This op-ed originally appeared in the Orange County Register
Reporting the type of back stories that made radio commentator Paul Harvey famous should be a must for the end of each legislative session in Sacramento. But to report behind-the-scenes stories, you need guts and a front-row seat. Now for the rest of the story:
Widely reported was the defeat of the Assembly speaker’s bill to raise taxes on out-of-state and in-state manufacturers (that also distribute), by mandating a change in calculating taxable income, known as the single sales factor. That the bill was, in fact, a tax increase and not meant to addressa fairness issue for employers in California should have been obvious. It was tied to grants or giveaway to college students, and promised reform of the California Environmental Quality Act, reform killed a week earlier by Senate chief Darrell Steinberg, D-Sacramento. Requiring a two-thirds vote, the bill passed the Assembly with one Republican vote but was killed in the Senate before the midnight Friday witching hour.
A 1 percent sales tax on lumber sold in the state was resurrected after midnight Friday because of an “urgency” clause. The state’s increasingly hostile regulatory and litigation environment has sounded the death knell for California timber and logging. The one Republican who joined with 53 Democrats and cast the deciding vote was persuaded by limits on litigation included in the bill. While “reforms” could always be reversed later with a simple majority vote, the governor would have to concur, which I doubt.
After all, killing off the industry loses revenue and may even cost the state to maintain and protect the abandoned timber lands. In the liberal mind, taxing all lumber sales could increase state revenue by increasing the price of homes and wood products, thereby driving up the costs and – well, you get the picture. We all pay for timber’s excessive regulation and litigation. But the industry lives to fight another day.
But the really big, nearly unreported, news, which Paul Harvey wouldn’t have missed, involved Senate Bill 1455, which would have increased taxes on vehicles, tires, and a few other must-haves to the tune of $2.3 billion over eight years. The defeat of this bill and the struggle to not support it, should be held up as an illustration of both the seriousness of the economic malaise that will continue in California if regulations are not curtailed, and the importance of elections.
SB1455 was supported by almost every employer group in California, including agriculture, truckers, oil refiners, delivery services and manufacturers, and Republicans were lobbied nonstop. But after we attended last-minute, late-night committee hearings and dug into details of who would pay, many discovered that most of the $2.3 billion in taxes and fees would actually go to support more regulation, government central planning and subsidies for favored industries.
The bill should have been an easy “No” for opponents of greater taxes and regulation. But with intense week-long lobbying of Republican lawmakers from businesses in their districts, a lack of early refuting information and late-night pressure, SB1455 cleared the Assembly with one vote to spare.
However, understanding the implications of casting a vote to increase taxes in this election year, two Democrats in the Senate joined with 13 Republicans in refusing to vote for the bill, denying it a two-thirds majority. While it may be resurrected in whole or in part, SB1455 died at midnight. Whoever says elections don’t matter did not witness the death of SB1455.
“And now you know the rest of the story.”