With the recession, the drop in California state income has been so radical that no one will get anything like what they they believe they need or deserve. And no one is talking about addressing the tax inequities (e.g., Proposition 13, and the resulting excessive dependence on income tax as a revenue source) that are driving these budget deficits. And we can't wave a magic wand and instantly get better legislators. They represent the people, for better, and for worst (and wouldn't we all love to wave a magic wand in order to get better people?) So, we will have to make-do instead.
With advocates like Carl Reiner, I heartily disagree with all this cross-program-borrowing that the Propositions will permit. But in a genuine budget emergency, do we have any real choice?
So, I will vote 'yes', but I entirely understand if people vote 'no'. But 'no' means a much bigger budget gap to paper over, and your own interests might suffer as a result.
The best article I saw on the election, and the avenues of taxation NOT taken, was the lead article in the Sacramento Bee on Sunday, May 3rd. These ballot measures are assembled with the care usually reserved for Swiss watches:
"Any time you do a ballot measure – any ballot measure – you always sit around and say, 'Who could be the potential opposition?' " said Assembly Speaker Karen Bass, a Los Angeles Democrat and one of four lawmakers at the negotiating table. "You also always sit around and say, 'How do I get that opposition on board or neutral at best?' "
The entire architecture of the ballot pact that emerged was heavily shaped by leaders' desire to please – or at least neutralize – the state's most powerful political players.
Now, some of those very interest groups protected in the budget deal are bankrolling the campaign to ratify it.
For the oil industry, the package omits a once-proposed 9.9 percent oil severance tax. Energy companies have given more than a million dollars to pass the plan, led by a $500,000 donation from Chevron.
For the liquor, beer and wine industry, increased alcohol taxes were shelved. Alcohol industry heavyweights, such as E. & J. Gallo Winery ($100,000) and California's Beer and Beverage Distributors ($50,000), have all opened their checkbooks.
For the teachers union, the list of ballot measures includes a separate measure to ensure repayment of deep cuts to schools and protections for top-priority programs. The California Teachers Association has contributed $7 million to the passage of Propositions 1A and 1B.
For casino-operating Indian tribes, the state lottery measure avoids any new games that could threaten their gambling operations. Tribes, who could have been major contributors against the lottery proposition, have kept their checkbooks closed.
The influence of such groups is, more often than not, simply unspoken.
"If somebody has a history of putting tens of millions of dollars into lobbying and ballot measures, they don't have to say anything," said former Assemblyman John Laird, who was the Democrats' chief budget negotiator for several years.
In 2006, for instance, the oil industry spent $100 million to defeat an oil severance tax on the ballot.
Negotiators know that an industry with that track record "would quite probably be willing to do it again," Laird said.
At the start of 2009, lawmakers and the governor faced a daunting $40 billion budget hole made worse by a cash shortage so severe the state would soon no longer be able to pay all its bills.
Democrats, who control a strong majority in both houses of the Legislature, were stymied by Republicans and California's constitutional requirement that two-thirds of lawmakers approve tax hikes.
Lawmakers of both parties and Schwarzenegger squabbled for months before settling on a complex plan that raises broad taxes (the sales tax, personal income tax and vehicle fees) on most Californians, borrows heavily and slices deeply into state services.
...The linchpin of the ballot deal was Proposition 1A.
If passed, the measure would allow $16 billion in continued tax hikes and create a stronger rainy-day fund to constrain future state spending.
Large special interests played a key part in determining which taxes were raised.
Democrats had wanted to tax the rich, but GOP lawmakers nixed that idea. Then, on New Year's Eve, the Schwarzenegger administration proposed taxing oil, alcohol and extending the sales tax to certain services, such as sporting events.
The business community objected loudly, as did Republican lawmakers, who had long insisted on closing the budget gap without new revenues.
The California Chamber of Commerce said it didn't object to all tax increases – but didn't like those targeted at particular businesses.
Then, ever so slowly, the GOP leadership moved toward embracing broad-based taxes, such as the sales and income tax.
"If you're going to raise taxes, you should do it where everybody sees it and feels it and gets mad," said Assembly Republican leader Mike Villines of Clovis.
In the end, any industry-specific taxes were left out.
There was no new sales tax on event tickets. The Golden State Warriors, Los Angeles Clippers, Los Angeles Lakers and their parent company, Anschutz Entertainment Group, have combined to donate $200,000 for the measures.
Many industry donors declined to comment for this story. Those that did generally said they contributed because, as Chevron put it, they are "committed to playing a positive role in restoring fiscal health to our state and building a stronger future for all citizens."
Anschutz said "we should all be very concerned with these propositions" because, if they fail, "This will be catastrophic."
Linking the spending constraint and taxes in one ballot measure was also driven by Republican lawmakers, who feared a repeat of 2005.
That year, a package of Schwarzenegger's self-styled reform measures – including a controversial spending cap – went down to defeat thanks in large part to a $100 million union-led opposition campaign.
"Their demand at the table was that there be some relationship between spending restraint and the length of the taxes," said Senate President Pro Tem Darrell Steinberg, D-Sacramento. " … They didn't want all of the constituencies that would ordinarily fight such a measure to be able to do so without some sort of an impact on revenue."
The structure of the ballot package has divided the union coalition that pummeled the 2005 measures. The state's two largest teachers unions are on opposite sides. The state council of the 700,000-strong Service Employees International Union has donated $850,000 to defeat 1A, while the California Labor Federation is neutral.
"You could have organized labor completely against Prop. 1A," Steinberg said. "You don't."
Lawmakers also linked Proposition 1A to Proposition 1B, which will take effect only if the first measure also passes.
Proposition 1B, which would require paying an additional $9.3 billion to schools in the future to compensate for current budget cuts, was designed to keep the California Teachers Association from bankrolling a campaign against 1A.
Education consultant Kevin Gordon said the move was "smart politics."
"A campaign with the education community led by CTA to oppose Prop. 1A would have been the death knell to all the measures on the ballot," Gordon said.
CTA President David Sanchez has called the final budget package "unconscionable" because of its deep cuts to school funding. Yet CTA is spending millions to ratify the package.
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