Forced March to the May Revise

APRIL 11, 2011

By JOHN SEILER

Things are looking bleaker by the day for Gov. Jerry Brown’s proposed $12 billion tax hike. So far, Republicans have remained rock solid against it, denying him the two GOP sellout votes he needs in each house of the Legislature to put a tax-increase before voters.

Meanwhile, here’s what’s happening:

1. Gas prices keep going up at the pump, having doubled in the past year. Some forecasters are expecting $5-a-gallon a gas by Memorial Day. That means Californian families already are paying about $1,000 a year more — the amount Brown’s tax increase would gouge the average California family.

Add it up: that’s $2,000 in added costs for each family. How many families will buckle under the pressure and leave for another state? True, gas prices are up everywhere. But a move to Texas means paying no state income tax at all, saving perhaps $4,000 over a year for the average California expats.

2. Tax day is approaching. This year it’s April 18, instead of April 15. Same difference: California taxpayers suffer what I call “tax shock” — paying huge amounts to the dysfunctional state government.

The bill due on April 18 is for the 2010 tax year, so there’s no tax relief there. But the 2009 Schwarzenegger income-tax increase expired already on January 1, 2011 — three months ago.

When people sign their huge California tax checks, slip them into the envelope, then drive down to the local Post Office to brave the heavy tax-day traffic — will they be in a mood to want increase their taxes? Not likely.

3. In early May, Gov. Brown comes out with the revision of his January 2011 budget proposal, called in Sacramento parlance the May Revise. Because he was unable to get a tax increase on a June ballot, his May Revise will have to calculate an all-cuts budget for fiscal 2011-12, which begins in July 1.

That is, it will have to factor in not getting any of his $12 billion in tax increase.

It will be the dreaded (to him and other government functionaries) “all cuts” budget.

Here’s the great part: It will show that, yes, California can survive an all-cuts budget. Those departments of government suffering the cuts will howl. Legislators in the Government Union Party (Democrats) will holler that it is impossible, that taxes really must be increased.

Schemes will be hatched to increase taxes anyway, through a majority vote (instead of the constitutional requirement of two-thirds) or by peeling away four Republicans, two from each house, to back tax increases. But such schemes likely won’t go anywhere.

The reality will be that the cuts will have to be made.

4. On July 1, D-Day will arrive, with the tax cuts wading ashore at a Normandy Beach defended by the tax increasers. The state will not fall apart. Instead, newly liberated taxpayers will dance in the streets.

All the prophecies of doom and gloom — even of Armageddon — should taxes not be increased, will not occur.

A new state budget, of course, will not be complete. Budget wrangling, as it almost always does, will continue well into the new fiscal year. The state may have to issue IOUs to state tax beneficiaries, pending a budget resolution.

But for almost everybody outside government, life will go on as usual — just with a few more coins jangling in our pockets.

For some folks, tax cuts will mean just squeaking by on the mortgage, avoiding foreclosure. For others, it might mean making a late car payment and avoiding the repo truck’s arrival.

For others, it might mean some new clothes for the kids. Or paying down a little more on a credit card. Or a marriage on the rocks might be patched together with a dinner for two, previously unaffordable, at a nice restaurant.

Maybe summer band camp now can be afforded for the next Louis Armstrong. Or capital can be saved to start, by some pimply teenage geeks, the next Apple or Facebook, creating thousands of new jobs — even new industries. Or a few dollars more can be given to a vital charity.

Government insists that it gets first crack at our money. And if we don’t pay up, our bank accounts can be raided; we even can be sent to prison.

But regular people — parents, workers, entrepreneurs, students — need their own money, too, for their own needs.

An economy doesn’t run on taxes. Rather, taxes can be collected only after something to be taxed first is created in the private sector.

Within the next couple of months, Californians are going to find out that, even after the state government has been whittled down — finally, after decades of waste and bloat — the people of this state will survive, even thrive.

Californians will find out that they don’t need so much government.

