This op-ed originally appeared in Fox & Hounds
Earlier this week, Assembly Democrats unveiled their budget blueprint of liberal spending and higher taxes, which they ironically call their California Jobs Budget.
In reality, they proposed the “California Red Ink Budget” because that’s really what it would produce more government spending, increasing debt and higher taxes that would hit working Californians especially hard. Considering our accumulated deficit, and the fact that we have borrowed from over 700 internal accounts, as well as our local municipalities, the plan is one of the most irresponsible budget proposals that I have seen in my time in Sacramento.
On the spending side, the Democrat plan rejects the tough cuts proposed by the Governor, or any substitutes that are necessary to close California’s $19.1 billion deficit. It instead relies on massive new borrowing and tax increases that will push our state even closer to the brink of financial insolvency.
As Vice Chair of the Assembly Committee on Public Employees, Retirement and Social Security, I am particularly troubled that the Democrat plan completely ignores our looming pension obligations. We all understand that unfunded liabilities will put taxpayers on the hook for billions more in future payments to retirees.
Before I was elected to the Legislature, I spent more than 30 years working in corporate finance and banking. I reviewed many tough budget choices as my customers dealt with cyclical economic realities. I know that when our state is facing a triple header of massive deficits, high unemployment and mountains of expensive accumulated debt, that the only way to dig out is to reduce expenses and reprioritize needs. To stay in business you must plan for the future, not merely hobble by day-to-day.
The heart of the Democrat plan is the creation of a so-called $10.1 billion “jobs fund” by “securitizing” $8.7 billion from the California Beverage Recycling Fund and another $500 million from the Disability Insurance Fund. They propose to spend these additional borrowed dollars on so-called “jobs investments,” which is code word for subsidizing government and so-called green jobs while creating new spending taxpayers can’t afford.
If the proposal were truly about job creation, Democrats would begin to work on the structural issues, rather than creating more uncertainty in our tax system. Suspending business tax incentives will deter investment in California, and raising taxes in a recession is a job killer. Their plan to impose a new tax on oil production in California will not only lead to higher gas prices, but it will also result in the loss of 10,000 jobs according to a study by a former Legislative Analyst. If you regulate or tax an item you will get less of it including employment!
By following President Obama¹s bloated, big government economic stimulus ideas, relying on “free money” to fill the gaps, the result in California will be no different than we experience at the national level exploding deficits, new giveaways for special interests and no progress in actually stimulating the economy.
Hard-working and entrepreneurial Californians create jobs. The best thing government can do is untie the noose around the necks of California’s employers by reducing regulation and offering lower tax options. The answer to our unemployment problem is making our economy more competitive so we can encourage employers to expand and return to our Golden State.
California is facing a $19.1 billion budget deficit today and projected multibillion-dollar budget deficits for as far as the eye can see. The gimmick-filled, Democrat Red Ink Budget that fails to bring spending in line with revenue and doesn’t account for our future mounting state obligations will do little to alleviate the problem.
The Legislature has overspent and over-borrowed for far too long and we have little time or room to maneuver. Only when we face the challenges honestly will we make any progress towards getting California’s finances back on track again.