The Capitol is full of optimism this week that there will finally be a budget agreement. But that won’t end the battle over California’s economic future. In fact, the important tests may only be beginning.
Public employee unions have a list of 31 new taxes, totaling more than $40 billion, they want to see. Plus they want to make it easier to get those taxes passed and they even want to rescind an effort by the state to keep and attract large employers.
If successful, the plans would be a disaster for California, especially in the face of the worst recession since World War II. The situation has brought together small businesses, taxpayer organizations and large employers in a statewide coalition, Californians Against Higher Taxes.
The coalition is a united front to promote growth and fight debilitating new taxes.
Californians are already paying $12.5 billion in higher taxes this year. What is being discussed in Sacramento is not a cuts-only budget. Taxes have been raised and additional taxes will be a drag on the economy, on job creation and on any hope for a quick economic turnaround.
The future could be worse.
The Legislature’s appetite for spending is voracious. We find ourselves with ever larger budget deficits even though we have one of the highest tax burdens in the country.
From 2003 to 2007, California’s population rose five percent. However, in the same period the state budget ballooned 31 percent.
Also ballooning is our unemployment rate, currently at a record high. Getting more Californians working and paying taxes is the best way to end this downturn.
The Legislature seemed to acknowledge that in February when it voted to lessen the tax burden on some large employers to encourage them to create more jobs and stay in California or to encourage other businesses to locate here.
That change is already threatened before it is implemented with the introduction of an initiative to repeal the tax incentive.
Try to convince employers that California wants to be business friendly with these kinds of anti-business measures on the ballot.
But those who want to raise taxes and repeal tax incentives have set their sites on a loftier goal: to change the constitutional requirement for a 2/3 vote to raise taxes.
Reducing that threshold would open the tax floodgates. Those behind the move will charge that the 2/3 requirement makes it too hard to raise revenues and is a major cause for the chronic delinquency of the state budget.
The facts indicate otherwise.
This year the Legislature had the votes to impose the largest tax increase in California history.
The 2/3 vote works to protect the economy from those who’ve never met a tax they didn’t like.
California voters put it in place and they have refused previous opportunities to change it.
Public employee unions are currently spending millions threatening lawmakers who don’t support new and higher taxes. That spending will pale in comparison to what they will put behind their efforts to lower the tax threshold and repeal tax incentives.
Any budget agreement this week or whenever won’t necessarily mean budget peace.