There is a little innovation in Gov. Arnold Schwarzenegger’s new
state budget plan, revealed by his top aides on New Year’s Eve. But
the plan completely ignores the single largest potential method for
raising revenues without imposing new taxes.
There is a little innovation in Gov. Arnold Schwarzenegger’s new state budget plan, revealed by his top aides on New Year’s Eve. But the plan completely ignores the single largest potential method for raising revenues without imposing new taxes.
And there’s plenty in it that’s contrary to the explicit wishes of California voters, as expressed repeatedly at the ballot box. Which means that even if most Schwarzenegger proposals could pass the state Legislature – doubtful – they would almost certainly be rejected in the special election he’s widely expected to call for sometime in early summer.
Plus, many of Schwarzenegger’s ideas for raising new funds target precisely the people least able to pay, while ignoring potential new taxes on corporations and people who can most afford them.
Most egregious among tax-the-poor measures is a plan to raise the sales tax by 1.5 cents on the dollar for three years, meaning the rate would vary from 8.75 percent to as much as 10.25 percent, depending on where you live. No tax is more regressive than the sales levy, paid by every Californian on items as basic as clothing, cars and fast food. Schwarzenegger also proposes raising fees by as much as 10 percent at California State University and University of California campuses. Together, these two measures would raise more than $10 billion, the largest share coming from the very Californians for whom paying more would be most onerous.
At the same time, advocates for preserving all rules regulating the landmark Proposition 13 property tax limits have once again prevailed to leave those rules alone, even though changing them would not affect Proposition 13 one bit. Regulations now let many commercial buildings escape reassessment when their ownership changes, unlike residential properties that are automatically reassessed on the basis of their latest sale price. Changing some of those rules to reassess all commercial property at time of transfer could raise as many dollars as the sales tax and college fee increases combined, by many estimates.
But Proposition 13 purists insist this change would drive businesses out of state, and Schwarzenegger and the Democratic legislative majority apparently buy that idea. Does this mean they actually believe building owners could somehow transport their high-rises elsewhere? Or do they think a small pass-through of new property taxes to tenants would cause outfits like the Federal Aviation Administration and the Internal Revenue Service (to name just two large commercial building renters) to leave California?
Does anyone really believe building owners and tenants are less able to increase what they pay the state than either students or the working poor?
Meanwhile, Schwarzenegger proposes to virtually eliminate the First Five childhood programs authorized by the 1998 Proposition 10, even though the First Five governing commission earlier offered to kick some funds over to public schools. Proposition 10 passed handily and there are no signs of a shift in public support.
And the governor wants to raid money raised under 2004’s Proposition 63, which taxes the wealthiest Californians to pay for mental health programs. That one passed by more than 8 percent and there are also few signs of a reversal in voter sentiment on it.
The Schwarzenegger plan, however, does face up to some of the waste in the state prison and parole systems. He proposes saving about $860 million by allowing early release of as many as 15,000 of the current 170,000 prisoners, those deemed least likely to commit repeat offenses. The releases would be confined to non-serious, non-violent and non-sex offenders found by psychiatrists and parole officials to be no threat to the public. At the same time, many released convicts in those same categories also would no longer be subject to parole.
A spokesman for the state’s prison guards union immediately blasted this plan, noting that crimes like spousal abuse, stalking and possession of destructive devices are not now considered serious offenses. But some of those crimes are violent, which would keep those who commit them in prison.
Altogether it’s a plan notable for taxing the poor and leaving the wealthy virtually untouched. But life figures to become significantly rougher for the poor under this plan, especially since it also cuts Medi-Cal services, while raising fees. Which is why most of Schwarzenegger’s ideas most likely won’t get far, either in the Legislature or at the ballot box.
