Patrick Gleason

Flawed Budget Deal Floated by California Lawmakers

Posted by Patrick Gleason on Monday, August 2nd, 2010, 8:53 AM PERMALINK

California lawmakers have returned to Sacramento and are gaveling back into session today, the 33rd day of the state’s budget impasse. While legislative Democrats and Republicans remain far from an agreement, a broad outline for a prospective deal being considered by budget negotiators was leaked last Wednesday and confirmed by Senate President Steinberg on Thursday.

The creative, yet flawed proposal entails raising income tax rates across the board and cutting the California’s sales tax – the highest in the nation, resulting in a reported $2 billion - $3 billion net state tax hike. Steinberg claims that the sales tax reduction, in conjunction with the fact that Californians can deduct state income taxes from their federal income tax liability will preclude most Golden State residents from seeing an increase in their overall tax burden. In an interview with the LA Times Steinberg claimed that people would probably pay less. However, Steinberg’s math and assumptions don’t add up.

Here are a few of the problems with Steinberg’s proposal:

  1. The Alternative Minimum Tax (AMT) is a huge problem in California. If you’re among the increasing number of Californians who gets sucked into the AMT every year, you don’t get to deduct state taxes from your federal income tax liability would see a substantial increase in your overall tax burden.
  2. In order to deduct California taxes from federal tax liability, you have to itemize your deductions. Two out of three taxpayers do not do this.
  3. For high earning California individuals and small businesses, itemized deductions phase out.
  4. This plan would also hurt Californians who would see their state income taxes go up, but don’t have a federal income tax liability from which to deduct. According to IRS data, 33% of income tax returns have $0 or negative income tax liability and the Congressional Budget Office reports that slightly less than half of families have a $0 or less income tax liability. Under Steinberg’s plan, families who fall into this category will face higher state taxes and have the same federal tax liability as before, the result being a sizable increase in their tax burden.

Those are a few of the problems with this proposal. But simplest and most important reason that it should be opposed is that it’s a net increase in state taxes. That right there makes it a violation of the Taxpayer Protection Pledge. All Republicans, save for Assemblyman Niello, have signed the Pledge. With California’s 2/3rds majority requirement to raise taxes, multiple Republican votes would be needed to pass this plan. Bottom line: some Republican lawmakers would have to violate a key commitment to their constituents to pass the agreement favored by Steinberg.

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Good Afternoon Pennsylvania Pledge Breakers

Posted by Patrick Gleason on Tuesday, July 6th, 2010, 12:41 PM PERMALINK

Today Pennsylvania Governor Ed Rendell signed the $28 billion general fund budget that passed out of both chambers of the General Assembly last week. However, it is widely understood that this budget deal is unlikely to hold up to economic and political realities, setting the state up for its day of fiscal reckoning next year when lawmakers will be forced to finally deal with the gimmicks that have papered over state overspending for far too long and the absence of federal stimulus dollars that have propped up PA’s bloated state government for the past two years. Next year lawmakers are projected to face a $5 billion structural deficit, along with a significant increase in pension payments.

The fantastical revenue assumptions in the new budget include $850 million in supplemental federal Medicaid funding that Congress has yet to approve and appears increasingly unlikely to do so at that. Even the most optimistic assessments have the state receiving $300 million at most from the feds, meaning that the FY ’10 – ’11 budget is unconstitutionally out of balance. Further calling into question the soundness of the new spending plan is it’s assumption of a 3% uptick in tax receipts in the new fiscal year, which began last Thursday. After two years of negative growth and remaining concerns about a double dip recession, this optimistic growth projection looks to compound the looming state fiscal crisis. Even lawmakers who approved the budget admit that it is technically not in balance.

Gov. Rendell and a number of legislators claim that they had already “cut to the bone,” yet that is a tough argument to make when one considers that the new budget represents an increase in spending from the previous year. These false claims of frugality are further debunked by the legislature’s approval, just three days after passing the budget, of $298 million in corporate welfare and pork for Gov. Rendell to handout as he sees fit. Included in this shameless package is $20 million in new spending on shrines to outgoing Sen. Arlen Specter and the late Congressman John Murtha.

