Today’s Commentary is guest-authored by two reknowned taxfighters — Jon Coupal, President of the Howard Jarvis Taxpayers Association, and Ted Costa of the People’s Advocate…
Putting the red light on spending
By Jon Coupal and Ted Costa
California faces a fiscal crisis that may soon drown taxpayers in billions of dollars of debt. The facts speak for themselves: Controller John Chiang says unfunded pension liabilities just for state employees are at a minimum $50 billion—and growing. In addition, California is facing at least a $5 billion structural budget deficit and tens of billions of dollars in bond debt.
We have long made it clear that the time for bold action is now and that the spending lobby in Sacramento must be told clearly that enough is enough. The Republican caucuses in both houses have taken this message to heart, and we commend them for it.
Last week, Assembly Republicans took a step in the right direction forcing the majority to accept a budget that scales down the operating budget deficit to approximately $600 million, and increases our budget reserve to $3.5 billion. If revenues do not match projections, the reserve will provide some cushion to use in the next fiscal year.
It is notable that the Assembly would also agree on a series of tax credits that will ameliorate California’s hostile business climate. Democrats and Republicans alike recognized the virtues of how tax credits can ultimately bring more money into California as well as increase job growth, which in June posted its smallest increase of the year. We remain optimistic that such credits will be part of the final budget.
Senate Republicans can build on the progress made by the Assembly by demanding even more cuts, and HJTA commends them for standing firm in the face of continued pressure. They clearly understand that an operating budget of $600 million dollars means the state is starting the fiscal year that much in the hole. Revenue numbers released earlier this year already indicate a shortfall in the hundreds of millions of dollars, and thus it seems unlikely that money will suddenly materialize later this year to fill the gap.
Many concerns remain. The budget passed by the Assembly assumes increases in both tribal gaming compacts and property tax revenue which may prove to be overly optimistic. The problem with budgets that spend more then they take in is the inherent risk that the funding will not materialize, ultimately adding billions to our structural budget deficit, while also failing to address our mounting pension debt. We join the Republican caucuses in being gravely concerned about the state of our economy.
We eagerly await the Senate Republicans proposal to the Legislature set for Wednesday morning. It is our hope that the ultimate product brings the budget closer to being balanced while, at the same time, advances policies that will help keep businesses in California.
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