California: New Taxes on the Horizon?


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Throughout California's latest fiscal crisis, some have argued that the state's entire $15.2 billion budget deficit should and can be resolved through spending cuts alone. This should come as little surprise. After all, California is the state that gave the nation its most well known tax limitation - Proposition 13, which turned 30 this month.

Those more in touch with reality - and those who have long struggled with the legacy of Proposition 13 - understand, however, that additional tax revenue must be part of the solution to California's financial troubles. As Jean Ross, Executive Director of the California Budget Project, pointed out in the Sacramento Bee earlier this week: "California's budget faces a chronic problem. Simply put, our tax system doesn't raise enough money to support the services Californians want and deserve." Ross further notes that one of the sources of that problem is clear; taken together, the numerous personal income, corporate income, and other tax cuts enacted over the past 15 years now drain $12 billion per year out of the state's budget.

State Board of Equalization Chair Janet Chu offers another approach to bolstering the state's tax system in the San Jose Mercury News. She proposes expanding the state's sales tax base to include an array of services, a move that would yield upwards of $8.7 billion and help bring California's tax system into the twenty-first century. Ross and Chu may be traveling slightly different roads, but their intended destination is the same - adequate revenues.

Fortunately, Assembly Speaker Karen Bass seems to be heading in the same direction, though she doesn't appear to have a very good map just yet. She indicated last week that she supports raising taxes by $6.4 billion, but offered few details on how that goal would be reached. Of course, as the Bee observes, with the start of the state's fiscal year fewer than three weeks away, the time for Bass and other legislative leaders to become more engaged in the budget process is now.

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