While no tax increases were included in the budget itself, a handshake agreement to pass a job-killing severance tax on natural gas extraction was assumed. In fact, language alluding to this agreement was included in the fiscal code, which passed both chambers on July 3rd. As a result, ATR scored a vote for the fiscal code as a violation of the Taxpayer Protection Pledge, a written commitment that 29 members of the PA General Assembly have signed to “oppose and vote against any and all efforts to raise taxes.” The following lawmakers broke this promise to their constituents last week:

Senator Lisa Boscola (D-18)

Senator Gene Yaw (R-23)

Representative James Casorio (D-56)*

Representative Camille Bud George (D-74)*

Representative Richard Grucela (D-137)*

Representative Ted Harhai (D-58)*

Representative Joseph Petrarca (D-55)

(*Denotes those who broke their Pledge last year as well)

Pennsylvania lawmakers have until October 1st to work out the details of the severance tax, which is to become effective no later than January 2011. However, don’t be surprised if Rendell and Co. come calling for further tax increases beforer that time when their new budget, which has been accurately described as a “house of cards,” falls apart.

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California Democrats Fiddle While Sacramento Burns

Posted by Patrick Gleason on Tuesday, June 29th, 2010, 4:39 PM PERMALINK

As we approach Thursday’s beginning of a new fiscal year in California one thing is clear, lawmakers will not reach a budget agreement on time yet again. In fact, legislators will be heading home at the end of the week for summer recess without a budget. The good news – legislators won’t fruitlessly be sitting around Sacramento and collecting their $142 per day allowance with no budget to vote on.

The two Democratic caucuses have each laid out a budget plan, both calling for higher taxes. Legislative Republicans are backing Governor Schwarzenegger’s tax hike-free budget that makes tough but necessary cuts.

In a presser yesterday afternoon touting Assembly Democrats’ budget proposal, Speaker John Perez (D-L.A.) placed blame for the impasse on the state’s 2/3rds supermajority vote requirement to pass a budget and ridiculed it irrational. Here Perez completely misses the point. It’s one thing if he wants to do away with the 2/3rds requirement to pass a budget - fine - but that still wouldn’t allow his tax hike-laden budget to overcome the supermajority requirement to raise taxes, which 16 other states also have in place. It’s a little hard to argue that the solution to California’s overspending problem is to make it easier to raise taxes in a state with already one of the most onerous tax burdens in the nation. The fact is that this taxpayer safeguard is the only thing that has prevented Democrats from completely opening the tax hike floodgates on Californians.

Assembly Democrats’ budget proposal relies on a new tax on energy and securitization of the beverage recycling fee. However that doesn’t come close meeting the revenue required for their spending wish list. There they want to make up the difference with more borrowing. It is because of such economically illiterate leadership in Sacramento that JP Morgan Chase chairman Jamie Dimon recently warned investors that he is more concerned about California defaulting than Greece, or that CMA has listed California alongside Iraq, Venezuela, and Pakistan as governments with the highest sovereign debt default risk.

What is – to use Speaker Perez’s own words – irrational is the fact that despite a $19.1 billion “deficit,” Perez and his colleagues have spent the past few weeks debating things like changing the state rock, dubbing June 14-20 California Golf Week, banning plastic bags, and in a move that will surely warrant a strongly worded letter from the Salahis, taking up legislation that would criminalize crashing the Oscars and other black tie events.

It is unfortunate and troubling that a state that used to be the economic engine of the nation (that title now belongs to Texas) has sunk to such depths by following the model that Reid, Pelosi, and Obama are busy implementing in Washington. In the following video, Republican Assembly Leader Martin Garrick (R-San Diego) explains just how California Democrats are fiddling while Sacramento burns:

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Pennsylvania Budget Deal Remains Elusive as Deadline Approaches

Posted by Patrick Gleason on Monday, June 28th, 2010, 10:14 AM PERMALINK

While many people spent the past two days by the pool, at the beach, or enjoying the World Cup, baseball, Wimbledon, and the host of other sporting events taking place, Pennsylvania legislators spent the hot and muggy weekend in Harrisburg trying to work out a budget agreement amongst the four caucuses and Gov. Rendell.

Legislative leaders and Rendell spent most of Saturday in meetings trying iron out their differences. Rendell still wants a $29 billion general fund budget that includes a severance tax on natural gas and higher taxes on tobacco products. Legislative Democrats support a slightly reduced budget, but one that would still necessitate higher taxes. Senate Republicans continue to push for a $27.8 billion budget that would include no tax increases.

