There are good weeks and then there are bad weeks. For California particularly its beleaguered taxpayer citizens last week was a very bad week.
It’s hard to know where to start. First while the rest of the nation comes out of recession — albeit slowly — California is doing some serious backsliding. According to the Controller’s office government revenues are down compared to this time last year. The percentage decline was not all that great from $40.97 billion to $40.81 billion but the shortfall from Governor Brown’s proposed budget is a big number; more than $2 billion.
Compare these dismal numbers with Texas which as of March has seen a 12% increase in revenue.
Second credit rating agency Standard & Poor’s issued a sobering statement expressing a lack of confidence that California’s political leadership could resolve the budget shortfall without the usual gimmicks. Bluntly stated S & P said that it anticipates “budget maneuvers that may be politically expedient but fiscally unreliable.”
Third for the eighth year in a row California is ranked by CEO Magazine as the worst state in America in which to do business. California’s anti-business climate is legendary in the rest of the nation and this year proved to be no exception. What is notable however were the brutal comments by business leaders who participated in the survey. Here are just two of hundreds of missives:
“California continues to head in the wrong direction as its tax policies will drive more businesses and people to relocate in other states. State politicians feel business and commerce are ‘necessary evils’ that provide the funds to enable pursuit of their misguided agendas.”
“California government is difficult to work with and very bureaucratic. Taxes and regulation are high and unruly.”
CEO Magazine simply confirms the reasons why well over 200 businesses have moved out of state and the rate of capital flight is accelerating.
Given all this horrible news one would think that our ruling political class would experience an epiphany and realize that the failed policies of the past — high taxes burdensome regulations union favoritism — should be jettisoned immediately.
Led by socialist leaning Democrats our political leaders — including Governor Jerry Brown — have a different answer: Double down on even more taxes more draconian regulation and heaven forbid let’s not have any meaningful reforms.
First three initiative measures raising taxes are in the process of being filed with the Secretary of State as you read this column. The cornerstone of these tax hike proposals is the Governor’s own measure imposing massive tax hikes in both the income tax and sales tax. Want to drive even more businesses — read “job creators” — and educated individuals out of California? Just raise our top marginal income tax rate from 10.3% to 13.3% which is what Brown proposes. Remember Texas (mentioned above as a state that is increasing tax revenue) has no income tax at all.
Second as long as we’re fiddling while Rome (er Sacramento) is burning let’s pass more laws making energy more expensive employing people more expensive and lawsuits against the productive private sector even easier than they are now. Brilliant.
Finally let’s not pursue any meaningful reforms that would lessen the pain of this economic torture. Last week the dominant Democrats in the Legislature made it clear that pension reform — the one reform virtually all thinking Californians agree is sorely needed — would not be forthcoming. The reason? They don’t want to anger labor whose support they need to help pass the tax hikes and budget related legislation.
California has always been different than other states. Many times our unique nature has been a positive attribute. But it is no longer a good thing when our actions border on the suicidal.
Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.