MEMORANDUM
To: GOP State Senators, GOP State Assemblymembers
From: Jon Fleischman, Publisher, FlashReport.org
RE: Heartfelt Input Concerning The State Budget And Jerry Brown’s Proposal To Place A Massive Tax Increase On A June Special Election Ballot
You don’t have to have a conversation with State Senate Republican Leader Bob Dutton for too long before you can hear the frustration in his voice. Dutton has served in the legislature for nearly a decade, and he will share with you that as long as he has been in the Capitol, he has seen the Democrats continue to enact more regulations, raise more taxes (often on majority votes, calling them fees), and all of the while continuing to increase state spending (the latter only finally abating when literally the money to spend ran out). He will tell you that the situation in which state government finds itself in today was not only totally predictable, but also was completely avoidable. Of course one only need talk to a host of retired Republican legislators to know that this has been the case going back many decades.
It is consistently the case that the only time that any serious effort to "woo" Republican legislators has taken place has been the annual budget “kabuki” dance where up until this year, a constitutional requirement of a 2/3 vote of each chamber on the budget necessitated Republican votes for the spending plan. Even then, when Republicans would seek to address a myriad of tax, regulatory and other issues in the context of budget negotiations, Democrats (and the state’s stable of liberal MSM columnists) would loudly object, expressing outrage that Republicans would tie "non budget related issues" to the budget process. This criticism of course causes Republicans to roll their eyes, as decades of Democrat big-government policy making has created horrible budget situations, to include the very serious budget quagmire that faces legislators today.
It is very important, when trying to analyze the political dynamics of the current budget situation, to do so taking into account the context that I have outlined above. When you hear tongue and cheek comments from seasoned GOP legislators like Senator Tom Berryhill, saying that the budget situation is not the Republicans problem, and that the Democrats own it — what he means is that the Republicans have tried, for a generation, to steer California towards a fiscally responsible course. What he means is that Republicans have been trying all along to enact common sense solutions and reforms to turn things around. It is just a fact of politics in the Capitol that the most meaningful, substantive and impactful public policy ideas put forward in legislation by Republicans always are killed by Democrats, usually in their first policy hearing.
Even with the fiscal nightmare in which state government currently finds itself, it is painfully obvious that were it not for the now air-tight Constitutional requirement for a 2/3 vote of each legislative chamber to enact tax increases or place them on the ballot (significantly strengthened by the passage of Prop. 26), Democrats would be more than pleased to continue trying to over-tax and over-regulate our state into prosperity — we’ve seen how well that has worked out! Which is where we find ourselves now. Governor Brown has proposed a budget that calls for some cuts, a lot of grabbing (Redevelopment Agency funds, funds collected by previous ballot measures, etc.) and, oh yes, the largest tax increase in the history of California.
For anyone following state political dynamics, it should come as no surprise that what can only be characterized as an "obnoxious" request by Governor Brown and legislative Democrats has been met with strong and resounding negativity by Republican legislators. After all, until they are blue (or make that red) in the face, dozens of Republican legislators have said that the short and long term solution to the state’s fiscal woes is private sector job creation. As Assemblyman Dan Logue often says, “We simply need to get government out of the way and let a vibrant marketplace get Californians back to work – if someone isn’t working, then they pay no taxes at all.”
The state’s budget crisis is not going to be resolved until we bring down unemployment and we get job creators back in the business of hiring people (who then will pay their fair share of state taxes). There is nothing that would be more harmful to turning around California’s economy than to enact new taxes on income, sales and cars just as those raised in 2009 are on the verge of ending. It would be a terrible public policy move and, fortunately, it is not something that the liberals who control the legislature can do on their own. It would require Republican votes to advance these onerous tax increase to the ballot — votes that should not be forthcoming.
It is not lost on me, nor I am sure is it lost on any Republican in the legislature, that the kind of reforms and downsizing that would need to be implemented in a "live within our means" budget are substantial. Frankly, it has been a lot easier for Democrats to grow the size and scope of state government over a longer period of time than it is to be stuck making a lot of cuts to bring that government down to an affordable size quickly. Obviously, with the passage of Proposition 25, Democrats actually can adopt a "live within our means" budget without a solitary Republican vote. But I would strongly urge Democrats to invite Republicans into a bipartisan discussion about how to “rightsize” state government more responsibly — with a particular focus on making changes to the way our state government works in order to foster more private sector job creation, as well as long term reforms to prevent radical overspending in the future.
