The California Nuclear Tax Option

Well it was an exciting day for watching our wallets drain in California. The state GOP held the line against out of control spending coupled with massive wished-for tax increases.

The State Democrat Majority decided to not only side-step the line, but ignore its existence completely.

For insight into the way the Democrats think here, check this out;

“I’ve got some breaking news for ya,” state Senate leader Darrell Steinberg exclaimed as he sat down at a popular breakfast spot near the Capitol on Wednesday.

Steinberg (D-Sacramento) and Assembly Speaker Karen Bass (D-Los Angeles) had devised a deficit reduction plan that could be passed by a simple majority of the Legislature, rather than requiring a two-thirds vote.

Obviously state Senate leader Steinberg has some marvelous magic plan to fix the budget deficit here in California! What could it be? Some newly found pool of money previously overlooked?


Steinberg ordered a bowl of fruit and outlined his majority-vote tax plan.

“This is Plan B,” he said. “It’s fairly groundbreaking. It could be a precedent for the future.”

The state’s tax structure can be retooled on a majority vote if the result isn’t a net revenue increase. It’s a little-known fact that he learned years ago, the senator said.

So the Steinberg-Bass plan involves raising some taxes: sales ( 3/4 cent on the dollar), income (2.5% surtax on the amount owed) and oil severance. Two gasoline levies would be eliminated: the 18-cents-per-gallon excise tax and the state’s 5-cent share of the sales tax. Those tax increases and reductions would amount to a revenue wash.

But the state would replace the gas taxes — and then some — with a new 39-cents-per-gallon “fee” costing motorists 13 cents more than they currently pay. Fees always can be imposed by a majority vote of the Legislature if they’re tied to a specific service. Call this “a highway user fee,” Steinberg said. It will all be spent on transportation — “a legal and logical nexus.”

The state also would hit independent contractors with 3% income tax withholding when they’re paid for work. That’s another majority vote item.

There’d be $9.3 billion in tax hikes over the next 18 months, and $7.3 billion in spending cuts to education, prisons, healthcare, welfare and the elderly poor and disabled. Add in another $1.5 billion in funding shifts and it totals roughly $18 billion.

Wait, did he just say “tax hikes”? But I thought raising taxes without a 2/3 majority was illegal in California?

But the governor is projecting a $41-billion deficit through June 30, 2010. Steinberg said $5 billion could be raised by borrowing against future lottery revenues, if voters agree, and California should be in line for $4 billion in federal bailout money.

“We’re still $14 billion short,” he acknowledged. “Now I must end this interview.”

He laughed loudly, startling restaurant customers at nearby tables.

“We live to fight another day,” Steinberg continued. “This is a jolt of confidence that we can actually get something done around this place. It gets us into January with a fighting chance to solve the state’s fiscal crisis.

“We’ve got to get right back at it. We’re going to have to cut some more. Look at more revenue. We haven’t even talked about carbon fees.”

Now he says “Carbon Fees”? Oh joy! What could he mean by that?

Well, Gov. Arnold Schwarzenegger decided to veto the plan, but not because it was illegal, but because he didn’t get exactly what he wanted;

“I need exactly what I recommended [for my] recovery package,” he told reporters an hour after the Senate and Assembly concluded voting. “I think they should stay here, work some more on this budget.”

Schwarzenegger objected not to the package of new taxes and fees intended to reduce the state’s budget crisis, but to details of provisions he demanded to help the state’s ailing economy. He said the Democratic plan — which would speed up more than $3 billion in public spending on construction related to hospitals, streets, housing, flood protection, parks and transit — was “bogus” because it did not ease environmental rules as he desired to speed up such projects or allow a greater role for private contractors in public building.

“They thought I would sign it, that they could put the pressure on,” he said.

He apparently doesn’t want to be seen as a “Girly-Man” by signing something he didn’t specifically ask for.

During a press conference afterward, the Governator was asked about the legality of the Democrat plan. He said (and I’m paraphrasing here);

“I’ll let others deal with that.”

That’s our top law enforcement guy in California.

Others in the state GOP;

“Once this approach is adopted, there will be tax after tax after tax,” said Sen. George Runner (R-Lancaster).

Exactly, like an errant family member with a spending problem and huge debt, you don’t give them a new credit card.

California Assemblyman Chuck Devore was on local station KFI (Rush’s Left-Coast 50,000 Watt Flamethrower), saying he marched up to the podium three times, questioned the legality to the Democrat maneuver, and was ruled “Out of order”.

The GOP letter to the governor can be downloaded here.

The old saying “As goes California, so goes the nation” should ring scary bells from coast to coast.