7 comments

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  1. RT
    RT 11 April, 2011, 16:13

    It is a shame; I will miss California when it goes bankrupt. California will not hear the calls for it to get itself right. California is tax addicted, and its people are addicted to Government Services. Like all addicts, they do not see they have a problem. California’s tax addiction has been ignored for too long.
    In an effort to feed its tax addiction, California must find new ways to reach into the pockets of its citizens for more cash.
    Now California is about to OD (go bankrupt). When California OD’s, its Government Service addicted people will cry to the Feds for a new source for its addiction. I will miss California. Too bad, that no one was willing to force it into rehab.

    Reply this comment
  2. Ornot
    Ornot 11 April, 2011, 19:53

    Rock headed republicans are about to find out what it means to have unfilled potholes on their streets, policemen not answering the calls, broken windows on empty buildings around town, crank heads burglarizing their gated communities, and basic services unavailable several days a week. Next round of cuts will be targeted heavily in their districts.

    Small businesses will suffer as the economy contracts and government agencies and the ripple effect is felt from those unemployed who can no longer afford the small business’ services.

    Hope you’re not caring for disabled or elderly family members, cause you’ll be on your own with that.

    Of course, the corporate elite will be fine tucked away in their country clubs with accountants tallying ways to help them avoid taxes, but the rest of the people will tire of that quickly and the taxes will soon come back, this time in initiatives targeted mostly at the wealthy and corporations instead of spread more evenly. I believe they call this blowback.

    Enjoy.

    Reply this comment
  3. Ornot
    Ornot 11 April, 2011, 20:19

    Rock headed republicans are about to find out what it means to have permanently unfilled potholes on their streets, policemen not answering the calls, broken windows on empty buildings around town, crank heads and the hungry burglarizing their gated communities, $400 parking violations, and basic services unavailable several days a week. Next round of cuts will be targeted heavily in their districts. In a way, I await to see this happen, as it may be what turns your people against you.

    Small businesses will suffer as the economy contracts on government agencies and the ripple effect is felt from those unemployed and who no longer provide the small business’ services to the agencies or their recipients. Surely there are more cuts that can be made, but you’re all too willing to throw out the baby with the bathwater.

    Hope you’re not caring for disabled or elderly family members, cause you’ll be on your own with that.

    Of course, the corporate elite will be fine tucked away in their country clubs with accountants tallying ways to help them avoid taxes. For awhile. But the rest of the people will tire of that quickly and the taxes will soon come back, this time in initiatives targeted mostly at the wealthy and corporations instead of spread more evenly.

    I believe they call this blowback. You lost the election large, and without the unjustifiable 2/3 rule, you offer only minority party obstructionism. That rule is likely to be the next thing challenged.

    All this because the right wing refuses to allow a vote on extending a small existing tax as a balance to cuts already approved and being further pursued by the other party, which understands that simple minded pouty jingos are no way to run a complex system.

    Enjoy.

    Reply this comment
  4. Gerry
    Gerry 12 April, 2011, 10:36

    The real reason that cops will be laid off is that the feckless leaders of our state have failed to deal with other viable alternatives. For example, let’s reduce welfare payments to illegals. Or let’s outsource some government functions such as DMV that lend themselves to this. Or let’s cut CalTrans and outsource. Options abound but these pinheads will not consider them.

    Reply this comment
  5. DW
    DW 12 April, 2011, 11:54

    This will be a preview of what is/will happen nationally.

    Reply this comment
  6. Steve
    Steve 12 April, 2011, 13:13

    If California continues to spend more than it takes in it will continue to have problems.

    We need to cut spending first and then consider adding new taxes. I think that RT is right, California is tax addicted.

    Reply this comment
  7. joe desilva
    joe desilva 12 April, 2011, 21:14

    I have worked in municipal, state, and federal government organizations for almost 40 years, and I have never seen one that could not sustain a 15% cut in budget and survive (and in some cases, thrive). Of course, some kinds of organizations have more slack than others…educational orgs being among the least efficient (at every level). A basic problem in administering cuts is that these decisions are made at the top of organizations, which tend to protect much of the fat, and cut a lot of the less expensive personnel…and often the most productive ones. The enemy of the taxpayer is the body of politicians who are ignorant of bureaucratic behavior.

    Reply this comment

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