Now that there’s almost serious talk from both sides of the aisle about a possible California Constitutional Convention it’s time to get down to buttons.
A Constitutional Convention presents a double-edged sword for both California Democrats and Republicans. Once the politicians stop using code words, the two shibboleths in the room, whether elephant- or donkey-sized, are Proposition 13 and 98. These are the prickly issues that get stuck in the throat of any call for reforming the fiscal mess that California budget and finance has become.
On the one hand Republicans could place Prop 98 on the table claiming it locks in unreasonable spending requirements, while Democrats would counter by placing Prop 13 on the table to match, saying it’s a stranglehold on much-needed revenue.
This is the classic unstoppable force v immovable object dilemma and Gordian Knot all rolled into one Constitutional nightmare brought on by plummeting revenues and ever growing expenditures.
Could there be a compromise that pares back education spending to some acceptable baseline and rewrites Proposition 13 as a realistic tax on business property? These are the heavyweight issues standing in the middle of the ring.
Conservative Republicans will still squawk about unchecked spending and Democrats will bemoan the failure of Republicans to “compromise on taxes” but never opt for compromise themselves on spending. And round and round it will go.
California needs to find a Solomon or some other adult in the room that can lead the all Californians to some breakthrough before truly Draconian measures must be put into place.
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Apparently CA Democrats want to pretend taxes are “fees.”
Dan Walters at Sac Bee says:
“Senate President Pro Tem Darrell Steinberg says he suggested a similar maneuver five years ago to offset newly elected Gov. Arnold Schwarzenegger’s declared intention to reduce the vehicle license fee by two-thirds after his predecessor, Gray Davis, raised it. But Steinberg says he couldn’t get other lawmakers to go along. One reason for the reticence is uncertainty about its legality. It’s almost certain that if the new maneuver is enacted, it will be challenged in court.”
If this is the case and it is found to be illegal should not the Legislators who vote for such a travesty resign for failure to uphold their oath of office or be impeached?
Or
Why shouldn’t California Democrat leadership be indicted on Federal Rico racketeering and conspiracy charges?
Questions have been raised about the legality of the Democratic proposal to raise taxes while circumventing the 2/3rd vote requirement. The Howard Jarvis Taxpayers Association has stated: “We have made it clear to the Legislature and Governor Schwarzenegger that any vote or signature in favor of this proposal would violate Proposition 13. If it passes and is signed, HJTA is also prepared to take legal action.”
Below is a shortened summary of the proposed action by the Democrats and their legal rationale. This is taken from http://www.sacbee.com/static/weblogs/capitolalertlatest/017906.html
California law requires a two-thirds vote to increase taxes — meaning Republican support is necessary. But Democrats are making an end-run around the GOP with this latest package, which the Legislature will vote on later today, in a number of ways.
The bottom line:
· The state sales tax will rise three-quarters of a percent. Total in new taxes: $4.9 billion through the 2009-10 fiscal year.
· All residents will pay an additional 2.5 percent on their income tax bills. So if you owed the state $1,000, you would now owe $25 more. Total in new taxes: $1.75 billion through the 2009-10 fiscal year.
· California would implement an oil severance tax — levied at 9.9 percent — on all oil extracted from the ground in the state. Total in new taxes: $845 million through the 2009-10 fiscal year.
· The current gas sales and excise taxes would be eliminated and replaced with higher gas “fees.” The new gas fee would be 13.5 cents per gallon higher than users at the pump currently pay. The new funds would be earmarked for transportation spending
How it works:
The first part of the plan is a quarter-cent sales tax hike that will bring in the state an estimated $1.6 billion in the next fiscal year. But Democrats insist that technically they won’t be voting to raise the tax. Instead, they will be voting simply to stop paying that amount to local governments. With that money not flowing, local sales taxes have a trigger to automatically rise ¼ of a percent.
So the move is a de facto tax hike and the state saves money by not paying local governments.
The second part of the equation is just as complex.
In a single bill, Democrats will eliminate the sales and excise taxes on gasoline and replace those taxes with higher income taxes, sales tax and an oil severance tax. The total revenues collected will turn out the same in that bill.
But the Democrats will then vote on a different piece of legislation to replace the old gas sales and excise taxes (which only went to transportation needs) with a gasoline “fee,” to be set at 39 cents per gallon.
Because they are raising a “fee” and not a “tax,” Democrats believe (and they say their lawyers have approved) they can do this with a majority vote.
In addition to all that, Democrats also plan to implement a new 3 percent income tax withholding on businesses that do independent contracting. This is not a new tax; the state is simply collecting the money earlier. It will result in $2 billion additional money in 2009-10 but will not be a long-term source of revenue.
All told, Democrats say the package will raise $9.3 billion in revenues.
The Democratic leaders said the package will contain the same cuts the Legislature rejected on Nov. 25.
The Cuts:
K-12 Education: roughly $4 billion, including the current year and 2009-10
The state’s biggest expenditure would take the biggest hit in the budget outlined by Assembly Democrats.
Community colleges: $200 million over two years
University of California and California State University: $264 million over two years
Personnel:: $657 million over two years
How this cut would be distributed – layoffs, furloughs, salary freezes – would be determined by various agencies and bargaining units. Cuts of $240 million in the current year and $417 million in 2009-10.
SSI/SSP grants: $600 million over two years.
Would take back scheduled federal increases for cost-of-living for low-income aged, blind and disabled scheduled for 2009.
CalWORKS:: $100 million from cost of living suspension.
Cost-of-living adjustment (COLA) would be suspended for the state’s welfare program.
Regional centers $112 million over two years from cuts to regional centers.There would also be a 3 percent cut to regional centers across the state, saving $40 million in the current year and $72 million in 2009-10.
Transit $312 million over two years.
Cuts of $156 million in each of the next two years.
Judiciary: $35 million in cuts
Local public safety programs $250 million in the current year and $500 million in 2009-10
The cuts come by eliminating funding for local law enforcement programs, though some of the funding (roughly $500 million over the two years) would be restored through a new $12 fee on car registration.
Williamson Act $35 million cut
Would eliminate state funds that currently go to counties for this program to preserve agricultural lands.