Gray Davis and the big spending legislature can\’t control the budget, look to raise taxes instead
WASHINGTON – Upon entering the governor\’s mansion three years ago, Gray Davis inherited a $7 billion budget surplus. Today, despite being one of the highest taxed states in the nation, California faces a $23.6 billion budget shortfall. One might conclude that state spending needs to be addressed. But Davis and his friends in the legislature are pushing for a massive tax increase instead.
On Wednesday, the State Assembly approved a laundry list of tax increases totaling well over $5 billion dollars. The tax hikes include a $2.13 boost in the cigarette tax to $3.00 per pack; suspension of teacher tax credits, land donation credits, the NOL, and solar energy credits; increased withholding on stock options and bonuses; a new withholding on the conveyance of real property; a cut in the rate of interest paid to taxpayers who overpay their taxes; and new taxes on satellite television subscribers. The package is expected to be passed by the Assembly on Thursday.
"Gray Davis ought to be ashamed of himself," said taxpayer advocate Grover Norquist, President of Americans for Tax Reform. "Profligate spending and mismanagement, including the notorious overpayment by the state for energy contracts last year, have bloated the state budget at an unsustainable rate. Davis is shifting the burden, and the responsibility, to the hardworking taxpayers. He should take a look at his own house, the State House, first."
California faces a $23.6 billion dollar budget shortfall in a budget totaling $99 billion, or roughly a 24% shortfall, forcing Davis into "creative" accounting. Multi-billion dollar shortfalls are projected for the next five years or more. Opponents of the tax increases in the Assembly, led by assemblyman John Campbell (R-Irvine), point out that spending must be cut in order to head off further shortfalls in the coming years. They predict massive tax hikes every year until spending comes under control.
"The Assembly\’s proposal is a sham, a distraction from the real issue," Norquist continued. "The real issue is spending. Until California tackles spending, there will be no responsible finances in the state."