This just off the transom…

California Assemblyman Chuck DeVore Resigns Leadership Post Due to $14 Billion Tax Increase Deal

Feb. 14, 2009, Sacramento, CA – California State Assemblyman Chuck DeVore resigned today as Chief Republican Whip due to his opposition to a massive tax increase deal brokered by Republican legislative leaders. DeVore said, “The St. Valentine’s Day deal to raise taxes on hardworking Californians will neither close the budget deficit nor control spending. I believe leadership thinks they are doing the right thing – but I cannot be a party to this agreement as I believe it will harm California.”

Excerpts of DeVore’s letter to Assembly Republican Leader Mike Villines follow:

“…the recent agreement you negotiated to increase taxes in exchange for a spending limit will not likely accomplish the twin aims of deficit reduction and budget control that you seek.

“This proposed agreement also strikes at the heart… Read More

In response to Cap Weekly’s mention of possible GOP leadership rumblings over the current budget deal, Jon Fleischman notes in a post below that he typically refrains "from commenting on legislative caucus politics."

Fair enough. However, the rumors of rumblings does evoke some memories of the last Assembly GOP rumble. Then-Republican Minority Leader George Plescia was ousted a bit over two years ago — and replaced with Mike Villines — ostensibly for the crime of being too accommodating of legislative Democrats and Governor Schwarzenegger, meaning not standing firm enough in representing GOP Caucus interests and ideals when it came to budget negotiations.

Fast forward. Today we have an Assembly Republican Caucus, a clearcut majority of its members sharing the conservative, no taxes stance of the 2006 version. Just last November, the GOP leadership in both houses excoriated the Governor for proposing tax increases. Yet, the budget deal to be considered tonight, as negotiated by leaders of both parties and… Read More

I will happily acknowledge that I am NOT a policy wong. Some of the back and forths below from policy-wonks on the language of the proposed spending cap (that would go before the voters, tied to extending taxes that are raised in this Big 5 deal) are above my pay-grade.

That said, my "open question" on the cap is this?

I am going to throw out there that there is distinct possibility that Republicans joinin hands with the Democrats for a plan that includes $14.8 billion in tax increases is going to cause a big problem for the GOP, and that it may very well lead to losses of seats in the Senate and the Assembly. When the smoke clears after the 2010 election, Democrats may have a supermajority of the legislature (yikes).

If that were to happen, AND the spending cap as proposed in this deal were in place (having been passed by the voters) — is the cap strong enough to keep Democrat supermajorities from racheting up spending (beyond the cap)? In otherwords, when we are forced off the beach, and back onto our landing craft, have we left some protection behind?

As I understand it, there is a big gaping hole in this proposal. To put… Read More

Dan Schnur points out the need for an alternative budget below. This is something that I have been considering for several weeks now.,

In 1993 a member from each party did come together to attempt to "solve" the budget crisis. Republican Senator Frank Hill and Democratic Assemblyman Phil Isenberg actually started to write their own budget document. The budget delay then was 63 days but few would doubt that their efforts helped determine the eventual outcome.

Personally, I support term limits for members of the Legislature but one of the obvious reasons we don’t have alternative budgets is because of the imposition of term limits. It is hard to write a budget that makes sense. It takes experience with government and an understanding of the process.

Many of you will attempt to point to the fact the Hill later served time in prison as a reason this was a bad system. The reality is that he and Isenberg are both very bright men that understood the system and had the staff support to make this happen. His other issues have nothing to do with this.

Right now in Sacramento how many members of the Legislature truly understand… Read More

Anthony York over at Capitol Weekly is reporting that there is unrest amongst Republicans as a result of this "Big-5, Big Taxes" deal.

I typically refrain from commenting on legislative caucus politics, and will continue to do so. But I will continue to express a high degree of frustration that seemingly overnight, the position of Republican leadership went from "taxes are terrible and we completely oppose them" to "taxes are terrible but not having them is more terrible and now we support them."

My overwhelming feeling is one of disappointment at this situation, and that our leaders are going "maverick" when their caucuses overwhelmingly oppose the tax increases.

Again, I am not trying to be critical of Cogdill and Villines as individuals — they are both good people. But I do feel that the "art of the deal" is supplanting the "team" concept that is so important to achieving long-term success.

I do hope that part of the… Read More

Mike Genest, Governor Schwarzenegger’s Director of Finance has offered this response to Dr. Zycher’s concerns about the Spending Limit Initiative language in the current "Big 5" deal: Dr. Benjamin Zycher made five observations regarding the budget stabilization fund contained within the current budget agreement. In response to his “observations,” I offer five factual statements. Zycher observed: The degree to which the estimated revenue projection trend and the Budget Stabilization Fund would operate actually to limit general-fund spending is not clear.

Incorrect. The governor could not simply suspend the transfer of revenues into the new rainy-day fund. While Article XVI Section 20 (e) of the state constitution currently allows governors to suspend the… Read More

Freshman Assemblyman (and fellow FR blogger) Curt Hagman released the following statement about his stance on the staggering new tax increases in the budget proposal:

“California’s economy is in shambles. Businesses, jobs and taxpayers keep leaving the state. According to the Employment Development Department (EDD), on January 1, 2009 there are 184,500 (8%) more employees on the government payroll than on January 1, 2001. Over those same eight years, private sector employment is up only 33,600 (0.2%).This means that the public sector accounts for 85 percent of the overall growth in California over the last eight years.

Even before an estimated $6.4 billion in business tax increases from last year’s budget, California employers already paid taxes that were 20 percent more than the national average. The national population of millionaire households grew by 5.9% in 2007, Los Angeles County lost about 7000 of these households. Orange and San Diego Counties lost millionaire households as well.

Maricopa County in neighboring Arizona gained 23,000 new millionaire households in the same time period. Why? Arizona’s top marginal… Read More

3:30 PM Update: The Governor’s Office has responded to Zycher’s observations below, and that response can be found here.

As we rush speedily into a vote tonight on a "Big-5" produces budget plan that includes nearly $15 billion in assorted tax increases, one of the major "concessions" that is in the plan, to "sweeten it" for GOP support is the placing of a Spending Limit Initiative on the ballot (though we note that the Limit, if it passes, also extends the tax increases).

One of the policy experts on economics and state finances that I look to in this area is Dr. Benjamin Zycher of the Pacific Research Institute. Zycher was asked by the Howard Jarvis Taxpayers Association to review the final language.

… Read More