Rumor du Jour: Budget Vote February 3

A budget vote February 3 is the latest rumor du jour rolling through the state Capitol. 

Allegedly the spending reductions – and tax increases – have been agreed to and the focus of continuing budget talks is the shape of the so-called “economic stimulus” legal changes sought by Gov. Schwarzenegger and his GOP allies. 

Those changes, such as relaxing state environmental review of less than a dozen highway projects and allowing more outside engineers to design such projects, having been a sticking point for the Republican governor since last year when he criticized – and this year vetoed — a Democratic budget plan for not doing enough to boost the economy. 

The new taxes are said to include a half-cent boost in the sales tax, which generates roughly $4 billion annually, and a return of vehicle license fees to 2 percent of a vehicle’s value. At 2 percent, the license fees, much of which are deductible on federal taxes, would generate $6 billion in new revenue for the state – and increase over time. 

Campaigning in 2003, Schwarzenegger was sharply critical of incumbent Gov. Gray Davis’ handling of the state’s budget and vehicle license fees, which Davis had increased to reduce the red ink. 

In December 2002, Davis estimated that without action, the state would have a gap between revenues and spending commitments of $34.8 billion by June 30, 2004. Schwarzenegger says that without action the state will have a $42 billion shortfall by June 30, 2010. 

Schwarzenegger reduced the car tax, as he and other Republicans call it, after taking office from 2 percent to .65 percent. 

Spending reduction are unlikely to be much changed from what Democrats already agreed to in the budget they put forward in December. That proposal included reducing checks paid to California’s aged, blind and disabled to 2008 levels and providing no cost-of-living increase this year which would save $700 million over the next 18 months. 

In addition, the nearly 500,000 families on welfare would see no cost-of-living increase either. Due to the economy, that number is projected to grow by nearly 6 percent this year and 7 percent the following year. 

A large chunk of the spending cuts fall on public schools which represent roughly 40 percent of the state’s general fund spending. 

Because of the economic decline, the amount of minimum state support for schools has fallen by $6.6 billion. Of that amount the governor and lawmakers appear to have settled on a plan in which a little less than one-third of that amount — $2.1 billion – would be felt in the classroom. 

As to which Republicans might vote to increase taxes, Assemblyman Anthony Adams has publicly said he would. Assembly GOP Leader Mike Villines of Fresno helped negotiate the deal and, therefore, would be expected to support it. Similarly, it’s traditional for the GOP’s top budget person, in this case Roger Niello, to go along with the team. 

Will there actually be a budget vote February 3? Unknown. It’s just the rumor du jour. 





Filed under: Budget and Economy

1 Comment »

  1. I am appalled, when doin the people’s business, I need a nice ride. To think that the Hummer Bummer, who rode in on a anti car tax wave, would buy into $6 Billion tax on my Detroit V8 with all the trimmings (CD, leather etc) is unreal. How does he expect me to get clients from Fat’s to Ella and invest in our economy if I can’t afford to drive my ride. Once again, these other 4 yahoo’s have demonstrated the failure of term limits. They can’t remember back 6 years and how they got here.

    Comment by Wally Webgas — 1.30.2009 @ 6:48 am

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