Legislators ignore budget mess

JULY 1, 2010

By KATY GRIMES

With the Legislature continuing to work on every possible frivolous or taxation issue except the budget, many are expecting one of California’s legislators to let loose with, “Let them eat cake,” when the taxed citizens cry “we have no food.”

This week at the Capitol has been just another typical week of committee hearings – about everything except the budget.

Last week, syndicated columnist Dan Walters asked, “Budget budget, who’s got a budget?” This week the question is, Crisis, crisis, who’s got a crisis?

However, in the strange world of the insulated legislator, the preferred new Marie Antoinette quote is quickly becoming, “I have seen all, I have heard all, I have forgotten all.”

In the Assembly, in addition to oversight hearings about “Health Workforce Development in Federal Health Reform,” or the Housing Agency Innovation Fund, there were committee hearings held for education and higher education, governmental organization, agriculture, accountability and administrative review, and natural resources.

In the Senate, committees held the usual hearings for education, local government, labor and industrial relations, human resources, banking and health.

Conspicuously absent was budget talk. However, there were plenty of bills presented increasing taxes as well as tax penalties.

A rundown of this week’s bills demonstrates legislators’ avoidance of the budget while increasingly becoming emboldened in the taxation arena.

Assemblyman Dave Jones, D-Sacramento, offered a bill about public safety at ski resorts, which would provide restitution to the victim for injuries sustained while skiing (AB 1652).

In the Senate education committee, Assemblyman Joe Coto, D-San Jose, presented AB2089 during an American Indian Education Oversight Committee extending operations for California American Indian education centers.

Assemblyman Tom Torkalson, D-Martinez, presented AB2178, another after school education and safety program.

Assemblyman Dave Jones’ pet insurance bill AB2411), was heard in the human services committee.

Mike Eng, D-Monterey Park, presented AB2289 offering a smog check program testing penalty for cars newer than year 2000, and the penalties are to be assessed on business owners and contractors. Newer car owners and small business owners are once again, being taxed. Fines will be between $100 and $5,000 or both. And the bill would make other changes to smog check penalty provisions, including authorizing civil penalties up to $5,000 for a violation of smog check requirements.

In Revenue and Taxation, there were no shortage of tax bills presented and discussed.

Tax help was offered by Sen. Roy Ashburn, R-Bakersfield, author of bill SB884 extending time to pay Board of Equalization sales and use taxes.

Joel Anderson, R-La Mesa, offered a property tax base year value transfer, after a disaster (AB157).

AB1341 changed authors from Lori Saldana, D-San Diego, to Bonnie Lowenthal, D-Long Beach, and originally was about a disabled veterans’ exemption. The final language of the bill is about funding a new courthouse in the city of Long Beach.

Sandre Swanson, D-Oakland, presented bill AB1973 that offers a $5,000 tax credit to employers for each full-time employee, who is either an ex-offender, or a person who has been unemployed for 12 months.

AB2017 by Isadore Hall, D-Los Angeles, would authorize voluntary tax contributions to go to the California Youth Leadership Fund and Government Program. Language directing the contribution specifically to the YMCA was removed.

AB2060 authored by Charles Calderon, D-Whittier, is a sales and use tax levy which initially appears to be a tax decrease for fixed-price contracts, but is limited to contracts entered into with government entities or small government-approved businesses.  A fixed-price contract normally protects the business from overcharges in a project. If the cost exceeds the contract price, the difference comes out of the contractor’s pocket. Analysis of Calderon’s bill states, “Enactment of AB 2060 would fix this inequity that these fixed-price contractors are subject to in the face of a rate increase. However, this inequity would only be addressed for the government and small business parties involved in these contracts.” This bill would take effect immediately as a tax levy.

Calderon’s AB2078 is another use tax on businesses in the state, which seeks to collect tax revenue on businesses that ship any product out of state. Bill analysis reads, “According to the California Board of Equalization, over $1 billion in state and local revenue is lost each year from unreported use tax associated with out-of-state internet and mail order sales.  AB 2078 seeks to close this sales and use tax collection gap by requiring specified retailers to provide notice to California consumers that they (consumers) are responsible for paying use tax on certain purchases in an effort to improve the collection of these taxes in the state.”

AB2498, authored by Nancy Skinner, D-Davis would add interest and penalties, in addition to the tax, relating to any abusive “tax avoidance transaction,” as well as additional interest, and penalties by the Franchise Tax Board. The bill is designed to prevent taxpayers from using tax shelters, and imposes fines up to $100,000 on the taxpayer, as well as the tax preparer or attorney.

Language from this bill reads: “This bill would make a penalty imposed by the Franchise Tax Board for promoting abusive tax shelters and aiding and abetting an understatement of tax liability grounds for revocation, suspension, or refusal to renew a license of a registered public accounting firm, any person associated with a public accounting firm, or a holder of a permit, certificate, or license to practice in the state.”

To keep up-to-date on legislation, anyone can watch legislative hearings on The California Channel and use TotalCapitol and aroundthecapitol.com: california political news & opinion to look up bills and bill language, see the status of bills, as well as news about legislators.

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  1. StevefromSacto
    StevefromSacto 5 July, 2010, 10:45

    Here’s an interesting piece to put California spending in perspective. (Brace yourselves, Rabid Rightists, it shows that we are NOT the worst spending state and provides a reasonable explanation for why we spend:

    It’s conventional wisdom: California is a big spending state. While our reputation as spenders and taxers are exaggerated, the state does spend more than the average state.

    Why?

    For one thing, California’s fiscal system is centralized, with money destined for school districts and local governments coming through Sacramento. The state’s spending levels look high, but not nearly as high when one understands that three-quarters of state spending goes to these local governments. In other states, local governments raise more of their own revenues — and keep it local, instead of sending it through Sacramento.

    California also has larger caseloads and more generous benefits in some areas. Part of this has to do with demographics–California has more school-age children and low-income families than most states, and thus spends more. The state also makes more people eligible for some programs than other states.

    But California also saves money by being very efficient in how its administers programs. In Medi-Cal (the state version of MediCare) and CalWorks (the welfare to work program), California’s expenditures per case are LOWER THAN THE AVERAGE in other states.

    Reply this comment
  2. DavidfromLosGatos
    DavidfromLosGatos 5 July, 2010, 18:19

    Stevefrom Sacto,

    Do you see any link between California’s making “more people eligible for some programs than other states” and offering “more generous benefits in some areas,” with California also having “more … low-income families than most states”?

    Or just a coincidence?

    Reply this comment

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