A Higher Cliff

EDITOR’S NOTE: This column was written prior to passage of the state’s budget yesterday morning (posted 2/20).

Over the last three days California has come perilously close to committing economic suicide. What is so frightening is that taxpayers have for now avoided by only a single vote the passage of a legislative package imposing the largest tax increase ever presented to any statehouse in America. Ever. The only question is whether the constitutional protection of a two-thirds vote against tax increases — approved by voters in a landslide in 1978 — will continue to prevent this tragedy from occurring.

The clear winner in this budget deal is the status quo of dysfunctional government. Indeed passing this budget deal removes the last remaining chance for substantive government reforms. The real losers in this deal are ordinary California taxpayers and small businesses. Corporate California has been thrown a few bones and as usual has neither the backbone nor the vision to fight for more. (Some corporate interests will actually do pretty well. Multinationals will get tax relief as will Hollywood interests which will receive $100 million in tax breaks.)

As of this writing votes on this multi-bill package have already taken place over the weekend. It is our fervent hope that the proposals are carefully scrubbed — at least as much as can be done in such a short period — so that those legislators who call themselves fiscal conservatives can let the breathtaking scope of this plan sink in.

It is not only the scope of these tax increases that should lead any sane person to reject them but the details of the proposals are very troubling. For example the so-called spending limit is significantly flawed. Unlike the hard spending limit of ACA 19 the proposal which is part of this package has huge loopholes in it including a provision that allows the limit to be adjusted upward to account for tax increases. This defeats the very purpose of a spending limit.

In exchange for massive tax increases which will hit an average family of four to the tune of $1200 or higher annually are fiscal conservatives getting anything in addition to a weak spending reform like repeal of collective bargaining for the public sector? No.

Are we getting systemic changes to address waste fraud and abuse? No.

Are we getting significant and permanent reductions in state payroll? Are you kidding? The tax increases are being imposed for the very purpose of protecting state workers

How about repeal or even suspension of AB 32? Of course not. California must continue to shoulder the burden of all nations to address global warming — who cares about destroying the economy?

Does the level of the so called "cuts" actually match the level of proposed tax increases? No. In fact real "cuts" — where spending will actually be reduced from the previous year — reflect less than $5 billion.

We are told to accept this deal as the best we could get. And besides something must be done to prevent California from going off a cliff.

But if this horrible bill package is approved we will soon find out that the cliff we have driven off is much higher and the damage we sustain will be irreparable.

Jon Coupal is president of the Howard Jarvis Taxpayers Association (HJTA) California’s largest taxpayer organization. John Kabateck is executive director of the California arm of the National Federation of Independent Business (NFIB) America’s leading small-business advocacy organization.