A statewide survey released on Monday by the Public Policy Institute of California (PPIC) found that the majority of California voters favor Governor Jerry Brown’s proposal to temporarily increase the state sales tax and the income taxes of high earners.According to a release from the PPIC, “Sixty-five percent of all adults and 60 percent of likely voters favor the proposal, while 28 percent of adults and 36 percent of likely voters oppose it.”
Governor Brown’s proposal would raise roughly $7 billion a year by increasing the sales tax a half-cent for four years and the income taxes of individuals earning more than $250,000 for five years.
The Governor’s proposal. along with competing tax plans being offered by others, comes at a time when nearly all Californians (93%) say the state’s budget situation is a problem, the PPIC press release reported. Most residents (62%) say their local government services – those provided by cities, counties and public schools – have been affected a lot by recent budget cuts.
The money from the tax increases would go to K-12 schools. When Californians are asked a follow-up question about how they view his proposal if new revenue were to go directly to schools, 70 percent of all adults and 58 percent of likely voters favor it (27% all adults, 37% likely voters opposed).
“The governor’s plan includes some of the most popular ideas for raising taxes – higher taxes on the wealthy and more money for schools,” says Mark Baldassare, PPIC president and CEO. “At the same time, the major challenges in asking Californians to pass state tax increases are the low approval ratings of state elected officials and high levels of distrust in government.”
California faces automatic spending cuts in January to make up the state’s budget gap if, as expected, projected revenues fall short. Cuts would be made to K-12 schools, higher education, health and human services, and public safety. When residents are read a description of possible cuts, a plurality (41%) prefer to close the budget gap with a mix of spending cuts and tax increases. Fewer – 30 percent – prefer to close it mainly with spending cuts (11% say mostly tax increases and 9% say it is okay to run a deficit).
With K-12 education making up a large share of the expected “trigger cuts,” a strong majority (85%) of Californians are concerned (53% very, 32% somewhat) about the potential effects on public schools.
“People are beginning to feel the impacts of state reductions in spending at the local level,” Mr. Baldassare said, “and people are concerned about what might come about next.”
The bad news for Governor Brown, according to the same poll, is that his poll rating is relatively low at 42%, with a slightly higher 46% among likely voters. That number, however, is substantially higher than the polling for the legislature, which registers a 25% overall approval rating and only 16% approval among likely voters.
Governor Brown issued a statement in response to the poll, stating, “California still faces damaging budget cuts, so it’s encouraging that so many citizens are willing to consider some modest, temporary tax increases.”
Previously, in his letter announcing the tax proposal, he argued, “Unfortunately, the deep cuts we made came at a huge cost. Schools have been hurt and state funding for our universities has been reduced by 25 percent. Support for the elderly and the disabled has fallen to where it was in 1983. Our courts suffered debilitating reductions.”
“The stark truth is that without new tax revenues, we will have no other choice but to make deeper and more damaging cuts to schools, universities, public safety and our courts,” he added.
Since being elected as governor in 2010, and beginning his term this year, Governor Brown has warned that we have had years of “budget gimmicks instead of honest budgeting.”
Governor Brown had pushed for a vote on tax extensions, but along party lines it fell short of the two-thirds vote requirement needed to put them on the ballot.
“Forced to act alone, Democrats went ahead and enacted massive cuts and the first honest, on-time budget in a decade. But without the tax extensions, it was simply not possible to eliminate the state’s structural deficit,” the governor wrote.
Last week, he criticized the governor for calling “upon Californians to bail out Sacramento by calling for higher taxes.”
He argued we have a revenue problem, not a tax problem.
“We have a revenue problem. Tax revenue is down over 25% from 2007. We don’t have this problem because some people are not paying enough taxes,” he argued.
On the other hand until the economy can be turned around, the only other option is to continue to cut funding to education and other vital services. Increasingly, as the polling by the PPIC indicates, the voters are not willing to do that.
Not only has K-12 education been decimated by cuts, students are revolting in the UC and CSU system against cuts to state funding that have pushed up student fees.
Refusal to raise taxes in other areas means an increased burden on the middle class, as they attempt to send their children to college.
That said, I think Mr. Del Becarro is largely correct when he said, “We always hear about how people are ready to pay more, but then, on Election Eay, they turn it down.”
It is, indeed, relatively easy to run campaigns against tax increases. However, given the magnitude of the state cuts and the targeted nature of the taxes, it is also possible that this time things will be different.
—David M. Greenwald reporting
Raise taxes and expect a lot more of this:
Today, California is experiencing the fastest rate of disinvestment events based on public domain information, closure notices to the state, and information from affected employees in the three years since a specialized tracking system was put into place.
Out-of-state economic development officials are traveling through the state to alert frustrated business owners and corporate executives to their friendlier business climate versus California’s hostility toward commercial enterprises.
From Jan. 1 of this year through this morning, June 16, we have had 129 disinvestment events occur, an average of 5.4 per week.
For all of last year, we saw an average of 3.9 events per week.
