, Harold Evans, once commented, “For America to work, Americans have to participate. If they don’t pay attention, they’re going to get screwed.” This is, albeit crudely, true of America, but it is even more applicable to the Golden State, where Californians appear to sit in stunned silence as we witness (from a distance) the slow motion train wreck that is the state budget process. This alienation from the gears of government – both in Sacramento and locally – has been decried from many quarters, but, for the first time, a statewide report has just been released quantifying disappointingly low levels of civic participation among Californians.

Co-sponsored by the organization I lead, Common Sense California (CSC), and produced by the Congressionally chartered, National Conference on Citizenship (NCoC), the “2008 California Civic Health Index,” measures citizen engagement in several ways. NCoC had published a national version of this study last fall, but the California study, which involved a representative sample of over 400 Californians has just come off the press. The main results reveal that even with the higher levels of participation in the 2008 elections, Californians vastly underperform the rest of the country in habits like volunteering and participating in local problem solving.

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Stop The Madness!

Rex Hime
President and CEO of the California Business Properties Association

When will government finally get it? At a time when California businesses are laying off thousands of people and struggling to keep the lights on, and local governments are having to do the same, here comes word of potentially new state regulations that not only would cost companies tens of thousands of dollars and jobs, but will also dramatically impact local governments — further exacerbating our economic crisis and adding to local governments overburdened responsibilities.

Right now the state is looking to adopt a new “Model Water Efficient Landscape Ordinance” to encourage greater water efficiency – something that is both needed and strongly supported by all who recognize the importance of conserving water.

In fact, many companies have come to recognize that water efficiency is vital in not only reducing their operating costs, but more importantly help them in reducing their carbon footprints – less water equals less energy, which equals less greenhouse gases.

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The Increasing Price at the Pump

Hector Barajas
Hector Barajas is a partner at Merino, Barajas & Allen, a California strategic communications and public affairs firm.

After a short break from record high gas prices for Californians, prices are back on the rise and will only get higher, courtesy of the Democrat Party and the Organizations of Petroleum Exporting Countries (OPEC).

The twelve countries that make up OPEC ( Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela) voted in November, to cut oil production by 1.5 million barrels of oil a day. That meeting was followed up by a December 17, 2008 meeting where OPEC decided to cut production by another 2.2 million barrels, with the stated goal of driving up prices and profits.

Similarly, as the legislative leadership of the Democratic Party in California convened in December 2008, they also voted to make the price of gasoline a bit more expensive. As part of their Democratic budget proposal the Democrats included a 39 cent tax on top of the regular price of a gallon of gas. Luckily, Governor Schwarzenegger vetoed the proposed gas tax.

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Avocado Commission Has Good Taste to It!

Public Affairs Consultant specializing in Issue Advocacy and Strategic Communications

I begin the new year with the suspension of my campaign for legislative office, which I had hoped would eventually get me a seat on either the state’s Integrated Waste Management Board or the Workers’ Comp Appeals Board.

Instead, I have decided to instead seek an appointment to the state’s Avocado Commission.

Sure, the other boards pay members over $100,000 for meeting just ten times annually, but they don’t provide the perks of the avocado commission!

According to a recent audit, the avocado commission has spent lavishly on board members and employees, as well as their spouses. Items such as flowers, four-star hotel stays, spas, gym memberships, vitamins and tickets to sporting events were regularly charged to commission credit cards.

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How the GOP hung on to CA Congressional seats in 2008

Allan Hoffenblum
Publisher of the California Target Book and owner of Allan Hoffenblum & Associates

It was near miraculous that the Democrats did not pick off a Republican incumbent congressman in California last November.

Not only did Barack Obama carry California by the largest margin since the Roosevelt – Landon landslide of 1936, Obama was able to outpoll John McCain in EIGHT of the NINETEEN congressional districts currently held by a Republican.

The principal reason for their lack of success is that with the exception of the race in CD4 between Republican Tom McClintock and Democrat Charlie Brown and the race in CD50 between Republican Brian Bilbray and Democrat Nick Leibham — both narrowly won by the Republican — national Democratic leaders didn’t make a full court effort to win any additional Republican seats in California.

They are not likely to make this mistake in 2010.

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Is There a Framework for a Budget Deal?

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Piecing together bits of information and whispers in the capitol hallways gives one the impression there could be a deal to be had to end the state budget stalemate.

Republicans have held fast on any tax increase proposals. But, the feeling is short of closing down some government functions the budget gap will not be closed without some tax increases.

Democrats have denied the need for spending controls. But, it is understood that reforms must be put in place to prevent the repetitive rollercoaster ride that the budget has become over the last decade.

A number of tax increase ideas have been floated from the legislators and the governor. Taxing oil, alcohol, cigarettes, and top earners is asking a portion of the taxpayers to take care of the problem that afflicts us all. If taxes are on the table, its reasonable to expect they should be broad based. If reducing the budget deficit is supposed to be painful for all of us, then everyone will be asked to sacrifice.

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Citi’s Big Week- Bye: Robt. Rubin; Hello: Bankruptcy Judges Modifying Home Mortgages Again

David S. White
Principal of the Law Firm of David S. White & Associates, West Los Angeles, specializing in litigation, arbitration and mediation of real-estate-related disputes and litigation since 1977;

Citicorp had a big week last week. Robert Rubin, former Treasury Secretary and member of Obama’s Transition Economic Team, bowed out of his Director and Senior Advisor role at Citi. Also, Citi withdrew its opposition to restoring Bankruptcy Judges’ power to modify home mortgages – a power taken away from Bankruptcy Judges via recent Bankruptcy law amendments a few short years ago in a frothy economy a world away from the sorry, beached whale the Media agonizes over today.

Some wondered how long Robert Rubin could remain untouched by Citi’s debacle (me, anyway) which he, according to some, had a major hand in creating. It is always fascinating to watch the rise and fall of media stars having their proverbial ’15 minutes of fame.’ For years, the Wall St. Journal would feature some rising economic star in the center column portrait piece, promising the moon, the stars and the sky for whoever they profiled, only to re-visit the same character some years later, this time on the way down amid scandals and ruination. It is reminiscent of the old saying: “Be nice to those you meet on the way up because you may well meet them again on the way back down.”

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Budget Battle and the Ballot

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Is Mac Taylor on to something? The Legislative Analyst suggested yesterday that if the legislature and the governor can’t solve the budget problem, hand the mess off to the voters and let them clear it up. Taylor proposed an April special election to deal not only with the measures all ready qualified for voter approval but also to put some budget and tax questions on the ballot as well.

Last year’s budget resolution – if you can call it that without laughing – included provisions on borrowing against future lottery profits and creating a rainy day fund, which need voter approval.

In addition, Taylor suggested some of the budget and revenue items discussed by the legislature such as the recent tax increase proposals and redirecting money from previously passed initiatives also be put up for voter approval.

When you consider that four initiatives* would be altered under Taylor’s plan to help the general fund you realize that the voters are already making budget decisions.

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