Legality of proposed California tax plan in question

Sacramento Bee ^ | 1/6/9 | Phillip Reese

[SmithL]

Any budget agreement between Democrats and Gov. Arnold Schwarzenegger that skirts the state's two-thirds vote requirement for new taxes will almost certainly be challenged in the courts – and there's a significant chance the state would lose, some legal experts said Monday.

It's not a slam-dunk case for either side, though, law professors say, because the Legislature is largely moving into uncharted territory with its plans to break the budget stalemate by effectively replacing a tax that is tough to increase with a fee that is much simpler to boost.

"The question is, 'What is a tax?' " said Jesse Choper, Earl Warren Professor of Public Law at the University of California, Berkeley. "It may be a simple little question, but like most things, it can be more complicated."

Democrats and the governor are trying to hash out a plan that would eliminate about half of the state's burgeoning $40 million deficit. The foundation of the plan is a measure passed by the Legislature last month that would raise some fees, lower some taxes and come up with an extra $10 billion or so in revenue – all without triggering the Proposition 13 requirement that any tax increase be approved by a two-thirds vote in the Legislature.

The governor threatened to veto the plan, then said he might go along with it if it contained several new provisions. Republicans, who didn't have the votes to kill the plan, nonetheless generally hate it and contend it violates the state constitution.

Daniel Simmons, a law professor at UC Davis who specializes in taxation issues, said it would be tough for Democrats to convince a court that a series of moves that results in a huge increase in revenue from citizens doesn't constitute a tax increase.

[SmithL]

If they manage to pass this without Republican support, and the Courts do strike it down, I would assume that the Republicans will be happy to negotiate - on their own terms.

[17th Miss Regt]

If they repeal the tax, impose the ‘fee’, and then have the ‘fee’ struck down by the courts, that will be hilarious!

[Navy Patriot]

I would hope that the Republicans would make every attempt to put the state into bankruptcy, and recall Schwartzenkennedy.

[goldstategop]

Its unconstitutional - a lawsuit is being filed to block it. Its just as well since the state will never see a dime from it.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[goldstategop]

The Democrats can pass it as long as its really "revenue neutral." But if its purpose is to increase revenue, it violates Prop. 13's language.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus