News & Updates - High spending locks in need for future California tax increases
The Orange County Register
By Rob Lapsley
Thanks to Silicon Valley and the stock market, California’s budget is on a record recovery. Last year, we passed the largest budget in our state’s history at $291 billion; a record destined to be broken next year. Since Fiscal Year 2009, state taxes, fees and other charges have increased by $10 billion a year, now totaling $72 billion more in all.
Of that increase, $26 billion is due to higher fees, special taxes and other charges shifted to special funds. This increased revenue, the Legislature argued, was to stave off severe cuts during the recession. Clearly, the recession is over — and not a single fee, special tax or other revenue increase has been cut.
Californians now pay the highest income and state sales tax rates in the nation. In fact, with only 12 percent of the population, Californians pay 23 percent of all income tax collected by state and local governments in the U.S. But that’s not all. Thanks to a cumulative body of state and local regulations and fees, those who can afford to buy a new home in this state pay as much as $100,000 or more per home because of those regulations and fees. New regulations on the horizon will add even more cost to a new home, denying even more Californians the financial security of homeownership.
What happened to this new revenue? Of the more than $10 billion a year in higher taxes, fees and other charges, $6.4 billion annually — nearly 10 percent — has gone to state employee salaries, even though the total number of employees is about the same. Another 10 percent is going to higher benefits — healthcare benefits are up $2.0 billion and pension payments have increased $4.6 billion, with an additional $146 billion unfunded liability on the horizon. Recent labor union agreements will increase these costs $3.8 billion more.
Important state programs, including education, transportation and public safety are being crowded out by these “progressive” budget priorities. That’s why, despite our record budget spending this year, the Legislature had to pass the gas tax increase and other fees to pay for years of neglected or underfunded transportation projects.
It comes as no surprise that many of the special interests responsible for diverting the massive tax revenue increases on these “progressive” budget priorities then turn around and campaign for even more taxes to fund education, health care and other programs. Measurable results and accountability for current spending is not part of the debate.
2018 continues this cycle — “progressive” priorities are pushing out core budget programs and voters are going to be asked to pay. Last week, special interests introduced a statewide initiative to create a split roll property tax that would tear apart the fundamental taxpayer protections of Proposition 13 and grab another $11 billion in new taxes across California. But what they won’t say is that this money is already spent — $10 billion for the state’s minimum wage increase and $3.8 billion from this year’s salary agreements.
A split roll tax initiative on the statewide ballot is just the beginning. San Francisco is looking to pass a parcel tax in 2018 to pay for increased teacher salaries and another two cities are looking to raise taxes to pay off pension debt. Even more state and local tax increases will be coming for the 2018 and 2020 ballots to fund universal government-run healthcare, local government pension increases and other “progressive” priorities. And it will only get worse when our economic recovery slows down and inevitable budget deficits return.
This is the path California is on. Only the voters can break this cycle of higher taxes to backfill programs denied funding by an increasingly expensive “progressive” agenda.