Experts Expound

Does the failure of Proposition 76 mean that taxes are on the way with the
2005-06 state budget? The governor said as much during the campaign, then
recanted. What happens now?

“No.”

“I think no. In the kinder, gentler version of the Governor, at least for
now, it would look vindictive.”

“New taxes are not inevitable to balance the budget, which can be achieved
fairly easily as long as both sides agree to continue borrowing money and
putting off the tough decisions. The deficit may be down to $3 billion by
spring, and that could be covered by the $15 billion Prop. 57 economic
recovery bond approved last year. However, if the governor and legislative
leaders go ahead with a $50 billion infrastructure bond, a sales-tax
increase will probably be necessary to back up the bond.”

“Bank on this: a dedicated sales tax increase to pay for the various bond
proposals. The only question is whether the Governor still has enough clout
among legislative Republicans to make it happen.”

“Why tax when you can borrow? Expect a massive bond that covers everything
from shoelaces and diet supplements to school funding and corrections.”

“No, not when it comes to the budget. Rising revenues and the $3 billion in
bond money left from the Prop. 57/58 vote should be enough to cover the hole
for this year. But some form of tax/fee increases are very possible to
cover a massive infrastructure bond.”

“Taxes might be on the table, but it might be a broader discussion for the
state’s growing needs and less about getting through one budget. If the
legislature and the Gov don’t try to grab these taxes there seem to be a few
other people looking to make a play (Reiner