Battle of the Bulge – In State Spending

Diane Harkey Board of Equalization Member Diane Harkey Leave a Comment

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Last week the State legislature passed a budget with the minimum number of votes that pleased no one, especially those of us who will absorb the increasing tax burden in sales, income and vehicle registration fees. The good news is the gas tax was rejected and the counties will be getting their allocation of state dollars without interruption in funding. Had counties been affected it could have pushed the state’s undeclared bankruptcy problem down to the local level. By having a budget plan in place, the state may also access the federal grab-bag of dollars now being doled out in Washington.

To digress, the initial budget passed on my first day on the Assembly floor, December 19, 2008 was with a Democrat only majority vote. This proposal included new taxes, no budget cuts, no job creation, no school funding reforms, and an early release of prisoners. It was a terrible plan for California and the Governor did exercise his veto power.

The deal finalized in the Assembly at roughly 6:30 a.m. on Thursday, February 19 excluded the early prisoner release and included the following reforms that should help with job creation/retention, ensure for public safety, as well as create local flexibility in education funding:

  • $3,000 tax credit to small businesses for each new full-time job they create
  • Changed the state’s tax structure to reward companies that hire and retain California workers, giving them the option of being taxed under the current double-weighted system (where taxes are assessed by the formula of 50% sales, 25% payroll, and 25% property) or allowing them to be taxed based solely upon their sales
  • Incentives to retain film and television production in state (provides jobs for more than 30,000 people per year)
  • A $10,000 tax credit for the purchase of a new home
  • Reforms to the 8-hour day overtime laws so that workers and businesses will have greater flexibility to set work schedules that are mutually convenient for both, including a 4-day/10-hour work week
  • Approved design-build methods and public-private partnerships for some state infrastructure projects, leading to more private sector employment
  • Streamlined regulations that make it easier for the State to sell surplus property.
  • Reduction in the categories of education funding such that local districts can better use the money where they need it
  • Allow for flexibility in classroom size
  • Begin the process of ”equalization” or a more fair distribution of your tax dollars back to school districts that are not funded on par with older districts
  • Funding for important public safety programs remained in tact. This includes funding for community policing (COPS program), juvenile justice crime prevention grants, gang prevention efforts (California Gang Violence Suppression Program, CALGANG, Multi-Agency Gang Enforcement Consortium), and the war against methamphetamines in California (Cal-MMET), as well as District Attorney funding to prosecute violent crimes.

There were also real spending cuts and reductions to the overall budget levels as follows:

  • 08-09 spending level is adjusted to $94.2 billion. This is $10.3 billion lower than adopted 08-09 budget ($104.5 billion)
  • 09-10 budget spending level is at $92.2 billion. This is $12.3 billion lower than the adopted 08-09 budget

However, the ”Battle of the Bulge” is not over. Efforts are underway to try to remove the 2/3 vote requirement to raise taxes, because some are frustrated that the legislature actually had to work together and negotiate for 100 days to finally reach an agreement. While admittedly the agreement was bad it was far better than the original passed in December.  Those working to eliminate the 2/3 vote requirement don’t like that it took so long to increase your tax burden.  So you will be seeing petitions floating around to change the State Constitution to pick your pocket a bit sooner next time.

I will continue to uncover the machinations of Sacramento, in hopes that you will remain involved in politics.  It is easy to say that your vote doesn’t matter – but it does. While only 29 out of 80 members of the Assembly are Republican, the impact we had on negotiations was very important.  We are taking a bashing for some of the votes, as well as questions regarding leadership.  I did not support the tax increases, but understand that we 29 do not set the agenda nor vote in lock step.  There were many heated debates in our caucus sessions and we were furnished with information throughout the negotiations.

We ultimately voted for or against the numerous bills in the budget package as we saw fit.  Since we are only 29 out of 80 members, in spite of the criticism we determined it was better to hang together than hang separately.  I’d suggest it might be better to begin the purification process once we see our numbers increase closer to the 40+ mark. We do work for you and need your help to try to establish a bit more balance in the state.  One party rule is not democracy and does not lead to ”moderate” government. Help us to hold the line for you and the future of California.

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