(PR) Budget Deal a Case of “The Good The Bad and the Ugly”

California Budget Deal: A Case of “The Good The Bad and the Ugly”

Sacramento — Jon Coupal President of the Howard Jarvis Taxpayers Association released the following Statement today regarding the tentative California state budget deal:

The budget deal reached last night by California’s political leadership team is a mixed bag which can best be described as “The Good The Bad and the Ugly.”

“The Good”

Taxpayers are pleased there are no additional new tax increases in this proposal and that Proposition 13 was left alone. After a massive $12 Billion tax increase enacted just last February even the majority party had no choice but to face the fact that additional taxes would have all but destroyed hard-working families and merely accelerated California’s decline.

There are real cuts in this proposal. Significant reductions in spending are absolutely necessary to bring expenditures into alignment with revenues. And it appears that the state is taking its first nascent steps toward selling unneeded assets such as the Orange County Fairgrounds. Some boards and commissions such as the Integrated Waste Management Board will be eliminated and many of the state’s furloughs would be made permanent. These are all great first necessary steps to getting our State back on track.

“The Bad”

While we are pleased that no new taxes were forced on the people of California during these difficult economic times we remain extremely concerned that a broader more fiscally responsible plan was not reached. Time and time again this Legislature has simply shuffled papers around leaving the problem to be solved another day. Bernie Madoff could have learned a thing or two about shell games from the California Legislature.

Real fiscal reform in California will never be achieved until we control government employee pensions at both the state and local levels.

And the State has yet again done an incredible disservice to our counties and cities by raiding local government funds. It is not only unfair but it is irresponsible to continue robbing Peter to pay Paul for their fiscal mismanagement. Furthermore we remain concerned that the loss of local revenues will only increase pressure to raise taxes at the local level something we will watch with great vigilance.

“The Ugly”

While there are some welcome reforms in this proposal particularly in welfare programs the lack of major reforms such as in public employee pensions that are necessary for long-term financial stability is not just a disappointment to taxpayers. The real question is whether this budget deal will be viewed by Wall Street as sufficient enough progress upon which to extend additional credit. While taxpayers are technically not going to pay more taxes the tax accelerators in this budget deal have the effect of taking money out of the pockets of taxpayers before it is due. Some argue persuasively that this is just as bad as a tax increase even though they will be getting the money back.

Finally it is not in California’s interests to continue to employ accounting gimmicks which simply “kick the can down the road.” From what we can gather the proposal has several “expense deferrals” ‰ÛÒ one-time revenue accelerators and numerous assumptions ‰ÛÒ that virtually guarantee we will all be back arguing over these same issues in just a few short months.

For information on the California Budget Crisis visit http://www.BudgetFight.com.