Comparing this year thus far with 2009, when the total was 51 events, essentially averaging 1 per week, our rate today is more than 5 times what it was then.
The same tracking system has been in place throughout the three-year period.
Our losses are occurring at an accelerated rate. Also, no one knows the real level of activity because smaller companies are not required to file layoff notices with the state. A conservative estimate is that only 1 out of 10 company departures becomes public knowledge, which means California may suffer more than 2,000 disinvestment events this year. The capital directed to out-of-state or out-of-country, while difficult to calculate, is nonetheless in the billions of dollars.
The top five destinations are (1) Texas, (2) Arizona, (3) Colorado, (4) Nevada and Utah tied; and (5) Virginia and North Carolina tied.
Based on the legislature’s recent rejection of business-friendly legislation and Sacramento’s implementation of additional regulations, signs are that California’s hostility towards business will only worsen.
California is such fertile ground that representatives for economic development agencies are visiting companies to dissect our high taxes, extreme regulatory environment and other expenses to show annual savings of between 20 and 40 percent after an out-of-state move.
How would you address the concerns about educational funding and the long-term impact of that on the economy?
rusty: [i]The same tracking system has been in place throughout the three-year period.[/i]
And what ‘tracking system’ generated by what organization would that be?
[quote]Governor Brown issued a statement in response to the poll, stating, “California still faces damaging budget cuts, so it’s encouraging that so many citizens are willing to consider some modest, temporary tax increases.”[/quote]
Taxes that are “modest”; “temporary”? LOL Once a tax is imposed, it is highly unlikely it will ever be “unimposed” – there is no such thing as a “temporary” tax from what I can tell, or at least such a tax is very, very rare; and taxes just continue to creep up while CA keeps doing business as usual – spend, spend, spend. The truth of the matter is Brown is choosing the easy way out – raising taxes and hoping for the best. As Rusty so rightly points out, CA needs to do better in other areas, particularly in creating a business friendly environment, pension reform and cutting gov’t waste. You have to do both – modestly increase taxes while instituting the necessary reforms. All I see is a move to increase taxes…
You can find rusty’s post verbatim on about a dozen other blogs if you google some of the key words.
California state budget revenue shortfalls likely to result in $100 million cuts from both UC and CSU systems.
State funding for local public schools likely to be cut by several billion.
Another California company escapes to Texas… the largest publicly-traded company in the area… taking with them ALL the tax revenue they would contribute and all the other economic activity they generate for the state… including a few hundred good jobs.
[url]http://sacramento.cbslocal.com/2011/12/12/folsom-company-moving-to-texas-for-a-new-start/[/url]
It appears that Atlas is shrugging and the looters and moochers will be left with the empty shell. The good news is that they are moving to another sunny state that understands that business and business owners are the producers that keep the state government running.
[i]”You can find rusty’s post verbatim on about a dozen other blogs if you google some of the key words. The source appears to be Joseph Vranich, a business relocation consultant.”[/i]
Don, shouldn’t we stop demonizing and attempting to discredit the messenger while we stick our head in the sand, and instead address the points? They are valid.
Immediately after I posted I realized that I left the (“‘s) off, I was going to do another post to correct that but I thought why bother as it was obvious that my post was material taken off of the Internet.
To Mr. Shor, thank you as always for pointing that out. Does that make the info any less correct? Or Mr. Shor, is only info you find on the Internet worthy?
Not demonizing, Jeff. Whenever possible, give credit to the originator of an article. I wouldn’t be thrilled to see my garden columns reprinted without attribution. On the other hand, I am perfectly happy when people quote me. Mr. Vranich makes his living on business relocation. He deserves recognition if he is the source of the data and analysis.
jeff: “[i]The good news is that they are moving to another sunny state that understands that business and business owners are the producers that keep the state government running.[/i]”
[url]http://www.businessweek.com/ap/financialnews/D9M0NQ102.htm[/url]
“Last week, he [Perry] touted a Federal Reserve Bank statement forecasting that Texas could add more than 264,000 jobs in 2011. Proposed budget cuts, though, could lay-off 100,000 school employees, 60,000 nursing home workers and eliminate 9,600 state jobs this year.”
“Pitts, the appropriations committee chair, acknowledged that making $23 billion in cuts for the next budget would be devastating.”
Elaine: “The truth of the matter is Brown is choosing the easy way out – raising taxes and hoping for the best.”
The budget passed by the legislature and signed by Brown cut billions in spending, and if I recall it passed without a single Republican vote. How is any of this “the easy way out”?
The budget passed by the legislature and signed by Brown cut billions in spending, and if I recall it passed without a single Republican vote. How is any of this “the easy way out”?
it isn’t. But if you and the Vanguard think upping taxes on the wealthy is going to solve a damned thing, sit back and watch what ultimately happens.
Octane: What’s gonna happen? How do you know?
ERM: [i]The truth of the matter is Brown is choosing the easy way out – raising taxes and hoping for the best.[/i]
Over the long term, I’m not sure that taking on K-12 cuts is the easy way out. I think it removes potential wealth from the future economy.
