The following commentary is co-authored by Steve Baric, Keith Carlson, Tony Krvaric Paul Bruno, Shawn Steel, Doug Boyd and Jon Fleischman, the Secretary, Treasurer, Budget Committee Chairman, Vice Chairman, Central Coast, Vice Chairman, Los Angeles, National Committeeman and Vice Chairman, South of the California Republican Party respectively.

To say that we were disheartened upon news that the GOP’s primary negotiators in seeking a solution for the massive over-spending induced state budget shortfall, Senate Republican Leader Dave Cogdill and Assembly Republican Leader Mike Villines, had reached a “deal” as a product of the secret back-room “Big 5” process, and had come back to present plans to their respective legislative caucuses that contain roughly $14 billion in new taxes on Californians would be an understatement.  It was almost a surreal experience – because the plan that was laid out was so much worse than any one of us could have imagined – and because the plan, from our understanding of it, is not only terrible public policy for California (tax increases like this are a bad idea in good economic times, let alone at a time when Californians are in the midst of a national recession), but the politics of this “deal” would appear to completely gut the political identity of the Republican Party as the party of limited government and lower taxes, at a time when we are all still reeling from the effects of national GOP overspending on our brand name.

To summarize our understanding of major tax increase and spending components of this “grand compromise” (which we will entitle the “Taxpayer Betrayal Act” or “TBA”) as we understand it — we’ve lifted this summary from the Sacramento Bee’s website:

$15.8 billion in cuts, $14.3 billion in tax increases, $10.9 billion in borrowing. And if California gets $10 billion in federal stimulus money, cuts drop by $1.2 billion, borrowing by $5.5 billion and tax increases by $1.8 billion.

Delving deeper the plan: Gives K-12 education $5 billion less than it was otherwise entitled.  Eliminates two paid holidays for state workers, with the final number of furlough days per month through June 2010 still subject to negotiation.  Cuts UC and CSU by 10 percent.  Eliminates cost-of-living increases for recipients of CAL-Works and SSI-SSP.  Cuts the corrections department’s medical budget by 10 percent.  Eliminates funding for local public transit agencies.

On the tax side, the plan increases sales tax by 1 cent on the dollar, vehicle license fees from current 0.65 percent of vehicle value to 1.15 percent, and gasoline taxes by 12 cents a gallon with proceeds to pay off transportation bonds. Income taxpayers would pay a 2.5 percent surcharge on tax liability – 5 percent if federal stimulus comes in under $10 billion. Reduces tax credit for dependents from $309 to $99.  Taxes would be increased for two years, and an additional one to three years if the spending restriction measure is approved on the ballot.  Other new "revenues" include taking from voter-approved taxes for mental health and early childhood programs.

Frankly, we are scratching our heads.  As I mentioned, the TBA seems to be a rather terrible deal for Californians, as the basic premise of the plan is that massive and chronic overspending is resolved by reaching deep, deep into the pockets of Californians with more taxes.  While called "temporary" we note that it seems that ballot measures to "extend an existing tax" always seem to fare much better than measures to create a new one — so these may ultimately be permanent taxes.

And as for the "spending cap" proposal — well, frankly, we have always been of the position that we already have a spending cap, it is called our fiscally conservative Republican legislators.  Placing a cap into place is a strong statement that our GOP legislators aren’t willing to hold the line — and depending on their response to this proposal, well, that may just well be the case.  For those who believe that a permanent spending cap is a worthwhile goal, we note with concern that taxpayer leaders whom we have contacted have yet to see text of a cap that passes muster with them, and we also note that the idea of "no taxes without a cap" was abandoned in this plan.

As elected board members and fiduciaries of the California Republican Party, it is impossible for us to look at the TBA without significantly considering the political consequences.  We think that a GOP-backed tax increase proposal of this magnitude, especially after sticking together for so long for real reforms that don’t appear to materialize in the TBA, will be a devastating blow to the brand name of Republican here in California.  We will have to go into the 2010 election cycle with no credibility whatsoever to make the case that we are the party of fiscal discipline, of individual responsibility and limited government, and of lower taxes.  We will in fact be the party of pledge breakers — of broken promises.

From where we sit, this plan would appear to be a huge policy and political win for the left — both the labor unions and the Democrat ideologues who understand too well that the running-game they play in the Capitol will allow them over time to incrementally bring back more increased spending, and that they would have a very good shot, with a damaged GOP, in once and for all claiming a two-thirds majority in each legislative chamber.

All of this having been said, all three of us know, like and respect Senator Dave Cogdill and Assemblyman Mike Villines.  Though we have reached out to them, we have yet to speak with either of them about this plan — which we also have yet to see in writing (just a of summaries in the media, along with some joyous editorials from left-wing editorial boards).

So we ask our Republican leaders to make their case — not just to legislators in the Capitol behind closed doors, but publicly here on the FlashReport, as to why, given all of the dynamics in play, this plan is good for California, and good for our party.  We’ll afford any space required, and upload any documents important to support the case being made.  As a matter of fact, we will commit to publish tomorrow any commentary from any Republicans in the State Legislature on this plan.  If there is something that isn’t clear to us, or if our perspective is, in the opinions of our GOP legislative leaders, somehow flawed — well, please take the opportunity to share your thoughts with us.

Like you, the future of our state is of critical importance to us.  And we also believe that the future of the Republican Party is critically important to our ability to ensure a positive future for the Golden State.  Please tell us why this plan should not be soundly rejected.  Absent some convincing arguments to the contrary, this plan seems like a really bad idea and should be rejected by GOP legislators.

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This entry was posted on Thursday, February 12th, 2009 at 12:00 am and is filed under Blog Posts.