School boards over the years, when faced with opposition to a
bond issue, have often resorted to a doomsday threat to get
voters in line. If the bonds don’t pass, they would say, school
sports — starting with football season — will be canceled and the
school band disbanded.
California’s once and current governor has dusted that one off
and is aiming it for the fences. Early this year he began promoting
a tax increase package for the November ballot, telling everyone
that if it were to be defeated at the polls in November, the public
will have been forewarned that drastic budget cuts would follow. By
early April it had 54 percent support in a poll.
He touts his tax increase measure as “temporary.” (Ronald Reagan
one said, “The nearest thing to eternal life on earth is a
government program.”) It would raise the state sales tax to 7.5
percent from 7.25 for four years. It would also raise income tax
rates on those earning $250,000 or more a year (“millionaires and
billionaires” as defined by Mathemetician-in-Chief Barack Obama).
Those making $1 million or more would see their rate go from 10.3
percent to 13.3 percent — easily the nation’s highest. With more
of the investor class changing their residences to income-tax-free
states every year, one guess as to what will be the effect of that
increase.
Complications have set in. In addition to Brown’s proposal
having gathered enough signatures for the ballot, so have two
others. One, headed by a hedge fund manager, Tom Steyer, would
eliminate the choice companies now have to use a tax formula based
on California sales in proportion to sales elsewhere or one based
on sales, payroll and property only in California. Steyer’s measure
would eliminate the first option. Its purpose is to raise revenue
for the government.
The third measure, headed by “civil rights” attorney Molly
Munger, would raise income taxes on a sliding scale for all but the
poorest California workers for the next dozen years. The purpose is
the same as Steyer’s: to raise revenue for the state. It would make
tax rates on higher income Californians even more lopsided than
they are now.
Brown had been figuring on raising about $6 billion or so to
erase most of a projected $9 billion budget deficit. That is until
a few days ago when the state’s green eyeshade people delivered the
bad news that the deficit would be $16 billion, not $9 billion. The
reason? Tax collections and other revenue this spring were well
under estimates.
Bad news for Brown? Not if he can use it to scare the voters
into doing his bidding. It helps him make his threats all the more
real. He talks of deep cuts to school budgets and aid to poor and
ailing seniors — on top of already-announced closings of state
parks. Wave the specter of cuts to education at California voters
and they usually succumb.
Several years ago they voted for a ballot initiative that has
required about 40 percent of the state’s general fund go to
education. This has not brought higher student performance, but in
more than a few cases it has brought a surplus of school
administrators.
Not mentioned in the governor’s list of cost-saving targets are
bloated public employee pension programs. In his first iteration as
governor in the late 1970s, he signed the order permitting public
employee unions to engage in collective bargaining. Gradually, but
steadily, they have become the state’s most powerful special
interest. They virtually own the Democrats’ legislative majority. A
few months ago, Brown sent up a trial balloon to require state
employees to pay more into their own retirement accounts and health
care plans and to have less generous programs for new hires, but
the unions and the legislative Democrats punctured the balloon.
Brown’s proposal to cut state employee salaries is another trial
balloon. It will drift away with the next breeze. And if you think
he’ll cut expenses by eliminating the FY 2013 budget’s $2.3 billion
allocation for that chimera, high-speed rail project, you are
living in a dream. He sees that as his “legacy,” but at
the rate he’s going his legacy will be bankruptcy.
Nevertheless, Even California voters are uneasy about high taxes
and deficit spending. With three tax-increase measures competing on
the ballot, they just may say to all three, “Nuts!”
Peter Hannaford’s latest book is “Reagan’s Roots.” He was
closely associated with the late President Ronald Reagan for a
number of years, including serving as director of public affairs in
the Governor’s Office.