Elaine
“All I see is a move to increase taxes”
How can you say that in view of the automatically triggered cuts to education and a host of social services ?”
Jeff,
It would be more complete to also include the numbers of businesses relocating into California over the same time periods.
I suspect that more businesses are moving out than moving in; would be good to confirm.
And what about the number of in-state start-ups as compared to in-state closings-down.
Are more big companies moving out of state and more small ones moving into state or starting up?
What about growth or shrinkage rates of existing companies?
Seems to me all of this is reflected in the private sector employment figures; are they moving up or down? How about relative to growth in working-age population?
Around Thanksgiving I heard Brown on the news presenting some of the main points for his state worker pension reform proposal; I thought his proposal was really good.
Would be good to see Rifkins analysis of it.
@ jimt:
“Over the past six months, California’s job growth accelerated, and the state added jobs at
twice the rate of the rest of the US. The number of California’s jobs increased by 1.5 percent
between September 2010 and March 2011 – the most recent month for which state jobs
data are available – while the number of jobs in rest of the nation increased by just 0.6
percent.”
Callifornia Budget Project May 2011
“Between June 2010 and June 2011,
California lost 24,500 state and local government jobs (1.1 percent) – approximately one job lost for
every nine private sector jobs the state gained. In addition, over the past three years, California lost
public sector jobs at a rate twice that for the nation as a whole.”
California Budget Project Sept 2011
Jeff
“It appears that Atlas is shrugging and the looters and moochers will be left with the empty shell.
I would happily accept a somewhat lower material standard of living if it ensured that our society was not dominated by the Reardons of the world, the rapists and narcissists that the Atlas Shrugged author idealized and saw as “superior human beings” but at their core believed had the right to use other humans physically, emotionally, economically and socially in any way they chose for their immediate gratification because of their supposed inferiority.
If you think that I am stereotyping or overstating this point, perhaps you might want to rethink your repetitive use of the terms moochers and looters. Far more benign stereotypes in my mind than rapists and narcissists.
[quote]Elaine: “All I see is a move to increase taxes”
medwoman: How can you say that in view of the automatically triggered cuts to education and a host of social services ?”[/quote]
I’m not convinced the cuts will happen. Already cuts to adult day health and in-home supportive services have been done away with bc various groups took the matter to court. As time goes on, I think you will see a number of ways in which the cuts will never be carried out as proclaimed…
The fact that courts overturned some cuts somehow means that other cuts won’t happen? If the pie is shrinking, and a judge orders larger slices to some, how do you keep the other slices from getting smaller?
Don–thanks for posting the stats; that sounds like good news for California.
ERM
“I’m not convinced the cuts will happen”
Individual lack of certainty is no indication that action is not being attempted. And in an earlier post, you had stated that once enacted, taxes never go away. I would say that Prop 13 is an excellent example to the contrary. unfortunately it had some unintended ( or perhaps not)
consequences in terms of devastating California public education funding.
[quote]The fact that courts overturned some cuts somehow means that other cuts won’t happen? If the pie is shrinking, and a judge orders larger slices to some, how do you keep the other slices from getting smaller?[/quote]
Good point! I think my frustration w Brown stems from his unwillingness to tackle serious problems in the budgeting process (albeit not an easy task with such a dysfunctional legislature) while advocating raising taxes. You have to do both – institute major structural changes and probably raise taxes (not sure which taxes are best). Instead, Brown advocated across the Board trigger cuts without any assessments of which programs should be saved and which should go, and ran into serious problems that clearly showed he was clueless when it comes to real structural reform that is meaningful. Instead he picked what he thought were some of the weaker groups (elders with dementia/Alzheimer’s Disease) to attack with serious budget cuts, and found them not as weak as he thought. Nor does Brown seem to be doing anything in the way of creating a better business climate in CA, which is sorely needed…
Elaine: I gotta disagree here. The problems that need to be addressed imo, are outside of Brown’s control and it has to do with the inability for a simple majority to govern in California. The problem with the legislature is that the majority party cannot raise revenue if the minority party is not willing to do so – and they aren’t. Brown has the choice to further cut programs like education or find a way around that legislative hurdle.
Brown cut the budget by billions of dollars. He has proposed pension reform. He has now also advocated raising some taxes. He cannot accomplish “major structural changes” without voter rescission of a number of initiatives that have been passed over the last decades.
You are concerned about the cuts that have been implemented within an interest group that you work with (elders).
Students are concerned about the cuts that have been implemented within their interest group.
Drivers don’t want auto fees increased.
Cities and counties don’t want redevelopment funds changed.
I could go on and on.
So nobody wants their ox to be gored, but everybody somehow magically wants the budget problem to be solved. And, of course, the Republican party wants a cuts-only solution with no new taxes.
Brown is proposing solutions that are achievable within the political framework he has to work with. And then we get “nor does he seem to be doing anything in the way of creating a better business climate….”
What could he and the legislature do to “create a better business climate” that would simultaneously address the short-term budget deficit?