Supermajority Requirement Forces Desperate Action in California

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As you can see from just a brief skimming of the Tax Justice Digest's California archives, the fight to fill California's enormous budget deficit has been a struggle of epic proportions. Despite widespread agreement among both the Governor and a majority of legislators that some type of tax increase will have to be employed if catastrophic reductions in state services are to be avoided, a minority of tax-phobic legislators have been able to hold hostage the process as a result of California's requirement that all tax increases be approved by a super-majority of the legislature. Having struggled for months under the unworkable limitations of the super-majority requirement, California legislators took the desperate action of cobbling together and passing a (perhaps illegal) budget fix that raises taxes in a manner so convoluted that it may circumvent the super-majority requirement (that is, if it holds up in court).

The gist of the plan is this: raise the sales tax, enact an oil extraction tax, and impose a surcharge on everybody's income tax bill. Then, at the same time, eliminate the gasoline tax so that, on the whole, the proposal produces no increased revenue for the state. But getting rid of gas taxes is hardly something California can afford, especially given the well-publicized suspension of numerous transportation projects this week. In order to fix this, the gas tax is then re-imposed (at a higher rate than before), but is re-labeled as a "fee", rather than as a "tax". Presumably, this is allowed because gas taxes are largely dedicated to the very specific purpose of recovering the costs of providing transportation -- in contrast to taxes which usually finance government expenditures more generally.

Given the desperate nature of the situation, the Governor appears to have given his consent to this convoluted technique. But before you start thinking that we've heard the end of California's budget debate, think again; the Governor has already announced his intent to veto this particular proposal because of his belief that it includes too few spending cuts and does too little to stimulate California's economy. Presumably, then, if another similar proposal manages to make it through the legislature that is more tailored to the Governor's liking, we may be set for a court battle over the legality of this revenue-raising scheme.

For now, only one thing is clear: California needs to greatly magnify the amount of attention that has been given to ending the absurd super-majority requirement.

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