Haynes is an Assembly member representing Riverside and Temecula.
He serves on the Appropriations and Budget Committees. [go to
Assembly Member Haynes
website at California Assembly]
A Budget With No New Taxes
(It could have been worse….)
[Ray Haynes] 8/5/03
said it couldn’t be done. They insisted
they needed new taxes to balance the budget. They threatened, they cajoled, they
they plotted. They dilly-dallied on the details, and groaned about the damage
Republicans were causing. In the end, they folded like a cheap tent, admitting
that their whole strategy was to try to embarrass the Republicans into voting
for a tax increase. They knew that the budget could be balanced with no new taxes;
they just didn’t want to do it.
that this budget is perfect. It isn’t. It is precariously
perched on a precipice, depending completely on a solid economic
policy in Washington to grow the national economy. If the national
economy grows, it will drag California with it, causing the State’s
tax receipts to increase, in spite of Sacramento’s short-sighted
anti-business policies. If the national economy continues on
its anemic recovery, California’s could fall into a canyon
whose only bottom is bankruptcy. It is still too early to see
what will happen, but at least California’s economy will
not be burdened with new taxes instituted through the budget.
the budget battle Republicans understood one thing. New taxes
the budget would be disastrous for the state as a
whole. In 1991, when then-Governor Pete Wilson pushed for huge
increases in numerous taxes in the midst of a growing recession,
he caused enormous budget problems. State budget experts thought
they were going to receive an extra $7 billion as a result
of the tax rate increases. The state actually lost $1.2 billion.
Governor Wilson and the Republicans had learned their lesson.
They reduced spending for three years, waited for the economy
to recover, and ultimately built up $10 billion in surpluses
for the state’s coffers. Interestingly enough, the record
surpluses arrived each year the state actually cut taxes, or
allowed previous tax increases to expire.
2000, when the Democrats started raising taxes again, the state’s economy began to slow. Democrats wanted to blame
President Bush, but, California’s recession started six
months before he became President. As taxes and energy prices
increased, job growth and state revenues decreased. All of this
was evident in May, 2001, as the state’s “perfect
budget storm” clouds gathered. They hit with full force
this year. As the winds and rain increased, Democrats cried about
the storm. Republicans tried to fix the boat. Additional taxes
would be devastating to our economy. Even the Governor’s
own fiscal experts predicted that his proposed sales tax increase
would cost our state jobs and reduce spending and investment
in our economy. Luckily, the good guys won this battle.
is still a lot of work to be done to restore California’s
fiscal health. A lot more spending reductions and long-term reforms
to the budget process need to be enacted. One small disaster
could throw this whole process into chaos. The $10 billion deficit
bond is risky. The revenue projections are uncertain, because
they assume that revenue from the car taxes will come in this
next year. Those taxes may not come in as revenue, because either
a court or a new Governor could reverse Governor Davis’ illegal
tax increase, leaving an additional $4 billion hole in the budget.
As the minority party, there was little we Republicans could
do to keep them from counting that money, even though they will
regret it in the near future.
truth is, the people of California were able to dodge a tax
They were lied to about the need for new taxes. Republicans
knew they were lies, and suffered the attacks of the Democrats
and their allies in the left-wing media outlets in California
to protect the hardworking taxpayers of California. We still
need a constitutional spending cap in California, and we still
need to do some immediate work repairing our business climate.
The Republican leadership has already asked the Governor (again)
to call a special session on worker’s compensation so
that we can get started on reforming that job-killing mess.
There is still a lot of work to do to fix the problems caused
by Governor Davis and his legislative buddies, but, for now,
people are safe from the tax and spend crowd in Sacramento.
That is something to celebrate.