Bridge Tax Fails; Local Tax Passes

JUNE 13, 2011

By KATY GRIMES

In the California Senate Friday, after a week of budget talks and hearings, the “bridge” tax extensions failed — for now. If passed, the tax extensions theoretically would balance the state budget until voters got a chance to vote on the extensions as early as September. However, the bill allowing local governments to tax of myriad goods and services with a local votepassed along party lines amid contentious debate.

And on spending, after slashing billions from the state budget in March, Senate Democrats last week voted to actually increase state spending by more than $1 billion.

Republican Response

In what many had described as a budget drill, Friday in the Senate Republicans fought to prevent passage of the Democrats’ budget proposal bill. Most Republicans said that the budget doesn’t include any reforms that would actually repair the state’s broken budget, or clean up the budget crisis. And California’s two million unemployed workers would not benefit either, since nothing in the bill encourages employers to expand or hire new workers, according to Senate Republicans.

Republican Sen. Tony Strickland of Moorpark lambasted Democrats for not committing the recently discovered $6.6 billion additional state tax revenues to public safety and education — the two groups in the state claiming to be hit the hardest with cuts. He said it does not appear the money was spent wisely.

“Democrats would like to claim that this budget is about public safety and education,” he said. “Let’s be clear: You can make no mistake that this budget is not about protecting public safety or education. If you extend these taxes, it’s going to mean more people out of work at a time when people can least afford it. If you vote for this, it will actually be a full year of tax increases even if people in September vote it down.”

Republicans were able to block passage of AB X1 18, the tax bill requiring a two-thirds vote. The fight is over implementing tax hikes or waiting for an election.

Immediately following the failed tax vote, Sen. President Pro Tem Darrell Steinberg (D-Sacramento) brought up SB 1X 23, which housed his local taxation bill, SB 653, and would allow local governments to bring local tax opportunities to a vote.

“I believe that it is another club to use over Republicans and our constituencies, saying, if you don’t do this bridge tax, if you don’t raise the taxes of people that have already said no, then we are going to have all these different taxes,” said Republican Sen. Bob Huff of Diamond Bar.

But Steinberg and other Democrats all throughout the tax discussions this year have said they planned to allow  local governments to fund their own public programs if Republicans and voters rejected the tax extensions. SB 653 was used as a bargaining tool to try to get Republicans to go along with Brown’s tax extensions. Under it, local governments could pass local taxes increases on not just goods and services, but also on income taxes. Democrats have said they would create a local car tax, additional business taxes, property taxes and many different excise taxes on cigarettes, liquor, soda and even locally sold medical marijuana.

Democratic Response

“I felt it was important to pass this early because it does show that if the minority party, which holds some of the cards here, does not provide bridge funding for schools and public safety agencies, that the majority party will fulfill its responsibilities,” Steinberg said. This proved once again that California Democrats have only one game plan — taxation.

Republicans have offered their own budget plan, which includes reducing and retiring restrictive environmental and business regulations, a permanent spending cap which would limit budgets in the future, a conservative savings plan for any excess revenue in positive growth years, and paying down the debt.

Republicans would prefer to let the 2009 Schwarzenegger tax increases expire, then later in the year take the vote to the people to decide if taxes should be reinstated.

And while Republicans have remained steadfast on not raising taxes, whether it is out of fear or a sense of party loyalty, they are willing to ask voters to decide.

Senate Democrats met all weekend, and it is anticipated that the budget will be voted on this week.

But can they pass a full budget rife with tax increases? Right now, even though Democrats rule the Capitol, they still need a couple of Republican votes. And Republicans seem to be holding on tightly — even those whose names are always mentioned as possible tax turncoats.

Constituents have made it clear to Republicans that more taxes will only bring about unemployment for the lawmakers. Brown has said his bridge tax is necessary before an election takes place to tide the state over until voters could decide the issue. But those talks were abruptly ended by Brown, not Republicans.

This morning, Brown will be pleading with legislators to pass a “balanced, no gimmicks budget,” before lawmakers meet in chambers to hash and rehash to tax, or not to tax.