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Jon Coupal- Columnist

Jon Coupal is an attorney and president of the Howard Jarvis Taxpayers Association -- California's largest taxpayer organization with offices in Los Angeles and Sacramento. [go to website] [go to Coupal index]

Budget Crisis And Hidden Agenda
Some seek political advantage by blaming the "other guy"...
[Jon Coupal] 7/22/04

The finger pointing has begun. A few weeks ago, the Governor and legislative leaders expressed optimism that the June 15th constitutional deadline for passing California's budget would be met. That date came and went but no one panicked and, indeed, John Burton said that the June 15th date was just a "snooze alarm" anyway. The "real" date (after all, what importance is clear, constitutional language?) was June 30, the last day of the fiscal year.

Whoops. June 30th came and went and now the heat is turned up and leaders on both sides of the aisle are working overtime to portray themselves as doing the people's business while the "other guys" are the obstructionists.

So far, what has been agreed to is, at best, a mixed bag for taxpayers. It appears that tax increases, or at least obvious tax increases, are off the table. But the final agreement may see the imposition of new fees and the closing of what are being described as "tax loopholes." Basically, these "revenue augmentations" are tax increases being described in more attractive terms to upgrade their image. Additionally, negotiators have avoided, as they would a poisonous snake, the tough spending cuts that would lead to long-term fiscal health for California.

The current sticking point in negotiations is how much state government is going to be allowed to pirate away from local governments. The governor has reached an agreement with local government representatives that would allow the state to take several billion dollars in return for a guarantee that this practice will end in a couple of years. Democrats don't like this restriction, claiming they are elected to serve their constituents and to do this they will need ready access to the money now going to locals. Somehow, they look past the fact that their constituents are also constituents of the local governments from which they want to take money.

Gov. Pete Wilson pioneered the practice of shifting property taxes away from cities, counties and special districts and redirecting them to schools -- a quasi-state function. To meet the budget deficit he faced in 1991, he pushed through cuts in spending, tax increases and a revenue shift of several billion dollars in property taxes. What was considered temporary at the time has become practice, and now the state wants even more.

Some have blamed Proposition 13 for the way in which property taxes are allocated, but Proposition 13 is not culpable. The tax limiting measure said that property taxes would be distributed "according to law" and the law has always been that the state had the ultimate authority over property tax allocation. Still, the system in which the state has all the power has worked to the locals' disadvantage. They point out that they, too, provide vital services and are demanding a reasonable expectation of a reliable revenue stream.

The Democrats say they should be able to seize more local money with a two-thirds vote, while Republicans are pushing for a three-quarters vote. The irony is not lost on taxpayers, since this is the only time in recent memory that the Democrats have supported a two-thirds vote for anything.

In fact, during last year's budget deliberations, it was Assemblyman Fabian Nunez who was caught by an open conference room microphone strategizing with Assemblywoman Jackie Goldberg and others on how a delay in passing the budget could help the public employee union-sponsored Proposition 56. The union's measure would have made it easier to raise taxes by eliminating the two-thirds vote.

It is unclear whether Nunez, now Assembly Speaker, would still engage in this sort of strategy now that Proposition 56 has been trashed by voters, but suspicions remain.

And lawmakers' agendas are not always what they seem; at least they are not stated publicly.

Californians were given a glimpse of what can lie beneath the Capitol's righteous exterior, when a few weeks ago published reports told of threats by members of the Latino Caucus to hold up the budget unless the governor agreed to new legislation to provide driver's licenses to illegal immigrants. While negative publicity seems to have caused these members to backpeddle, who is to say that these or other legislators do not have their own partisan reasons to delay a budget? With the fall election less than four months away, some may see advantage in being able to blame the "other guy" for the state's continuing budget woes. CRO

copyright 2004 Howard Jarvis Taxpayers association

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