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The Backwards May Budget Revise: Taxes Before Reforms
Governor Jerry Brown’s press conference on the May budget revise served the dual purpose of revealing the new budget and kicking off his campaign to pass his tax initiative on November’s ballot. The governor wasted no time in tying the success of his budget to his initiative income and sales tax increase plan.
The governor said that things are getting better and, in an odd way, when you look back at California’s sorry budget story the last few years you can see how he makes that argument. However, the campaign to raise taxes without coupling reforms will not lead California out of the fiscal forest, which is the governor’s goal.
Compare the recently announced $16-billion deficit to the $42-billion Governor Schwarzenegger faced in the latter years in office or even the $26-billion Governor Brown dealt with when he took over. However, in those past instances, the deficit shrunk from the projected January budget deficits to the May revise budget. This time the May revise was worse that the governor’s original budget.
Things should be better better. As the Wall Street Journal editorial, California Ugly,
pointed out yesterday, while the Golden State was suffering a 20.2% drop in April tax collection projections, other states nationwide were seeing increased tax collections over the year.
The governor’s hope to fix to the state’s fiscal situation with taxes and without reforms would be a fool’s bargain for taxpayers.
Brown said his goal is to fix California’s structural deficit. He said the problem was not created overnight and would take some time to fix. However, he is not laying out a plan for a long time fix but is just applying a tape to a rickety structure. He is probably making the situation worse by not first seeking reforms.
How are things going to get better when spending in the initiative will be earmarked for local public safety, creating another constitutionally mandated program with a revenue source that will disappear?
How are things going to get better when there is no spending reform, when Brown himself said at the press conference that California continues to live beyond its means?
How are things going to get better when there is no reform of pension and employees’ health benefits that are eating away at the budgets of local and state governments forcing those governments to cut back services?
Without reforms taxes will not solve the state’s problems.
The first order of business is for Sacramento to build up confidence in the legislative process by making major policy reforms and encouraging business growth to create jobs and produce dollars for the state treasury. The first order of business should not be a call for taxes. Yet, that was what the governor did at the top of his remarks. He has it backwards.