A meeting was held May 22, 2009 in the Walnut Creek Chamber of Commerce with the 15th Assembly Representative: Joan Buchanan and a collection of about 12 Chamber of Commerce from Walnut Creek, Concord, Brentwood, and others. The topic was the California budget crisis and the recent election failure of the propositions relating to the budget.
The main messages from Buchanan on the budget crisis were:
1. Technically, we have a budget now; we have met the statutory deadline. However, we need to pass a revised budget soon to avoid a cash crisis in July and close the $21+Billion deficit.
2. The State needs major structural changes that cannot happen quickly, namely:
A. Change the way we develop the Budget. We need a zero- or performance-based approach.
B. Especially in Schools, we need more local control of revenues.
C. The unintended consequence of Term Limits icreates more intransience rather than the hope for benefit from influx of new people
D. The initiative process needs to be changed
E. The 2/3 rule has to be ended for budgets and finances
3. The current problems are massive and revolve around a lot of structural finance problems where the ongoing income does not match the current operating expenses. With the current election results, people can expect that:
A. There likely will be no new revenue measures since both the Republicans and the governor have said that they will not approve any new revenue measures.
B. There will be budget cuts that could mean the elimination of whole programs in addition to other reductions. The Governor’s May revised budget includes major cuts to programs in education, health and human services.
C. Governor also proposes more borrowing which will put more pressure on future budgets by increasing the proportion of the budget directed to debt service
4. The propositions were excessively complicated and an underlining disapproval of Sacramento led to their failure.
Additional items were touched upon in a lively discussion:
1. Buchanan said she supports the idea of a Constitutional Convention for the state but realistically the fastest that can take place is about 5 to 6 years. The Legislative Analyst predicts growing deficits in the coming years. We need to solve our fiscal problems now.
2. In response to a question about only charging sales tax on goods, Joan said that if we taxed services, we could lower the current tax rate over all and still maintain the same revenue. This is an interesting idea to some retail consumers and providers. Buchanan did not take a position on this.
3. During times of negative chaos great companies have emerged stronger and others have been created.
4. Retirement benefits are a major problem, when Social Security was first started the average person collected it for only 6 months. People now live almost half as long in retirement as they did in their working lives.
5. A discussion on corporate taxes ensued. Points were made that companies mentioned that had overcome bad times, did so when corporate taxes were much higher than currently, and corporations now can go to different countries with greater ability than before and still trade into the state, yet tariffs were not the answer.
6. The decline of our education system through cuts and reduction in performance, will further add to the bleak future currently portrayed by the pundits.
Buchanan is in favor of more attention to education. The PPIC recently reported that California needs to increase its college graduation rate by 20 percent to meet it workforce demand in the next decade.
7. One Chamber member used Ireland as an example of a place where there was a major investment in Education combined with a cut in corporate taxes that helped increase a flow of companies to Ireland. However, it was not discussed fully that Ireland did this in the bosom of a massive European Union subsidy and with a sales tax that was twice or higher than the current one in California, so that comparison may have substantial flaws.
8. There was no discussion on the current CD-10 race.
The meeting was held down to about an hour an half and was conducted on an informal basis which was most welcome. At the end of the meeting there was the grim reality of the tough times ahead as all parties headed back to their work in this complex state we call California.
{ 2 comments… read them below or add one }
Say What!!!! The problem is the corrupt Politicians, like Buchanan and weak Republicans, addicted to Union bribe money, would love remove the 2/3 requirements until nobody but the Union thugs and their elitist friends could afford to live in California. Good news is, even the liberals are starting to figure out that overpaid government workers with unsustainable 90% pension will bankrupt any state.
Below is my list of California reforms, not the crap that Buchanan is feeding to the gullible:
(1) STOP PUBLIC SERVICE UNIONS FROM CONTRIBUTING (IE BRIBING POLITICIANS). The taxpayer pays the government worker who funds the union who bribes the politicans to increase benefits to bankrupt the taxpayer. WHAT A SYSTEM!!
(2) STOP FUNDING ILLEGAL ALIENS. Illegal aliens are destroying the schools, filling up the prisons, sucking up the social services, overloading the infrastruture. Who with any common sense couldn’t figure out that eventually we would have millions of uneducated people on welfare once the economy tanked? Not Buchanan obviously
(3) REDISTRICT NOW!! California has more disenfranchised voters than any other state due to the ridiculous redistricting. How? Well, some of the nuttiest left wing socialists barely has 80,000 voters in their districts, other more competitve districts (mostly Republicans) have up to 500,000. Yet, they each get 1 representative. TALK ABOUT VOTING DISENFRANCHISMENT!! Forget about somebody not getting to the polls on election day, THIS CORRUPT SYSTEM IS DISENFRANCHCHISEMENT EVERYDAY!!!
Funny how you never hear this issues discussed by the Buchanan Puppet Politicians. Buchanan and her ilk would love to remove the last few roadblocks to absolute control like the California InitIatives and 2/3 majority to tax. She thinks you voters are much to stupid to be in control of your lives when Comrade Buchanan and friends can do it so much better.
To the Editor:
Total elimination of the corporate income tax is an excellent idea.
Suppose a firm has a profit of $1 million. Under normal conditions, 40% ($400,000) of that profit would go for taxes.
If the $400,000 in profit were distributed to owners (often shareholders), let the owners, as part of their personal income tax, pay any taxes due.
If, however, the corporation takes its $1 million in profit and hires new employees, develops new products, or improves its productivity (output per person-hour), then there should be no tax.
By eliminating the corporate income tax, unemployment would drop and foreign investment would increase.
The situation in Ireland needs to be quantified. How much money did Ireland receive from the European Union? How much of the Celtic boom over the last 15 years came from EU money? How much came from lowering the corporate income tax from 40% to 12.5%?
In 1988, when the corporate income tax was 40%, Ireland had an unemployment rate of 20%. Over the last 15 years, Ireland, until the recent recession hit, had a shortage of workers. During these last 15 years, Ireland has been deluged with workers from Poland and the Baltic nations.
I support requiring a two-thirds vote to pass a California budget and to raise taxes. Otherwise, government spending and tax rates would be much higher than they are now.
California would not have such a huge budget deficit if it had enacted income tax reform. Currently, 50% of the state’s income tax comes from the top one percent of earners. When high-income people do not have income from capital gains, stock options, and dividends, California does not collect enough money. The state’s revenue situation should not be so dependent on the earnings of high-income individuals.
California’s debt, currently $24 billion a year, can be eliminated by privatizing services now performed by goverrment. For example, how much money could be saved if a private firm ran the Highway Patrol instead of the governent of California?
I was present at the May 22, 2009, meeting that included Assmeblywoman Joan Buchanan and members of various local chambers of commerce. I am a member of the Greater Concord Chamber of Commerce.
Richard S. Colman
Orinda, CA
June 2, 2009