Each plan is reliant on $850 million in additional Medicaid money from the federal government, which last week appeared less certain of coming to fruition. Without the money, Rendell claims that as many as 20,000 government jobs will be cut. Even with the money, Rendell warns as many as 1,000 could be cut, which he also decries as a tragedy.

At the risk of sounding callous, cry me a river. What Rendell fails to mention is that Pennsylvania’s public sector has been detached from fiscal realities for years and the state has continued to add employees to the public payroll at a time when the economic downturn has precipitated substantial job losses in the private sector. According to Commonwealth Foundation analysis of Bureau of Labor Statistics data, between 2000 and 2009 Pennsylvania’s private sector shrunk by 113,600 jobs while the public sector grew by 40,200 bureaucrats, whose salaries, mind you, are dependent on the Keystone State’s shrinking private sector.

The deadline to pass a budget is this Wednesday, although that is not exactly a firm deadline as PA lawmakers have failed to meet it for the last seven years. ATR urges Pennsylvania residents to contact their representatives in Harrisburg today and urge them to reject the job-killing tax increases being pushed by Rendell and legislative Democrats. To do so, simply click HERE.

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A Little Hiccup in Rendell's Pursuit of Higher Taxes in Pennsylvania

Posted by Patrick Gleason on Thursday, June 17th, 2010, 8:33 AM PERMALINK

A wrench was thrown into Gov. Rendell’s tax-hiking plans on Tuesday when his fellow Democrats in the PA House realized they didn’t have the votes to pass his proposed $320 million in higher taxes on natural gas and tobacco products. The legislative vehicle for Rendell’s tax hikes, HB 325, was subsequently pulled from the floor and sent back to the House Appropriations Committee to settle some issues that, as Rendell put it, “need to be ironed out.”

The point of contention amongst the Democratic caucus isn’t whether taxes should go up, but rather, how to divvy up the bounty when they are done looting more money from Keystone State taxpayers and employers.

The crux of the dispute is how to allocate the more than $140 million that the proposed severance tax on natural gas is estimated to generate. Rendell and Democratic leadership are calling for most that revenue to go to state coffers, with the rest divided among local governments. Rank and file House Democrats, led by Rep. David Levdansky, are calling for an even split between state and local coffers. The remainder of the $320 million in higher taxes would come from tax hikes on tobacco products and elimination of the 1-percent vendor discount.

Yesterday, during an afternoon press conference, Rendell announced that he will resume meetings with the four legislative caucuses to try and reach and agreement. There is some speculation over the prospect of Senate Republicans coming back and passing what reporters are calling “Son of ‘850’,” a tax hike free budget similar to SB 850, which Senate Republicans put forth last year. Asked if he was concerned about Senate Republicans doing this and then pulling off enough Dems in the House to pass it – Rendell shrugged it off and made clear that such action would be met by his veto pen. Rendell wants to raise taxes and he doesn’t care if it takes all summer.

ATR would support passage of a “Son of ‘850’” and continues to urge lawmakers to craft a budget that does not include tax increases. The House is expected to take up the budget again early next week. With the budget deadline two weeks away, now is the time for Pennsylvanians to contact their representatives in Harrisburg and urge them to oppose Rendell’s irresponsible budget, which raises taxes, increases spending, and makes the state more reliant on a federal government that is $13 trillion in the red. Click here for a copy of the letter that ATR sent to Pennsylvania lawmakers last week.

ATR urges Pennsylvania taxpayers to take action today and contact thier legislators by simply clicking HERE.

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Rick Perry to Obama's EPA: Don't mess with Texas

Posted by Patrick Gleason on Wednesday, June 16th, 2010, 9:18 AM PERMALINK

The following article by Patrick Gleason, ATR's Director of State Affairs, was published in The Daily Caller this morning:

Much of the current focus on the EPA these days surrounds its move to be the largest regulator of the nation’s economy by treating carbon as a pollutant under the Clean Air Act. As controversial and arduous a task as that may be, it hasn’t precluded the agency from finding time to go after the most prosperous state in the nation. After years of threatening to do so, the EPA recently announced plans to take over Texas’ air quality permitting system.

