Governor's budget would make a tax hike likely

The proposed budget Gov. Arnold Schwarzenegger unveiled Tuesday is an election-year document that seeks to appease his enemies while doing as little as possible to offend his allies. The problem is that Schwarzenegger is out of political capital. He has little clout to impose his will on anyone, even if he cared to do so. And clearly, at least when it comes to the budget, he does not even want to try. Although the governor likes to talk about how so much of the budget is out of his control because of state laws and constitutional provisions, he did have the guts to concede that he could have balanced it by now if not for policy decisions he made - and stands by.

Those decisions include the repeal of a car tax increase engineered by his predecessor. He supported a constitutional amendment to prevent the governor and the Legislature from doing that again. Now he is doing the same thing with transportation funding. After having taken a beating for over-promising money to the schools and failing to deliver, he has proposed giving education a $4.3 billion increase next year, which is $1.7 billion more than the constitution requires. That's money that will be built into the education budget's base, forcing future Legislatures and governors to start from that point and go higher as they fund the schools in the years ahead.

Each one of these moves, in isolation, might be defensible. But the math does not allow them all to be done at once while also balancing the budget without raising taxes. It is still possible that the economy will boom beyond all expectations and bail out this governor, or the next one, with higher tax revenues. The most likely outcome at this point is a tax increase in 2007

Absolutely predictable; before Schwarzenegger was elected.

What was the CAGOP thinking then? Now, they don't have time to think. They're preoccupied grabbing their ankles and holding the position.

it is still possible that the economy will boom beyond all expectations and bail out this governor, or the next one, with higher tax revenues.

It is also possible that the real estate market will tank (or some other economic downturn) and revenues will come in less than projected at which point we will have tapped out every fund by committing revenues to new bonds and locking in terms through constitional amendments. If one considers what may be ahead in the pre-written script, it almost appears that this is the recipe to ensure future tax increases.

Although the governor likes to talk about how so much of the budget is out of his control because of state laws and constitutional provisions, he did have the guts to concede that he could have balanced it by now if not for policy decisions he made - and stands by.

The most likely outcome at this point is a tax increase in 2007

Get ready FO, you're going to get your biggest spin opportunity yet. Weintraub has documented it for you.

Surging revenues highlight governor's budget (Schwarzenegger, CA)

http://www.freerepublic.com/focus/f-news/1556486/posts

California's tax revenues are surging ahead of expectations, giving an election-year jolt to the state budget and providing more money for public schools, health services and higher education, according to a budget proposed Tuesday by Gov. Arnold Schwarzenegger. The governor, a Republican, revealed a $125.6 billion spending plan for the 2006-2007 fiscal year that does not raise taxes while providing a 7 percent boost in spending over this fiscal year.

The plan also marks the first time in several years that the state projects enough tax revenue to cover spending without significant borrowing, a reversal from budget deficits that reached into the billions before Schwarzenegger took office.

Among its highlights, the governor's spending plan:

Does not raise taxes.

Reduces the state's structural deficit by more than two-thirds, from $16.5 billion when Schwarzenegger took office in 2003 to $4.7 billion in the next fiscal year.

Does not raise taxes.

The fund will be created from a small surcharge on electric and gas customers within PG&E, Edison, San Diego Gas & Electric and So. Cal. Gas Company territories. The PUC estimates the surcharge will be absorbed into existing rates without any discernible impact to energy bills.

This $3.2B tax is directly from the executive, bypassing legislative approval.

Does not raise taxes.

This budget year, and only because of a broken promise not to borrow (Weintraub was talking next budget year when Prop 57 funds run out). Meanwhile FEES go up. You choose not to call those taxes.

California's tax revenues are surging ahead of expectations, due to a real estate bubble that is EXACTLY analogous to the dot com boom.

You do remember what happened then?

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