While the public policy reasons for doing everything possible to stop the advance of a tax increase plan are compelling, for Republicans, the political considerations are even more so. If Republicans are going to begin the long climb back towards being a majority party here in California, we first need to be united. It is obvious, especially with the debut of the legislative Taxpayers Caucus, that an overwhelming number of Republican State lawmakers oppose placing taxes on the ballot. Some people have lamented the creation of a Taxpayers Caucus (with a major tenet of membership being a commitment to not putting a vote for higher taxes on the ballot) as being divisive. My perspective is that this has been an extremely positive development because it not only sends a strong message against foisting higher taxes on an over-taxed populace, but it was a project initiated by and embraced by legislators themselves, not from external sources.
Let us all remember that Sacramento is filled to the brim with rent seekers — those looking to take advantage of the redistributive power of government to take money coercively through taxes to then spend on their particular project or cause, whatever that might be. This group is not limited to big labor and their tradition allies — more and more we have seen those looking for government hands-outs coming from the big business sector and other folks who have traditionally supported the GOP. By standing together, legislative Republicans get to draw fortitude from each other, and send a collective message that enough is enough, and that there will be a sharp focus on private sector job creation.
There are some who advocate that Republicans should use their "leverage" to try and force Democrats to put forward substantive "reforms" in state government (presumably through ballot measures), in exchange for providing the votes to place this massive tax increase on the ballot. You can put on the top of that list a host of "smart" people like George Skelton of the Los Angeles Times, Greg Lucas of Capitol Weekly, John Diaz of the San Francisco Chronicle, Dan Morain and Peter Schrag of the Sacramento Bee, and Phil & Jerry over at CalBuzz — in addition to all of the aforementioned rent-seekers. It seems like the way Sacramento’s political world is structured, there is always a steady beat of "make a deal" in the air — "make any deal…"
First and foremost, the kinds of deeps cuts that would have to be made in the absence of a tax increase are so substantive that they themselves will reform state government. But it is also the case that the public employee unions would never allow the kind of substantial reforms that would be "game changers" for state government on a special election ballot. And of course "half loaf" reforms only serve to undercut the momentum of real reforms that will be headed to the 2012 ballot through the initiative process.
The damage to our already beleaguered GOP brand name after seven long years of Arnold Schwarzenegger as the state’s top Republican official has been devastating. My friend Michael Der Manouel, Jr., who served as Treasurer of the California Republican Party when I was Executive Director (those many years ago) – now Chairman of the Fresno County Lincoln Club, often likes to say that the situation we are in today “is the direct product of excessive compromise.” Republican votes going up to advance this massive tax increase to a special election ballot would be terrible.
I have heard some say that a few Republicans can vote to put the taxes on the ballot, but then they (and the rest of us Republicans along for the ride) can just then oppose those taxes on the ballot. Jon Coupal of the Howard Jarvis Taxpayers Association appeared on the Eric Hogue radio show yesterday, where he said that it lacks credibility to say voting to place a tax increase on the ballot is substantively different than supporting the passage of the taxes. I agree with him 100%. For exaggerated emphasis, Coupal made the point that if a legislator voted to put a measure legalizing heroin use on the ballot, that it would fly in the face of common sense to not conclude that the legislator who cast that vote wanted to see heroin use legal in California. It is also significant to note that a key messaging component for the campaign to pass the tax increases would be to emphasize the bipartisan vote to place the taxes on the ballot. I guarantee you that the unions will make the four Republican legislators who voted to place the taxes onto the ballot into "stars" with direct mail into Republican voting households.
In closing, it was just over two years ago that the 1500 or so delegates to the California Republican Party State Central Committee gathered in Sacramento for a convention. Delegates arrived just as the legislature voted out the now infamous budget deal of 2009 that including massive tax increases. The fury of delegates was palpable as six Republican legislators and a nominally Republican Governor approved of these taxes. A resolution was passed blasting the Republican tax-raisers. The absence of GOP unity against higher taxes created a bitterly divided party (one legislator was almost put through a recall election over it).
Everyone I talk to makes the assumption that the days of Republicans facilitating higher taxes are behind us, and is looking forward to a convention and a Republican Party focused on winning elections in 2012. No one I know wants to divert enthusiasm, energy and resources away from 2012 to engage in June battle against higher taxes, a battle in which Republicans and tax fighters would be outspent by forty or fifty to one.
By rejecting the call of Brown and the Democrats to raise taxes, GOP legislators have an opportunity to lead a united party focused on election gains, and force the Democrats into a turf war between real liberals and union hacks over where to find deep and impactful cuts in state government spending. I urge Republican legislators to cast aside the rabid consumers of government largess, and prioritize their constituents, the taxpayers. And for those who would express concern that Republicans will be seen as simply the party of "no" — I would respond by saying that we must reject this label. We are the party of opportunity, and the party that believes that the goal of putting people back to work through private sector job creation cannot occur until we look to and focus on solutions that probably include cutting tax rates — but certainly do not include facilitating a massive tax increase.