Sacramento Report
By Ron Kingston

Now it is the public’s turn to decide if the budget proposal does not increase taxes.

The Governor unveiled an $82.9 billion state spending plan. The plan purports to not increase taxes, proposes pay cuts for state workers, reduces services to the poor and relies on increased federal government subventions.

Governor Arnold Schwarzenegger also declared another fiscal emergency and called for a special session of the Legislature, designed to keep a projected $19.9 billion budget deficit from growing by an additional $2.4 billion.

The Governor’s proposed three-part deficit-closing budget solution: $8.5 billion in spending cuts, $4.5 billion in “revenue shifts” (some of the revenue shifts were rejected by the voters last year), and $6.9 billion in additional money from the federal government.

The Governor railed against federal tax subvention policies and practices that only provide 78 cents in services for each dollar California residents send to Washington.

Now it is the public’s turn to decide if the budget proposal does not increase taxes.

The proposed budget for the next fiscal year that begins July 1, 2010 would:

• Temporary increases of the sales and income taxes that were implemented last year would be allowed to expire on June 30 and on December 31, respectively. Last year, the voters rejected proposals to extend the 1-cent sales tax hike and .25 percent income tax until 2012.
• The state’s current six percent sales tax on a gallon of gas would be eliminated and replaced by a 10.8 cent increase in per-gallon excise taxes. Administration officials estimate the overall impact would be a 6-cent per-gallon reduction in gas prices. This would allow the state to cut the money that it pays to local governments for transportation programs and schools. The question that we MUST ASK: do you think for a moment that local governments wouldn’t seek to impose a local tax increase to make up for the lost revenue?
• The 200,000 some odd state employees who currently take three unpaid days off each month would go back to work full time. The “furlough program” would be replaced by a 5 percent pay cut, a five percent increase in contributions to retirement plans and a directive to all state departments to cut overall payroll by 5 percent.
• Retain most elementary and high school funding with the exception of cutting $1.2 billion from school administrative costs. University of CA and state colleges would see the most increase in funding.
• Prison costs would be cut by $1.2 billion.
• As far as direct cost impact to property owners, the Governor proposes, as he as done in the past, to impose a $200 million fee (many refer to it as a tax) to pay for the state emergency response capabilities for CAL FIRE, the Military Department, and assistance to local first response agencies. Every property owner would pay a 4.8 percent surcharge on property insurance policies.

Concerning the state Legislature, not only can we expect approximately 1500 bills being introduced this year, we should be active in over 50 of those bills pertaining to landlord and tenant issues. And those issues will be far and wide.

We can expect some of the most significant landlord and tenant legislation in years to be introduced this year. Most notably, there should be an attempt to reverse a very recent court case that was a significant loss for cities and low-income advocates and a win for rental property owners and developers.

Ron may be reached at: Ron@CALPCG.com
or you can call him at (916) 447-7229.