CALTAX COMMENTARY:
Lawmakers Proposed $3 Billion in Higher Taxes and Fees in Three Months

By Robert Gutierrez, Director of the California Tax Foundation

In June, California lawmakers approved a new state budget with a healthy $16 billion reserve, reflecting California’s strength as the fifth largest economy in the world. Now that the state has recovered from the depths of the Great Recession, it seems odd that lawmakers are still proposing higher taxes and fees.

Since the start of the year, the California Tax Foundation identified 91 bills placed before lawmakers for consideration that would increase taxes and fees by more than $272 billion annually. The foundation published this year’s first-quarter Tax Watch in March, and our July 2 update found that the cumulative amount of taxes and fees grew by $3 billion in the interim.
Among the bills identified by our second-quarter Tax Watch:

These and other bills increase the basic costs of goods and services used daily by every Californian – including

There was a time when California teetered on the edge of fiscal insolvency. Some thought that California might become the first failed state in America. Things got so bad that the state issued IOUs to state workers and vendors. By all accounts, California was in crisis mode, and lawmakers responded by cutting programs and proposing new taxes and fees.

Sometimes it is necessary to increase taxes or fees. But it would be extremely difficult to substantiate the necessity of a tax increase this year, as there is no fiscal crisis, the economy is healthy, and tax revenue is ample. We have an “obscene surplus,” to quote Treasurer Jesse Unruh’s famous description of staff coffers shortly before voters approved Proposition 13.

So, why have lawmakers proposes increasing taxes and fees by more than $272 billion annually?
California’s revenue is more than sufficient. It’s time that lawmakers find opportunities to economize and live within the state’s means.

This doesn’t mean that lawmakers must abandon their policy objectives. Healthcare, education, roads and public transit, the environment, social services, homelessness and affordable housing are the public policy priorities of this state. But complex policies don’t deserve simple solutions. Throwing money at a problem isn’t leadership.

When Harry S Truman served in the U.S. Senate, he was assigned to a committee to investigate defense spending during World War II. He became curious whether rumors of inefficient military spending were true. He hopped in his car, travelled thousands of miles and visited military projects to see firsthand how tax dollars were being spent. His leadership on the committee saved taxpayers billions of dollars, while protecting American lives overseas.

Lawmakers need to embody the “Truman spirit” to provide leadership and advance policy priorities through in-depth auditing, program evaluation and reorganization of structures. Policymakers need to identify best practices, improve program quality, and learn where programs can be changed to best serve their constituents. This work is time-consuming and doesn’t always capture headlines – it may not even help some lawmakers get re-elected. But it is the type of work needed to improve cost savings and promote better government services.

Proposing more than $272 billion in higher taxes and fees when the economy is recovering, and when the state has a $16 billion surplus, is unnecessary. Before asking taxpayers for more money, lawmakers should economize programs and identify how to provide services with existing resources. The buck stops on every legislator’s desk.

 

 

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