Note: the following article was submitted and published last week in the Los Cerritos Community News.  I have added back for clarity purposes portions that were ommitted for space reasons.

In February, the Sacramento Folks hatched a budget deal that included 6 propositions on the May ballot that they said would solve the budget gap of $32 Billion. Except they came back in March, saying that the budget gap is still $8 Billion shy of being balanced. 

What did they do?

They increased the sales tax, state income tax and vehicle license fee with some minimum cuts to the increase of spending and in the number of certain regulations, while hiring 2,000 new employees. Unlike what many businesses have had to do to reduce their fixed costs to save their businesses, they didn’t renegotiate state employee union contracts. Meanwhile they allowed some state agencies to waste money on things like redecorating offices and junkets.  While Insurance Commissioner Steve Poisner did a review of his department including procedures and inefficiencies and found ways to get the tax payers 10% in savings, Attorney General Jerry Brown and State Treasurer Bill Lockyer claimed there was no waste in their agenices and thus they could not afford a cut of 10% to their agencies budgets.

Why is there still an $8 Billion deficit?

One reason is that they believe that businesses and individuals don’t react to save their hard earned money from tax increases, failing to note that investors have been voting with their money by moving it into overseas tax havens and to other states. By raising taxes on property, be it income, vehicles, places of residence or business, they raise fixed costs, thereby reducing spending and therefore revenue that would have come from sales taxes. They have also reduced revenue from income taxes by putting fiscal & regulatory pressure on businesses, forcing them to lay off their workforce, move their businesses to lower costing areas, &/or shutting down. They have reduced the revenue that would have come to governments, while hurting businesses & working families.

On May 19^th they are asking us to pass 6 propositions that they say are needed to solve our budget problems. Prop 1A imposes a spending cap which is in reality a budget mechanism that ensures that spending will never decrease it just will not increase as rapidly, in exchange for extending the economy killing taxes imposed by the budget deal. Prop 1B doesn’t go into effect unless Prop 1A passes, while it increases funding to the Education bureaucracy without guaranteeing that most of the money will get to teachers or into the classroom. Prop 1C uses an accounting gimmick to borrow against money the state doesn’t currently have but is anticipating it may generate from the state lottery. Prop 1D temporarily takes tobacco tax money away from the California First 5 Commission. Prop 1E takes the millionaire surtax money away from state mental health programs. There is concern that while Prop. 1D & 1E may reduce the temptation for further tax increases, that the money will be backfilled by means of an emotionally tinged ballot proposition at some later date increasing the tax burden on working families and small businesses even further down the road. Prop 1F stops a salary commission from raising the salaries of the Legislature and the State Constitutional Officers when the state has a deficit, but doesn’t stop the legislature from raising its own salaries.

How do we solve this budget GAP? 

First, fixed costs from property based taxation need to be reduced, in exchange for consumption based taxation which has exemptions for necessities and can be chosen by those suffering through this economy; because only those who feel secure in their jobs &/or investments are making these other sorts of purchases this change could actually spur the growth in the California economy and stop the bleeding from tax induced layoffs, as more individuals, families and businesses start to feel secure in their jobs and investments. Second, the Democrats in the State Legislature have to stop the game of holding our public safety, health care, local governments, and children’s education hostage, while they refuse to cut wasteful spending that otherwise has padded their lifestyles of suptuous state paid for parties and junkets disguised as fact finding missions to state owned luxury resorts, condos, etc...   Last, we need to stop giving special interest groups money they did not earn to promote the changing of our culture to the Democrat Leadership’s vision of a socialist utopia where there is no right or wrong; unless you are a conservative, Christian, &/or Republican, then you are always wrong.

-Matt Kauble

Cerritos, CA