Taxes, Budget and interest groups’ spent more than $500 million

The Capital Weekly is reporting that “California labor unions, business associations and other interest groups spent more than $558 million – about $764,000 a day –  to influence California government during the 2007-08 legislative session, according to state records analyzed by Capitol Weekly.” Capitol Weekly: Interest groups’ lobbying tally tops $500 million.

No wonder the leaked budget proposal has new taxes and no significant cuts in the expenses.  I am willing to bet that when the official budget is released we will see that very little was cut in ares where unions spend there money to influence.

According to the Sacramento Bee the leaked budget plan includes $14.3 billion in taxes, $15.8 billion in spending cuts (mostly by stopping  planned increases in spending) and $10.9 billion in borrowing. The state also anticipates billions in federal stimulus money, which would reduce each component of the solution if California receives more than $9.2 billion.  But taxes will be the last item on the list to be reduced.

The plan would raise sales taxes by 1 cent on the dollar and place a 2.5 percent surcharge on income taxes across the board. Drivers would pay more through a 12-cents-per-gallon fuel hike and an increase in the vehicle license fee from the current 0.65 percent of vehicle value to 1.15 percent.  They plan to tax our tax!  Or maybe they have called it a fee or surcharge to the income tax.  They plan to increase vehicle license and fuel costs which will likely provide the final fatal blow to California’s auto industry.

As a trade-off for new taxes, Republicans demanded a limit on future state spending. Under the tentative agreement, the restriction would require the state to place money into a rainy-day fund after reaching a limit determined by state revenues over a 10-year period.  This spending cap will be sent to the voters for approval.  If approved the tax increases will be effective for 5 years, if not approved only 2 years.  So we will be faced with the decision to live with a 3 year longer increased tax period in exchange for a spending cap.  That is of course if the voters are willing to even pass a spending cap.

And then the rube salt on the wound  George Skelton over at the LA Times comments that “taxes should have been raised a year ago. Make that years. The bite would have been a lot smaller. Maybe just a nibble.“  I don’t understand comments like this due to the majority of our taxes being percentage based.  With this percentage base, if the economy grows, tax revenue grows and government can then grow to fill the need.  The problem occurs when the government grows to big in a good economy like the past few years.  The reality is that government needs to be reduced to the size that is optimal for the current tax base.

How is it possible that the leaders of California think that removing more money from the pockets of the tax payers is good for the economy.  Yes is solves the states cashproblem but it will be fatal for the people of California and the long term welfare of the State itself!

Please call your legislators and the governor and tell them what you think!