As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Wednesday, December 17, 2008

Points For Creativity

This is kind of a gangster move by Darrell Steinberg. It doesn't raise the gas tax for consumers as much as it looks. It's a maneuver to get around the 2/3 vote. The gas "fee" is implemented on a majority-line vote, and the real increases are to the income tax, sales tax and the oil severance tax. The actual increase in gas fees would be about $0.13 cents a gallon. Gas has decreased about $3.00 a gallon since the summer. Really, I just appreciate the creativity to get this done at all.

The first part of the plan is a quarter-cent sales tax hike that will bring in the state an estimated $1.6 billion in the next fiscal year.

At first blush, that would seem to require a two-thirds vote. But Democrats insist that technically they won't be voting to raise the tax.

Instead, they will be voting simply to stop paying that amount to local governments. With that money not flowing, local sales taxes have a trigger to automatically rise ΒΌ of a percent.

So the move is a de facto tax hike and the state saves money by not paying local governments.

The second part of the equation is just as complex.

In a single bill, Democrats will eliminate the sales and excise taxes on gasoline and replace those taxes with higher income taxes, sales tax and an oil severance tax.

The total revenues collected will turn out the same in that bill.

But the Democrats will then vote on a different piece of legislation to replace the old gas sales and excise taxes (which only went to transportation needs) with a gasoline "fee," to be set at 39 cents per gallon.

Because they are raising a "fee" and not a "tax," Democrats believe (and they say their lawyers have approved) they can do this will a majority vote.

If you want to look at the ACTUAL tax increases that would result, I think oil severance is a no-brainer, we're the only state in the union without one. The sales tax and the income tax hikes and the gas taxes are pretty flat, although lower-income residents use public transit more than others, so there's a patina of progressivity. I would prefer a millionaire's tax. But in this time of crisis, a little shared sacrifice makes sense.

And as I said, it's the out-of-the-box thinking that makes this a winner in my book. As well as Steinberg's hard-core rhetoric:

After the longest budget stalemate in California history and a month-and-half of gridlock in a special session, Steinberg claimed Democrats had "made every effort to engage our Republican colleagues in a bipartisan strategy to make a dent in this budget deficit."

"They're very clear," he continued. "They are not going to put up a single vote to raise the necessary revenue."

"You have two choices," Steinberg said. "You can either continue to sort of bang your head against the wall and hope that they will change their mind or you can govern. And we believe the higher responsibility is to govern."

"The message to our colleagues on the other side of the aisle is we want you to engage in governing with us. But now and beginning Jan. 1 in the next budget session, we will solve this problem either with you or without."


Desperate times call for desperate measures. The Controller, Treasurer and Finance Director today voted to freeze all state construction projects at the worst possible time. Halting these projects hits every piece of the state: a veterans home in West LA, fire protection in forested areas, five schools in Compton, a school for the deaf in Riverside, highways, hospitals, basically anything with a shovel. In a statement, Controller Chiang was pained to make this vote but had no choice. There's simply no money and without revenue enchancement or cutbacks the state is staring into the abyss. The Democrats in the legislature had to do something. Steinberg's maneuver is very good stuff when seen in that context.

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