Tax Hikes Add to $6.6 Bil Windfall for Debt-Strapped California – But GOP Fights to Kill Them

Facing a $30 billion budget shortfall in 2009, the state of California raised taxes — a quarter-percent on personal income tax, 1 percent on sales and a half-percent on vehicle license fees.

“I’m not going to give the Republicans a roadmap to ruin. I’m giving them a roadmap to success.”
– California Gov. Jerry Brown’s moment of zen

According to Republican dogma, those tax hikes should have killed the state’s economic recovery. This week, however, Gov. Jerry Brown reported good news. The state is projecting $6.6 billion more in revenue than expected — some of which is unarguably a result of these modest tax increases.

In the five months since he’s been office, Brown and the Democrats who control the legislature have reduced the budget deficit from $26.6 billion to $15 billion, mostly through harsh cuts to education, health care and other safety-net programs.

The tax hikes would bring in an additional $11 billion next year, but, as of now, they are set to expire on July 1. Without them, severe cuts will be required to programs that serve children, the poor and elderly.

In the governor’s race last year, Brown campaigned on putting a measure on the ballot that would allow voters — also known as “taxpayers” — to decide whether to extend the additional taxes. He won the election by double digits, a clear mandate.

And yet, despite polling showing that the public favored the vote — and perhaps because polls also found that the measure would pass — the Republican minority “Party of No” in Sacramento killed the governor’s ballot initiative. It will not appear on the ballot next month as planned.

That’s right. Republicans blocked a measure that would allow California taxpayers to vote on tax policy.

Brown needed just two Republican votes in the Assembly and two in the Senate, but the GOP refused. They want to balance the budget on spending cuts alone — specifically by shredding what’s left of the safety net and draining funds set aside for early childhood development and mental health. They also want a 10 percent salary cut for state workers — exempting themselves, of course.

Brown issued a revised budget this week that calls for renewing the 1 percent hike in the sales tax and the half-percent increase to the vehicle license fee for this year. The quarter-percent added to the personal income would be dropped for now but would return next year and remain in place until 2015.

Asked how he planned to get the tax extensions past the Republican minority after failing to do so last month, Brown answered with a moment of zen: “I’m not going to give the Republicans a roadmap to ruin. I’m giving them a roadmap to success.”

Predictably, Sen. Bob Huff or Diamond Bar, the top Republican on the state Senate Budget Committee — ignoring the hard evidence that the tax hikes are helping reduce the debt while having no adverse effect on the recovery — responded to the governor with a moment of spin:

“Let’s give this economic recovery an opportunity to recover before we start throwing more taxes out there,” Huff said.

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