California Governor Jerry Brown is annoyed at Republicans who have blocked his plan for massive tax hikes to balance the budget. In response, the governor plans to take his case straight to the voters.
Please consider Brown Plans California Drive to Keep Taxes as New Cuts Loom
California Governor Jerry Brown said he’ll propose a new budget next month and plans to campaign in Republican districts to win support for a statewide referendum to retain $9.3 billion of higher taxes and fees.
The plan will show how he intends to erase the most- populous U.S. state’s remaining $15.4 billion deficit, said Brown, 72.
Brown will begin a series of events around the state to persuade voters that Republican lawmakers are wrong to block his plan to extend expiring tax and fee increases for five more years to prevent deeper spending cuts to schools and public safety. The temporary increases are set to end in June.
Last month, Brown said he had broken off negotiations for a statewide vote after being presented with a widening list of Republican demands.
“Rather than continuing to negotiate with Senate Republican Leader Bob Dutton on a bi-partisan budget with long- term solutions, Governor Brown is going on a dog-and-pony show to sell voters on short-term gimmicks and $50 billion in tax increases,” said Jann Taber, a Dutton spokeswoman.
Brown Wants Massive Tax Hikes
The governor wants voters to …
- Extend a 0.25 percentage-point increase in personal income-tax rates
- Boost retail sales taxes by 1 percentage-point
- Boost auto-registration fees by 0.5 percentage point to 1.15 percent of a vehicle’s value
- Reduction the state’s annual child tax credit to $99 from $309
The only one of those that is remotely reasonable is number 4. However, in return for number 4, Republicans should ask for passage of right-to-work laws.
Expect Biggest Fear-Mongering Campaign in History
Every public union in the state will throw money at Brown’s effort in what will likely be the biggest public union fear-mongering campaign the world has ever seen.
Republicans should preemptively counter with their own statewide referendums to …
- Eliminate prevailing wage laws
- Enact right-to-work laws
- End defined benefit plans for public workers
- Reduce sales taxes 1 percentage point
- Reduce state income taxes .50 percentage points
If Brown Wants Referendums, Give Him a Handful
Items 1, 2 and 3 would engage public unions on multiple fronts as well as siphon union ad money from fear-mongering tax hike campaigns.
Besides, you never know. Voters are fed up with tax hikes and public union extravagance. Some of those proposals might pass.
There is one sure way to find out: If governor Brown wants referendums, give him a handful.
About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.