PCOC - Spring 2009 - (Page 27)

statecapitolReport Is It Over Yet? By Dominic DiMare Partner, DiMare, Van Vleck & Brown I’ll be honest. I don’t even know how to begin this article. It seems as if the political world around us is moving in an unpredictable pattern, similar to the weather. We have just inaugurated a new president whose very ascension to office is not only historic, but whose initial mission is to “fix” unprecedented economic problems and epic international threats. He is immediately expected to revitalize our economy, protect the homeland and rebuild our collective confidence. Right now, President Obama has his work cut out for him – the transition alone is of extraordinary proportions. Meanwhile, back in California, there seems to be a remarkable amount of malaise regarding the state’s worsening budget situation. There has been little progress made in addressing the ballooning budget deficit which now stands at around $18 billion and is expected to grow to as large as $40 billion by June. Before Christmas the democrats in both houses put together a “majority vote” budget which they passed out of both houses and sent to the governor. The proposal only provided about $18 billion in solutions – abut $23 billion shy of a fix – but the democrats say that these bills would prevent a “fiscal Armageddon.” The democrats proposed raising sales taxes by 75 cents on the dollar, income surtax increase of 2.5 percent and an oil severance tax. Two gas levies would be eliminated – the 18 cents per gallon excise tax and the state’s five-cent share on the sales tax. These tax increases and reductions would be perceived as a wash. Here’s a neat trick: the state would replenish the gas taxes with a new 39 cent per gallon “fee” on motorists. (This is about 13 cents more than what they pay now). The operative PCOC / SPRING 2009 © Rcmathiraj | Dreamstime.com word here is “fee” because according to the law, if the fee is tied to a specific service (this one is called the highway user fee), then it too only requires a majority vote. Under the democrats’ plan the state would also require independent contracts to withhold 3 percent income tax when they paid for work. Overall, the democrats’ plan calls for a $9.3 billion in tax hikes over 18 months, along with $7.3 billion in cuts to education, healthcare, prisons, welfare, and the poor and disabled. There are a few other “shifts” in funding that make up the $18 billion total. Now you may ask yourself how democrats raise revenues without new taxes. They went to their lawyers – the Legislative Counsel – and asked them for an opinion on whether or not the following plan was constitutionally allowable, and the lawyers said yes. In fact, they said that if the proposed set of budget reforms “do not create a net revenue increase, it can be approved on a majority vote.” In other words, no republicans needed. Many folks saw the democrats’ plan as a good interim solution – especially 27

Table of Contents for the Digital Edition of PCOC - Spring 2009

PCOC- Spring 2009
President’s Message
Martyn’s Corner
Under Attack!
Drywood Termite Control
State Capitol Report
Capitol Scope
Index to Advertisers

PCOC - Spring 2009