Though we have yet to see the current budget deal in writing, the Howard Jarvis Taxpayers Association has posted this review of the agreement as they understand it. We are currently awaiting a more definitive summary of the contents of the budget document but have been given to understand that the onerous taxation portion applied to independent contractors was not included in the final version. More as we know it.
T A X P A Y E R U P D A T E
. . . from the Howard Jarvis Taxpayers Association (www.HJTA.org)
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California Budget Deal: A Case of “The Good, The Bad, and the Ugly”
SACRAMENTO — Jon Coupal, President of the Howard Jarvis Taxpayers Association, released the following Statement today regarding the tentative California state budget deal:
The budget deal reached last night by California’s political leadership team is a mixed bag, which can best be described as “The Good, The Bad, and the Ugly.”
Taxpayers are pleased there are no additional new tax increases in this proposal and that Proposition 13 was left alone. After a massive $12 billion tax increase enacted just last February, even the majority party had no choice but to face the fact that additional taxes would have all but destroyed hard-working families and merely accelerated California’s decline.
There are real cuts in this proposal. Significant reductions in spending are absolutely necessary to bring expenditures into alignment with revenues. And, it appears that the state is taking its first nascent steps toward selling unneeded assets, such as the Orange County Fairgrounds. Some boards and commissions, such as the Integrated Waste Management Board, will be eliminated and many of the state’s furloughs would be made permanent.
HJTA also recognizes and appreciates what appear to be of billions of dollars worth of long-term reforms to welfare programs like CalWORKS and IHSS, and elimination of all cost of living adjustments. It is ridiculous that California has 12% of the nation’s population but 30% of the welfare recipients. Any reforms that decrease that number in order to make people more productive members of society will be crucial for the continued fiscal health of the state. We are pleased that Republicans in the Legislature have used this debate to improve government efficiency and promote more responsible use of taxpayer dollars. These are all great first necessary steps to getting our State back on track.
While we are pleased that no new taxes were forced on the people of California during these difficult economic times, we remain extremely concerned that a broader, more fiscally responsible plan was not reached. Time and time again, this Legislature has simply shuffled papers around, leaving the problem to be solved another day. Bernie Madoff could have learned a thing or two about shell games from the California Legislature.
Real fiscal reform in California will never be achieved until we control government employee pensions at both the state and local levels.
And, the State has yet again done an incredible disservice to our counties and cities by raiding local government funds. It is not only unfair, but it is irresponsible to continue robbing Peter to pay Paul for their fiscal mismanagement. Furthermore, we remain concerned that the loss of local revenues will only increase pressure to raise taxes at the local level, something we will watch with great vigilance.
While there are some welcome reforms in this proposal, particularly in welfare programs, the lack of major reforms, such as in public employee pensions, that are necessary for long-term financial stability is not just a disappointment to taxpayers. The real question is whether this budget deal will be viewed by Wall Street as sufficient enough progress upon which to extend additional credit. While taxpayers are technically not going to pay more taxes, the tax accelerators in this budget deal have the effect of taking money out of the pockets of taxpayers before it is due. Some argue persuasively that this is just as bad as a tax increase even though they will be getting the money back.
Finally, it is not in California’s interests to continue to employ accounting gimmicks which simply “kick the can down the road.” From what we can gather, the proposal has several “expense deferrals” — one-time revenue accelerators and numerous assumptions — that virtually guarantee we will all be back arguing over these same issues in just a few short months.