Rather than doing the hard work of reducing spending, lawmakers felt it
was easier to solve the problem mostly by raising new taxes.
The
legislators voting to impose these additional taxes on Californians
were: 100% of the Democrats in the Assembly, 100% of the Democrats in
the State Senate, three Republican Senators, Maldonado, Cogdill and
Ashburn and three Republican Assemblymen, Niello, Villines and Adams,
all of whom broke their word, because they previously signed a "no new taxes"
pledge.
No other Republicans supported the tax increase proposal. I
want to congratulate those Republicans who stood strong and tried to
defend the people of California against these outrageous new taxes. In particular,
Assemblyman Chuck Devore, candidate for U.S. Senate, and State Senator
Dennis Hollingsworth, new Minority Leader, although all Republicans who
chose not to vote for the measure should be commended.
It is, in
my view, unconscionable for Republicans to have supported the
imposition of this huge additional tax burden on the already over-taxed residents of
California. Why should the people of California bail out an irresponsible State government?
I know that those who voted for it thought that it was the
only way that anything was going to get passed that would close the
budget gap and prevent the State from having to go bankrupt, and I also
know that they were strongly pressured by the Governor. I think they
chose the easy way out rather than doing the hard work.
What
were the alternatives, you ask? Well, let me say that one possibility
was going back to the 2003 budget, which was the year we recalled Gray
Davis and the year Arnold came in, and increase each line item in that budget by
two factors: 1) the increase in population since 2003, and 2) the
inflation rate for those years.
The other possibility was to start
over. Do Zero-based budgeting. That is you start with each line of the
budget and decide what is necessary and what isn't. Each line starts
out at zero and then you justify each addition.
Let me give you
some examples of why the budget is out of whack (a professional term).
In 2003 the population of California was approximately 35 Million.
Today the population of California is about 38.5 Million. An increase
in population of approximately 10% in five years, or roughly 2% per
year.
The State spent a total of $78 Billion in the 2002-2003
fiscal year. The State spent a total of $105 Billion in the 2007-2008
fiscal year. That is an increase of 35% in spending in 5 years, or roughly 7% increase in spending every year. The
population is increasing at the rate of 2% per year and spending is
increasing at the rate of 7% per year. Is something wrong here?
The
number of employees of the State of California in 2003 was
approximately 321,000. The number of employees of the State of
California today is approximately 360,000. An increase of 40,000
employees in five years, or an increase of an average of 8,000 new
State employees per year, or roughly 30 new
employees on the State payroll added EVERY DAY. Is the legislature
saying that the State can't run without adding 30 new employees every
day? Is the legislature saying that the State can't run if we lay off
20,000 of the new employees that we have added since 2003? Why not? The
state ran with 40,000 fewer employees in 2003.
Are you telling me that the only way to make up the budget deficit is by raising taxes? Is reducing spending not an option?
The
special interests in California who have Democratic legislators literally in
their pocket are running this state and driving it into bankruptcy, and
driving businesses out of California. California was the sixth highest
taxed state in the nation before this bill was passed. We will soon
have the distinction of being the highest taxed state in the nation.
Here are just a few of the new taxes Californians can look forward to:
* You will pay a state income tax "surcharge" of 5.25%
* Your sales tax on most everything you buy will boosted a full 1.00%
* Your car tax (Vehicle License Fee) will mushroom to 77% higher than now.
* Your dependent tax credit will be slashed by two-thirds, in effect, costing you $200 per child
I
don't understand why any Republican would vote for a bill that will
cost the average family between $1,000 and $2,000 per year in
additional taxes. If you want to get an idea of what this new bill will
cost your family, you can calculate it here.
But wait, there's more.
This tax increase will not solve the problem.
I can almost guarantee that the projected tax revenues will not be
received. There will be another shortfall within a few months and they
will be back to take more money out of your pocket. This is not the end
of your being over-taxed by a Democratic legislature that wants to take
your money, because they feel they know how to spend it better than you
do, and because they would rather take more money from you than make
the difficult choices about cutting spending. More to come, and it won't be pretty.
Because
Abel Maldonado knew that he could not win a statewide election in the
future where there were only Republicans voting, he made, as a
condition of his agreeing to the tax-increase bill, a provision that there be open
primaries in the State of California. That will be on your ballot soon.
What does that mean? It means that Democrats will be able to vote in
Republican primaries, and vice versa. It means that, if the measure
passes, from now on, Democrats will choose who the Republican
candidates are.
This bill is going to cause severe economic
problems in the State of California, along with AB32 which places
impossible burdens on businesses in California. Businesses are already
moving out of state. California is now ranked as one of the most
business-unfriendly states in the union.
This tax increase bill,
coming on top of the huge devaluation in our currency (inflation) which
will result from the gigantic federal stimulus spending package, will
mean much economic pain for Californians over the next five or six
years.
The car tax increase will not generate the revenue that
the legislature and the Governor think it will. I heard two people
today tell me that they are now going to postpone buying a new car
because of the car tax. How does that help the auto industry? There are
always unintended consequences of raising taxes.
What can we do
about it? There is only one answer. Elect fiscally conservative Republicans to the State legislature to replace profligate
Democrats. California Democrats, as well as Republicans, will be hurt
by this bill, and they may be more willing to listen in the future to
candidates who care about their financial well-being and who will take
a stand for them in the legislature.
My daughter and son-in-law
left Los Angeles to move to Nevada in 2008. While I personally hadn't
considered leaving the State before, I feel it is now something to
think about. Nevada has no state income tax.
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