Posted on 11/12/2008 8:43:59 AM PST by NormsRevenge
On a day when the legislative analyst suggested raising the state income tax by 5 percent, one termed-out Republican lawmaker said his party may have no alternative than to support tax hikes.
California Legislative Analyst Mac Taylor said Tuesday the state deficit could reach $28 billion by June 2010. Besides recommending the income tax hike, he urged lawmakers to act immediately on Gov. Arnold Schwarzenegger's proposals to eliminate this fiscal year's $11.2 billion deficit. The governor last week proposed billions of dollars in cuts and a temporary, 1.5 percent hike in the state sales tax.
"I don't think we are going to get there without some sort of tax modification," said state Sen. Bob Margett, R-Diamond Bar. "The vehicle license fee is in that realm, so is that proposal of the tippler tax - a nickel for every drink.
"The governor could say, `I need this half-cent sales tax.' And if he says that (the sales tax) dies at some point in time, and if he says this is how it would be spent ... I think you would probably find Republicans saying we have no other route to take."
Margett's 29th District includes Chino, Chino Hills and Claremont.
Republicans have so far adamantly opposed using a tax increase to bridge California's budget deficit. Because a tax hike requires approval of two-thirds of the Legislature, at least eight Republican lawmakers would have to approve it. Margett's legislative career, which began in 1995, ends Nov.30.
Local lawmakers said regardless of the proposal, the governor needs to be active at the negotiating table.
"Where are the eight Republicans going to come from? It is incumbent on the governor to provide this solution, versus just holding a press conference making a proposal, and walking away," said Assemblyman Anthony Portantino, D-Pasadena. "He has to say: `I might be a movie star, I might be the governor, but I really have to sit down at the table and craft a bipartisan solution."'
Schwarzenegger has said that Republican lawmakers might be more willing to support a tax increase, despite past opposition, because the election is over, and the economy has reached a level of crisis.
But Margett said Schwarzenegger has not reached out to rank-and-file Republicans yet.
Margett said that to get GOP support, a sales-tax increase would need to be temporary, and the proposal would need to include specific education and welfare reforms.
Besides a sales-tax increase, Schwarzenegger's proposal includes $4.4 billion in across-the-board spending cuts.
Taylor said the two-pronged approach was necessary. He supported the framework of the governor's plan and called it "comprehensive and ambitious" because it does not rely on borrowing.
The state's revenue collapse is so bad that if lawmakers did nothing, California would face $22 billion shortfalls each year from 2010 to 2014, Taylor said.
"We have to do something in the ballpark of what the governor proposed ... ongoing spending reductions and some tax increases," Taylor said.
Assemblyman Mike Eng, D-El Monte, said a vote on budget reforms could come as early as next Wednesday.
Taylor's report Tuesday said cuts alone will not solve California's budget deficit because the state's weakening economy is cutting the flow of tax revenue.
Last week, Schwarzenegger had projected a $24.5 billion deficit for the rest of this fiscal year and the one that runs from July 1, 2009, to June 30, 2010. But the analyst's office estimated tax revenue will be even lower, which will widen the shortfall another $3.5 billion.
Since the governor signed the overdue state budget in September, revenue has been lower than expected. It is $1billion below the $22.6 billion that was expected for the first quarter, according to the state Department of Finance.
"With the expected slow recovery of the state's economy, it is imperative that the Legislature attack the grim budget problem aggressively, making permanent improvements to the state's fiscal outlook," Taylor wrote in his report.
He said elected officials should do more to raise revenue because the governor's proposals would address only about half the state's long-term problems.
In addition to an income tax increase, which would be deductible on federal tax returns, Taylor's report offered a list of potential revenue sources for lawmakers to consider.
One option was to boost the licensing fee on vehicles, which Schwarzenegger cut when he took office in 2003. That action cost the state about $6 billion a year.
The legislative analyst said increasing a portion of the vehicle license fee would generate about $1.6 billion annually, money that could be used by local governments on public safety and mental health programs. The state would benefit because it would not have to compensate local governments for the amount they lost when Schwarzenegger cut the licensing fee.
The state's financial officers have been urging swift action amid a Wall Street nose dive and as the housing market continues its slide.
The tightened credit market is adding to California's fiscal misery. The state is having trouble borrowing money to pay its daily expenses, a routine action the state takes each year until most of its tax revenue arrives in the spring.
State Treasurer Bill Lockyer cited unfavorable market conditions in postponing the issue of $2 billion in short-term loans next week.
Lawmakers have scheduled a budget hearing on Friday to debate the governor's proposals.
If the GOP are stupid enough to do this they need to change parties as they will never win another election as a Republican.
Taxing your way out of a recession does not work. Gotta make more cuts, CA!!!!
NOT ONE DIME.
GOP, hold the line!
Better idea. REDUCE government.
Uh, how about putting all state workers on a 401-K plan instead of handing out such generous pension plans?
I’m sure that trying to get more productivity out of all of the slackers would probably be out of the question by the Democrats.
Hoover and FDR upped the marginal tax rate from 25% to over 75% and turned a market crash recession into a decade long depression.
Make work New Deal projects always have the same ending, at the end of the project, it’s back to the unemployment line for the workers.
tax hikes, eh?
like cutting spending is so radical a concept that ‘lawmakers’ can’t figure it out...
Gubamint is the biggest employer around.. if I’m not mistaken.
We are in a vicious cycle, likely to get much worse before the bottom finally falls out and anarchy and chaos reign.. which is pretty synonymous with where we are as a nation.
Hey RINOs, how about throwing out the illegal aliens?
California could erase its budget deficit by making all non-violent crimes punishable by administrative fines, with appeal only in writing to a single state officer.
Jail and prison would only be for those who refused to pay the fines. But perhaps even a majority would pay them instead.
Start off with a $30,000 fine for first time DUI, with no other crimes or damage. That would rake in close to a billion dollars a year right there, if only half of their offenders coughed up the money.
California could go fine crazy, if it wanted to, like Singapore. Police could carry WIFI credit card readers with them and assess fines right on the spot.
Californians behave like fools. They deserve a punishment like this.
BULL!
Here we go again - being DEMONCRATS!
THAT is what made us lose the election.
You have a choice - VOTE AGAINST IT and
CUT SPENDING!
What idiots!
The GOP is the STUPID PARTY.
Brace yourself for the NEW and failed “Green Deal” along with more road constrution and building bridges ... .
It make me SICK to repeat more FAILED POLICY.
Government =insanity squared. There is no rational explanation for what is going on.
If the state raised the sales tax by 1.5%, I will avoid spending any money on items I don’t have to have.
New cars, new television, other electronic items, any clothing I can do without, none of these and other things will be bought while that tax remains in effect.
I’m betting I won’t be the only one.
So go ahead Schwarzenegger. Tack on this tax and watch the state sink into the sunset. Business will be devastated by this tax.
cut
cuts
eliminate
end
reduce
reductions
remove
retire
Just a few of the words that have been removed from dictionaries in Sacramento. The tax and spend government has no use for them.
It makes me scratch my head too.
These are supposedly intelligent individuals elected and sent to protect and preserve the Constitution and the people who swear allegiance to its sovereign flag.
I think we have a vision thing going on.. Some are either intentionally blind or very naive as to what this nation is becoming... or willfully working to undermine and destroy “our thing” aka The Republic from within.
I like your post! Public school indoctrination of a generation ago is now paying its dividends. Sadly!
Thanks. I agree, it is.
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