June 18, 2009

State budget requires fair revenue increases and political reform

CPI calls for stopping corporate tax breaks, revising sales tax and ending one-third rule

To avoid drastic and unprecedented cutbacks in public services, California lawmakers must face the responsibility for fair increases in taxes and fees balanced with spending cuts.

In a press release and letters to lawmakers, the Center on Policy Initiatives today called for progressive changes and modernization of the state's revenue structure and budgeting process.

"Our state is in deep trouble.  We must have reality-based budgeting that balances selected cuts with new revenue," said CPI Executive Director Donald Cohen.  "It is highly irresponsible to close off the state's options with "No taxes" rhetoric."

The governor and other politicians have misinterpreted voters' thumbs-down on Prop 1A as a mandate against all taxes.  Low turnout and survey results indicate voters may have dismissed the propositions as inadequate but still want real solutions to the budget shortfall.

The solution must include political reform to end the tyranny of a one-third minority.  California is the only state that requires a two-thirds vote of the legislature for both adopting a budget and approving new revenues.

In addition, most voters support certain increases and changes to make the tax structure more fair.  Among the many options available:

• Eliminate $2 billion a year in recent corporate tax cuts.  A new study by the California Budget Project reveals that the state's budget agreements since last fall give giant tax cuts to just a few large corporations.
• Modernize the sales tax to match modern consumption patterns, by including services and Internet sales.
• Tax commercial property at market value, eliminating the assessment disadvantage for newer businesses.

Most Californians do NOT want drastic cuts in basic services such as schools, public safety and healthcare for children. The role of our state government is to provide these services and to figure out the best and fairest ways to pay for them.