Since 1994, Texas has operated under a flex permitting system whereby overall emission caps are established for power plants and petrochemical facilities in the state. The caps are applied to each facility as a whole and it is up to management to abide by these limits. The system has served Texas well, improving air quality during a time in which the state has experience rapid economic and population growth. Sounds like a model that federal officials would hold up for other states to consider, right? Not so much.

To continue reading, CLICK HERE.

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For Rendell, "Manning-Up" Means Stealing More Money from Penn. Families and Employers

Posted by Patrick Gleason on Monday, June 14th, 2010, 11:15 AM PERMALINK

“Man up.” That was Gov. Ed Rendell’s message to Keystone State lawmakers last week at an event launching his statewide tour promoting the state’s tax amnesty program (you know – the program that creeped out the nation with Orwellian threats from the PA Department of Revenue).

However, Rendell’s idea of what it is to “man up” is a little different than how you or I may think of it. Rather making tough decisions about necessary spending cuts (Read: actually governing), Rendell’s definition of “manning up” entails raiding the pocket books of Pennsylvania taxpayers - the same Pennsylvania taxpayers who had to work 226 whole days last year just to pay for the cost of PA’s bloated state government and who just had hundreds of millions of dollars in new taxes imposed upon them last year.

When Rendell claims that legislative Republicans are obstructionists and that tax increases are necessary, know that is a lie. In fact, House Republicans have proposed a series of reforms that would bring state spending within anticipated revenues without more job killing tax increases. The Commonwealth Foundation has also proposed a host of common-sense and much needed reforms that will rectify the state’s overspending problem.

While House Republicans remain in steadfast opposition to tax increases, sources at the PA Capitol have expressed concern that Senate Republicans, who hold a 30-20 majority in that chamber, may cave in to pressure from Rendell at the end of the day. If there is ever a time when the public understands that the taxpayer well is dry and that the state can’t spend what it doesn’t have – now is that time. If Senate Republicans can’t stand up to Rendell’s bully tactics now, they never will. ATR encourages Pennsylvania taxpayers to contact their Senator today and urge them to hold the line against Rendell’s tax hikes.

The deadline by which lawmakers must pass a budget is June 30. However, don’t expect that to be met. It hasn’t been met once during Rendell’s entire tenure in office and last year the budget wasn’t finalized until 101 days after the deadline. It looks like legislators might need to prepare for another long, hot summer in Harrisburg.

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Supporters of South Carolina Tobacco Tax Hike Still Don't Get It

Posted by Patrick Gleason on Thursday, June 3rd, 2010, 2:13 PM PERMALINK

The Charleston Post-Courier ran an article yesterday calling into question whether the South Carolina legislature is moving away from their limited government, anti-tax hike tendencies in light of the 50 cent per pack cigarette tax increase that the legislature approved last month with an override of Gov. Sanford’s veto.

The article noted that in voting for this 714% rate hike, 19 legislators broke their Taxpayer Protection Pledges, a written promise they made to their constituents to oppose all tax increases. Apparently at least one lawmaker was confused as to the commitment he made to constituents. In the article, the Post-Courier notes:

“Rep. Kenneth Bingham, R-Lexington, is one of the legislators that Americans for Tax Reform has said broke the no-tax pledge. Bingham said he signed the pledge during his House campaign in 1999 but did not re-sign for later terms, unaware that he would be held to it for life.”

No, Bingham is not held to his Pledge for life. But he is bound by the Pledge for the duration of his tenure in the office for which he signed. This is no secret and not unreasonable by any measure when one considers this was a central campaign promise that he ran on. In fact, ATR informs all legislators and candidates of this every election cycle.

Bingham wasn’t the only legislator to make questionable statements to the Post-Courier. Rep. Chip Limehouse said that he voted for the bill because viewed it as “a worthwhile inroad against a dangerous habit.”

The fact is, if Limehouse’s goal was simply to curb smoking, he could’ve have done so in a way that didn’t raise taxes by supporting a revenue neutral bill. In fact, Gov. Sanford made it clear that he would have signed a cigarette tax hike, so long as it was offset with tax relief elsewhere. That Limehouse and his colleagues refused to send Sanford such a bill proves that this was all about more money for the government and not about public health, or the kids, or any of the other warm and fuzzy, but false, reasons given by Limehouse and his fellow tax hikers.

