The California Budget is Up for Grabs

The core of our revenue shortfall is a regressive tax system that hits the lower classes harder than the upper classes. California's overall tax burden is 18th among the states, but our property tax rates are at #42. The failure to modernize property tax law, to revise Prop 13 to protect fixed income homeowners while making the wealthy and commercial property owners pay their fair share, is perhaps the major reason why California faces such enormous budget deficits, whereas other states face far smaller shortfalls.

And of course, nowhere does Arnold appear to be acknowledging his colossal error of repealing the restoration of the Vehicle License Fee, which costs our state $6 billion a year. A modernized sales and professional services tax and a pre-1998 VLF would bring as much as $15 billion in revenue, making legislators' jobs this summer far easier.

The devil is in the details of course, especially in what we have to give up to get new revenues. These would be the right wing tax solutions I discussed last week, and the LA Times article refers to them again:

“Before the governor raises taxes, should he go that route, he is expected to demand legislative support for spending restraints that would force the state to create a rainy-day fund with revenue windfalls it receives during good economic times. Business leaders have long pushed for such measures, arguing that they would curb runaway spending and bring some stability to state finances.

“Business leaders are also lobbying the administration to use potential tax hikes as leverage for policy changes unrelated to state spending, such as changing workplace rules to allow employers to dictate when workers can take breaks. Political analysts were not surprised to learn that the governor was considering tax hikes.”

Some continue to argue whether voters will even support new taxes at all. The recent PPIC poll has given ammunition to both sides of the argument, with Bill Cavala arguing it suggests new taxes are unlikely:

“Bad news for California's budget came in from the precincts today. The latest PPIC survey indicates that (1) voters don't want to cut education's budget; and (2) don't want to raise taxes to avoid those cuts. Years of budget flim-flam - led by Governor flim-flam - have convinced voters we can simply 'reorder' priorities and get by....

“With many of the gimmicks used to 'balance' budgets in previous short-fall years no longer available, and with a cash-flow problem that will crest this summer, things look bleak indeed for the new leaders of the Legislature. And they deal with these problems starting with a 'favorable' rating by the public of 22%.”

I am much less pessimistic than Cavala. He seems to be falling back on the failed assumptions that Democrats have used over the last 30 years to evade action on our structural revenue shortfall - blame the voters for not supporting tax fixes. Reading the PPIC numbers I see a very different story - about half of the state believes new taxes are a good idea. Sure, we need 66.7%, but even half is a very good place to be in considering how widespread our state's anti-tax madness has become. Democrats should use this as a starting point, not an excuse for inaction.

Unfortunately these efforts may have been undercut by, of all people, Hillary Clinton. Her embrace of McCain's idiotic gas tax cut - which would save drivers a total of $30 for the whole summer while blowing a $10 billion in the already-stressed federal transportation budget.

By embracing the notion that tax cuts, not investment in public services, are the solution to economic distress, Hillary Clinton has delivered a major victory for the Club for Growth and Howard Jarvis Association and delivered a serious blow to progressive Democrats who are trying to restore the link between taxes and services, between taxes and a high quality of life.

Democrats in both DC and Sacramento need to unite on this matter, and categorically reject the Republican anti-tax framing that has done so much to produce this mess. It doesn't make our job easier here in CA to have one of the Democratic candidates running around agreeing with the right-wingers on taxes.

Robert Cruickshank is a historian, activist, and teacher living in Monterey. He is a contributing editor at Calitics.com and works for the Courage Campaign, in addition to teaching political science at Monterey Peninsula College. Currently he is completing his Ph.D. dissertation in US history, on progressive politics in San Francisco in the 1960s and 1970s. A native Californian, he was raised in Orange County and educated at UC Berkeley.