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Arnold nixes Buffett advice over Prop. 13
By George Avalos
CONTRA COSTA TIMES

The Oracle of Omaha may need a new crystal ball after Arnold Schwarzenegger on Friday rejected comments by his adviser Warren Buffett that California property taxes should be increased.

The suggestions from billionaire Buffett that Proposition 13 may need to be scrapped unleashed a political firestorm, since the initiative is revered by California voters. Buffett provided Schwarzenegger's opponents with political ammunition, raised questions about the actor's solutions for California's financial disasters, and forced Schwarzenegger's campaign into damage control mode. The comments also opened the door for a renewed debate on the role property taxes should play in the state's revenues.

Backers of Prop. 13, including the Howard Jarvis Taxpayers Association and People's Advocate, lambasted the suggestions from Buffett, the nation's second-richest person and the chairman of conglomerate Berkshire Hathaway Inc.

"Buffett and Schwarzenegger need a new script," said Ted Costa, chief executive officer of People's Advocate. "This is not going to play very well in California. I suspect they will make a complete retraction before long."

Indeed, within hours of Costa's suggestion, top aides to Schwarzenegger moved to distance the actor from Buffett's comments. Buffett was named earlier this week to be Schwarzenegger's financial adviser for his campaign to replace Gray Davis if the governor is recalled in October.

"Mr. Buffett doesn't speak for Mr. Schwarzenegger," said Rob Stutzman, spokesman for Schwarzenegger's campaign. "Arnold Schwarzenegger has supported Prop. 13 for 25 years. ... Arnold is an admirer of Howard Jarvis and has referred to him as the original tax terminator." Jarvis and Paul Gann were the prime movers behind Prop. 13, the tax-slashing initiative approved overwhelmingly in 1978.

Ironically, it was in June that Schwarzenegger was the keynote speaker at a 25th anniversary celebration of Prop. 13. Schwarzenegger praised the measure, which sharply curtails yearly increases in property taxes.

"Arnold gave a wonderful talk on Proposition 13, and his own life," said Jon Coupal, president of the Howard Jarvis Taxpayers Association. "He has never made any comments in the past that worry us about his stance on Prop. 13."

Buffett, in a Wall Street Journal interview, noted that the property taxes on his Laguna Beach home in Southern California are far lower than the taxes he pays on his residence in Omaha, Neb. Buffett said his California home is worth $4 million, but its property taxes are only $2,264. His Nebraska house is worth $500,000, with a property tax bill of about $14,000. And Buffett's Nebraska property taxes jumped $1,900, compared with an increase of $23 on the California home.

"This property-tax illustration, that tells you, you can draw certain conclusions from that," Buffett said in the Journal interview. "In effect, it makes no sense." Buffett also noted that he was only providing advice.

One group used the comments as an opportunity to rekindle discussion about possibly raising property taxes.

"Property taxes in California are lower than the national average," said Kim Rueben, a research fellow with the Public Policy Institute.

About 22 percent of California's revenue comes from property taxes, compared with 29 percent in the country as a whole.

"We're more dependent in California on income taxes, which are volatile and go up and down with the economy," Rueben said. "If we substitute a more stable tax like property taxes, we could be more insulated from the economic cycle we're in."

The flap could ratchet up the pressure on Schwarzenegger to provide specifics about his economic program to extricate California from its budget mess, including spending, revenue and economic growth proposals. So far, besides supporting Prop. 13, Schwarzenegger has done no more than state he would repeal Davis' recent increase in vehicle license fees.

Two Republican rivals also running for governor demanded that Schwarzenegger take even stronger steps to disavow Buffett's comments.

"Arnold should sack Buffett immediately," said John Feliz, campaign director for Sen. Tom McClintock.

Bill Simon spokesman K.B. Forbes said Schwarzenegger should offer an unambiguous stance on taxes.

"Schwarzenegger should take a pledge that he will not raise taxes as governor, period," Forbes said. "He has to come out from behind the curtains and answer the tax question, yes or no."

Davis also pilloried Buffett's comments. "I could not disagree more," the governor said. "I'm very proud that property-tax levels in California are lower than the rest of the country."

One California political strategist, Arnold Steinberg, believes the Schwarzenegger campaign may be able to weather the fallout from Buffett's comments.

"Buffett has proved he's a real loose cannon with these comments, and in a regular campaign, this would be a real blunder," Steinberg said. "But with the recall, the opposing campaigns don't seem geared up to exploit these comments."

Oops, you better remove post #11 (to which I am replying), before we all get into trouble.

Normally I always post the full article, and wish that others did as well from sources which aren't restricted.

But in this case the FR "vigilant software" didn't allow it, it said that articles from this source must be excerpted. I am sure you, CC didn't know that, I didn't either until I tried posting the article.

You can post a different excerpt than what I posted, but I wouldn't want to get FR into trouble over posting full articles from sources we are not allowed to.

Davis also pilloried Buffett's comments. "I could not disagree more," the governor said. "I'm very proud that property-tax levels in California are lower than the rest of the country."

Never mind that Davis' party wants to do away with Prop. 13. Right now, the Dems are pushing for a referendum that would gut Prop. 13's 2/3 vote requirement. About 2 years ago, they got the 2/3 requirement lifted from public school boondoggles. Now they can more easily raise money "for the chirlins", kinda like Aaaahnold's initiative last year, and play a shell game with the money.