Economy & Budget

Increase taxes or else!

“Nice little school system you got there, be a shame if something happened to it”. Taxation by extortion–here’s how it works.

Acting like the mafia dons they are, the California Legislature adopted a state budget last week that increased state spending starting July 1 by 5.6 percent despite an estimated $15.7 Billion deficit.

In a nod to budget cutting, the one-party dominated Legislature slightly pared back projected increases in health and welfare budgets then ritually denounced these “draconian” cuts to the safety net.

The 2012-2013 budget is “balanced” (as the California Constitution requires) by assuming the Facebook IPO will generate $1.9 Billion in state revenue, a claim many economists find fanciful.

The new state budget is also “balanced” on the assumption that California voters will pass Governor Jerry Brown’s “temporary” income and sales tax hikes on the November ballot.

Tuition at California’s public universities would be frozen at current rates but raised if voters turn down the tax increases.

If the tax increases are defeated, the Legislature also put “trigger” cuts into the budget that would reduce the 180 day K-12 school year by 15 school days. The Community College system faces $551 million in “trigger” cuts.

Across the state, California’s K-12 schools are already in a death spiral with experienced teachers retiring, class sizes increasing, dropout rates rising, test scores lagging, and a politically correct curriculum driven by progressive politics crowding out time for math, science, English, etc courses that once made California public schools the best in the nation.

Is there another way to “trigger” reduced state spending without further threatening the schools?

For example, while threatening education funding, the Legislature is poised to approve billions of dollars of public financing for the first leg of a new train from Los Angeles to San Francisco. Really? This is more important than education?

Shouldn’t the Legislature first cut some of the hundreds of useless boards and commissions stuffed with campaign contributors and other cronies of the political class?

Or repeal some of the regulations on business which are killing the goose with the golden eggs by driving employers out of California? Or at least cut the compliance cost of tax and regulatory laws through simplification?

None of these cuts, much less cuts to generous pension and health benefits for state workers or contracting out state services to more efficient private vendors, are on the table.

Why? Mainly because taxpayers would love to cut the considerable fat in California government and rein in (witness the recent pension reform vote in San Jose and San Diego) the out of control unfunded liabilities in the state pension system.

The Legislature knows that threatening to cut these things would result in an overwhelming no vote for new taxes. Taxpayer dream: Ladies and Gentlemen of the Legislature, start the cutting.

Another reason why structural reform or even common sense austerity is off the table is because the public employee unions won’t hear of it. California is a one party state of, by, and for the public employee unions. No Wisconsin here.

So, the California Teachers Association endorses Governor Brown’s tax increases, putting a gun to the head of voters and threatening to pull the trigger when those voters can’t afford higher taxes and know that the Legislature will never really cut spending but cringe at the thought of even more deterioration in our schools.

What’s a hard pressed California voter to do?

Here’s one answer. Call their bluff.

In 2010, San Diego City officials put a $72 million sales tax increase on the ballot, threatening to cut police and firefighters from the budget if the tax increase did not pass.

Opponents to the tax increase, led by Councilman (now Mayoral candidate) Carl DeMaio identified $90 million in cuts to the city budget that would not cut police, fire, library hours, road repair, or parks.

These opponents pointed out that 20% of the annual city budget went to shore up the unfunded liability of the city retirement fund. In the June 2012 election, city voters solved that problem by adopting DeMaio’s pension reform.

But back in 2010, San Diego voters started the reform movement by a resounding no vote on new taxes. Following the defeat, not one police officer or firefighter was fired. In fact, the safety services budget went up as the City Council cut other parts of the budget.

For California voters, the November election is an opportunity to start a similar statewide reform movement by voting to Just Say No to higher taxes.

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