Lawmakers also used this tax hike to further game the dysfunctional federal matching fund system; allowing the state to draw down as much as a 3-1 federal match. As if passing a massive tax increase (which will be borne mostly by the state’s poorest) amidst skyrocketing unemployment and a down economy weren’t bad enough, the Palmetto State will now be further dependent on a federal government that is over $12 trillion in debt.

Call the Republicans who overrode Sanford’s veto what you want, just don’t call them conservative. South Carolina voters will have the opportunity to hold lawmakers accountable for their actions in next Tuesday’s primary. All four Republican gubernatorial candidates have signed the Pledge. For the list of challengers who have signed, CLICK HERE. For the list of incumbent Pledge signers, CLICK HERE.

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California Assembly set to vote on statewide bag ban this week

Posted by Patrick Gleason on Wednesday, June 2nd, 2010, 10:34 AM PERMALINK

The California Assembly is set to hold a final vote this week on Assembly Bill 1998, legislation that would ban plastic and paper shopping bags at supermarkets, retailers, and conveniences stores statewide.

As I pointed out in a piece that ran in Big Government last month, all of the claims and assertions made by bag ban proponents are either false or without merit. First, there is no proof that a bag ban will provide any environmental benefit or reduce litter. In fact, after San Francisco became the first city in the country to ban plastic bags in 2007, litter audits found plastic bags comprised a greater percentage of street litter after the ban. The stated goal of this legislation is to “reduce the environmental….and societal costs resulting from the production, use, and discard of single-use plastic carryout bags.” If that is the case, it should be incumbent upon AB 1998’s proponents to show support for their claim that a bag ban will improve the environment and reduce litter. They have not.

It’s hard to imagine California becoming even less business friendly, but that would be the result if AB 1998 is passed. In addition to creating a whole new series of regulatory hurdles and bureaucratic red tape for businesses to contend with, this bill would create what amounts to a veritable reusable bag Gestapo, authorized to go around to supermarkets and retailers to test reusable bags in order to make sure they meet the requirements of AB 1998 and assess penalties and fines.

This bill, in conjunction with the billions in higher taxes Assembly Democrats have called for, is sending a clear message to employers (both present and prospective) that California is not a good place start a business, invest, or create jobs and only looks to get worse based on the proposals coming out of Sacramento.

Friday is the deadline by which all bills must be passed out of their chamber of origin. So if the Assembly doesn’t pass AB 1998 this week, it’s dead. ATR urges Californians to contact their representatives in the Assembly today and tell them to vote “NO” on AB 1998. To do so, simply CLICK HERE.

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Lying, Stealing, Earn California Lawmakers Prestigious Award

Posted by Patrick Gleason on Tuesday, May 25th, 2010, 8:04 AM PERMALINK

Yesterday the John F. Kennedy Library Foundation bestowed four California state legislators – Senator Dave Cogdill, Senate President Pro Tem Darrell Steinberg, Assemblyman Mike Villines, and former Assembly Speaker Karen Bass – with the JFK Profile in Courage Award.

It turns out it’s “courageous” for politicians, despite a recession and rising unemployment, to impose the largest state-level tax increase in history. At least, that is what the John F. Kennedy Library Foundation would have you believe, as the instrumental role played by the aforementioned four in passing last year’s tax-hike laden budget was the cause for their award.

It also must now be courageous to go against a central campaign committment to constituents, which Villines and Cogdill did in voting for a budget that raised taxes by $11 billion and did nothing to address the state's structural deficit.

For their part in making California the nation’s leader in raising taxes last year, Schwarzenegger lauded Cogdill, Villines, Steinberg, and Bass as “real action heroes.”

So the courageousness of these “heroes” must’ve saved the day, right?

Not so much.

Schwarzenegger actually had to deliver his congrats by video yesterday because he is currently stuck in California…..dealing with yet another budget crisis. It appears that the “courageousness” of Villines, Cogdill, Steinberg, and Bass solved nothing and only served to put off necessary reforms and spending cuts.

Dealing with what is now an approximately $20 billion deficit, it turns out the Senate Democratic caucus is comprised entirely of what Schwarzenegger would classify as heroes.

Yesterday Senate Democrats proposed raising taxes by nearly $5 billion. In addition to extending last year’s income and car tax hikes, Senate Dems’ plan calls for taxing e-commerce and indexing the state alcohol tax to inflation (AKA putting tax increases on auto-pilot).

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