Extorting More from Taxpayers

It was Al Capone who said you can get more with a smile and a gun than with just a gun. Well Senate boss Don Perata is not smiling as he holds a tax gun to the heads of California taxpayers.

The June 15th constitutional deadline to pass the state budge has come and gone and all 120 members of the Legislature and the governor are in violation. Perata is making good on his threat voiced last month that there will be no budget without a tax increase. He and Assembly Speaker Karen Bass want at least $11.5 billion in new taxes. Make no mistake Bass and Perata are not targeting opposition lawmakers or the governor with their threats. They are menacing already overburdened taxpayers.

California is a high tax state and its economy is showing all the symptoms of recession — even more severe than in other states. Simply talking to average Californians will confirm what several recent polls tell us — that three out of four of us believe we are on the wrong track. In a particularly disturbing trend there is net outmigration of working better educated Californians abandoning the Golden state for lower tax states. California’s stable population is attributable almost exclusively to births and new immigrants — both documented and otherwise.

While common sense says that taxpayers staying in California have reached their limit the legislative leaders want to take inspiration from Herbert Hoover who raised taxes in response to the beginning of what became the Great Depression.

Perata at least should know better. It is not any failure by the taxpayers to provide sufficient funds that has resulted in the current budget crises. Last year with former Assembly Speaker Fabian Nunez and the governor as accessories to the crime he led the charge for an unsound budget that would have been even worse if Senate Republicans had not held out for 58 days.

The governor has proven to be too quick to give in to the usual tax-and-spend suspects like Perata in an effort to maintain his popularity. Budget watchdog Senator Tom McClintock described the governor’s response when before last year’s disastrous budget he tried to warn him of the consequences. Californians do not want to hear bad news they prefer optimism Schwarzenegger told McClintock. And the governor’s response to the current crisis is just as weak. When Perata made his now infamous threat the governor responded "Everything is on the table."

The governor need not go back more than five years to understand how betrayed taxpayers feel. In 2003 they helped recall a governor who had spent the state into misery and had resorted to illegal bond issues to cover the bills. Now less than five years later we see that government revenue has increased by 29 percent while spending is up 36 percent.

How could this happen? The blame — at least in part — can be placed on questionable negotiation tactics by Governor Schwarzenegger. Every time there is conflict with the Legislature over spending the governor takes a "firm" stand a scintilla to the right of the "riotous" spending proposal put forth by lawmakers so that after negotiations the final agreement has spending reduced to the merely "lavish" range.

Let’s be clear about the initial negotiation position of the tax-and-spend lobby. The $11.5 billion in new taxes demanded by the Democrats is nothing short of outrageous. For that reason Republicans should put a number of major pro taxpayer reform measures on the table as well including — but not limited to — a real spending cap based on inflation and population (not the Governor’s meaningless proposal) pension reform paycheck protection (to prevent more Vallejos) meaningful contracting out etc. etc. etc.

Of course leadership will never go for any of these major reforms. But the failure to address these reforms would give Republicans more than sufficient justification upon which to adhere to their pledge not to raise taxes.

And the Republicans ought to keep one thing in mind about who has the greater bargaining position here. The Democrats are the ones whose constituencies are tax receivers while Republicans represent the tax payers. Who suffers when government runs out of money? Republicans forget this. While it may be irresponsible to wish for a shutdown of government when conservatives have put reasonable proposals on the table which are rejected by the majority party who’s to blame for a shutdown?

The people who pay the bills are far more concerned with how much is taken out of their pockets than they are with uninterrupted state government — a government they are viewing with increasing hostility.

Jon Coupal is President of the Howard Jarvis Taxpayers Association — California’s largest taxpayer organization — which is dedicated to the protection of Proposition 13 and promoting taxpayers’ rights.