California’s continuing budget crisis may be buried towards the back of newspapers but if you’re a Californian you should start paying attention. It looks pretty clear to me that some taxes are going to go up eventually.
Negotiators are debating tripling the car tax (which Republicans vehemently oppose), the sales tax (which Republicans oppose), and the income tax (which would likely need a popular vote and isn’t likely to be approved). In order for a tax increase to be allowed Republicans are demanding hard budget caps (which are both vehemently opposed by Democrats and that would have to be voted on by the public and would likely fail) and immediate deep budget cuts (which Democrats oppose).
Doesn’t this sound familiar? It should—it’s a repeat of the budget crunch from this summer. The difference is that the economy was neutral then and it’s now falling. Indeed, I think it’s going to be a while before California recovers and what the legislature does will have a big impact on when the recovery begins.
Consider how dreadful California’s business climate is. Additional taxes will only exacerbate the problems of the Bronze Golden State.
There are going to have to be deep budget cuts. What’s unknown right now is whether there will be additional tax increases or not, and if there are what shape they’ll take. Once again the operative phrase for Californians is to watch your wallets.
News Stories: Los Angeles Times, Sacramento Bee