Brown's Full-Court Tax Hike Press
JAN. 31, 2011
By STEVEN GREENHUT
Gov. Jerry Brown’s State of the State speech Monday night was pretty much what anyone should have expected, as the new governor championed his “tough choices” budget and pushed hard for its centerpiece: a public vote on controversial tax extensions. Since his inauguration, Brown has made it clear that he opposes tax hikes, but with one key caveat — unless they come with a vote of the people.
Tonight it was a full-court press for vote on a tax extensions, which are, realistically, major tax increases even though the governor acknowledged that California’s “credit rating is the lowest of the 50 states, unemployment is higher than the national average and some journalists are calling California a ‘failed state.'” Yet the last thing a state struggling to re-energize a struggling private sector needs is higher taxes.
His entire budget plan is built around getting the people to approve such a tax-extension choice, and he became even more direct and even shameless on Monday, as he compared this issue to what’s going in the Middle East: “When democratic ideals and calls for the right to vote are stirring the imagination of young people in Egypt and Tunisia and other parts of the world, we in California can’t say now is the time to block a vote of the people from this process,” he said in the Assembly chambers, in a prime-time speech. “They have a right to vote on this plan. This state belongs to all of us, not just those of us in this chamber. Given the unique nature of the crisis and the serious impact our decisions will have on millions of Californians, the voters deserve to be heard.”
Certainly, in California the Legislature has the power to put an initiative before the voters,. And the people do have a right to say “yea” or “nay.” But Brown presented this as some fundamental choice that touches on the essence of our self-governing political system. Bizarre. In reality, Brown is trying to muscle the Legislature and voters to support transferring more of their wealth to a state government that has not managed its affairs or budgets with even a modicum of good sense and discipline. This is a public relations stunt to relieve him of the difficulty of delving deeply into the bureaucracy, challenging his core union constituencies and rethinking and reworking government. The savings of that approach could be immense.
He continues to offer voters a false choice: higher taxes or fewer services. But he steadfastly avoids real, cost-saving reforms. He mentioned pension reform in passing, but there are no such reforms incorporated in his budget proposal. He doesn’t mention contracting out and competition, which result in cost savings. He ignored an education study released today just a few blocks from the Capitol by Pepperdine’s Davenport Institute and co-sponsored by the California Chamber of Commerce.
That study found that, despite the governor’s and legislators’ decrying of deep education cuts, “In reality, total expenditures (excluding capital expenditures) have increased every year from FY 2003-04 through FT 2007-08, before leveling off in FY 2008-09.” When capital expenditures are thrown in the mix, “total expenditures have increased every fiscal year.” So there have been no drastic cuts and the student population has declined, meaning that per-pupil expenditures also are up and the increases are well above the increases in per capital personal income for all Californians during the study period. Yet to Brown education spending is sacrosanct.
Unfortunately, the spending has decreased for in-classroom activities and even for the pay and benefits for teachers. Meanwhile, administrative pay and benefits and bureaucratic costs have soared. This points to the way that the current system grossly misspends resources. Davenport researcher Steve Frates told me that if Brown really had courage, he would take the report and find ways to reallocate existing funds. If administrators’ salaries were frozen for three years, enormous savings could be realized, for instance. But Brown — despite his disarming no-nonsense style — lacks the will to take on the public sector unions that vociferously fight the kind of reforms that could save billions of dollars across the state government. This sort of approach is far more difficult, also, than asking for tax-hike votes in lieu of “frightening” budget cuts.
There’s no mistaking that Brown prefers approval of taxes to deep cuts in programs. He detailed the choice: “either to extend the taxes as I fervently believe or cut deeply into the programs from which–under federal law–we can still extract the sums required. Unfortunately, these would most probably include: elementary, middle and high schools, the University of California, the California State University system, prisons and local public safety funding, and vital health programs.”
Brown stood up for one of his few genuinely original proposals — the plan to eliminate the state’s redevelopment agencies, which divert funds “directly from local property taxes that would otherwise pay for schools and core city and county services such as police and fire protection and care for the most vulnerable people in our society. So it is a matter of hard choices and I come down on the side of those who believe that core functions of government must be funded first.” Good for him for resisting the pressure from city officials, who have been lobbying him to save the debt-ridden agencies that mainly dole out corporate welfare and abuse property rights by using eminent domain on behalf of big developers who promise tax windfalls to cities.
The Republican response from Assembly Minority Leader Connie Conway was generally praiseworthy. She reminded Californians that the “Legislature has strangled our economy by imposing mandates, regulations and taxes. It’s no wonder that companies have been leaving California for other states.” Conway, however, lost credibility this week when three members of her caucus — Jim Silva of Huntington Beach, Paul Cook of Yucca Valley and her top lieutenant Brian Nestande of Palm Desert — joined a union rally to oppose cuts to a waste-ridden in-home health services program as union members chanted “no more cuts” in the background.
If GOP leaders are opposed to cuts, then what else is left other than higher taxes? Perhaps we know now which Republicans are most likely to abandon the GOP and support Brown’s push for a tax vote.
I’ll give Brown credit. He hasn’t been hiding his plan. He’s sticking to his guns. He genuinely wants to fix the budget mess. But he blasted his opponents for not putting forth real alternatives. Yet there are alternatives, such as pension reform and education reform, and he just isn’t listening.
The big question: What happens after voters reject those tax measures? That’s when things really get interesting.
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