Prop 1A: Tax Issues

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(Sacramento, CA)
Tuesday, April 28, 2009

You won’t find anything in Prop. 1A about extending tax increases.  And that makes Jon Coupal of the Howard Jarvis Taxpayers Association mad: 
“So if you look at the ballot arguments, the ballot label, the ballot title, the ballot summary, it is devoid of specific references to the 16 billion dollar tax increase.” 
One reason Coupal opposes 1A:  The measure extends the sales, car and income tax increases that were part of the recent budget deal by one to two years.  The mechanism for that is in a separate piece of legislation.  But if you read your voter guide, you will find the taxes discussed in the analysis by the state’s non-partisan legislative analyst.  Michael Cohen is with the analyst’s office.  He says the 16 billion dollars in new tax revenue that 1A could bring in would help balance the state’s budget: 
“In 2011- 2012, if 1A doesn’t pass, you’d see a budget shortfall growing from about 15 billion to 25 billion under our projections.” 
Prop 1A also restrains state spending through a complex formula
based on the last ten years of growth.  But new taxes wouldn’t be factored into the formula right away…. meaning the limit wouldn’t apply to them.  Coupal says that gives lawmakers more reason to hike taxes: 
“If the only way you can get additional revenues is to pursue a tax increase, then that provides that incentive.”  
But Democratic Senate Leader Darrel Steinberg says it’s actually a strength of 1A that it doesn’t prevent lawmakers from funding major new programs:

“If the bipartisan legislature decides that it wants to actually fund a universal access to health care for example, they ought to be free to do it.”

Plus, Steinberg says, it still takes a two-thirds vote of the legislature to raise taxes….and that’s never an easy thing to achieve.