Only days after Californian's agreed to shell out $40 billion for a high-speed rail program, Gov. Arnold Schwarzenegger announced a plan to hopefully put an end to the crippling state budget deficit.
In order to overcome the $11.2 billion budget shortfall, the governor proposed a 1.5-cent increase in state sales taxes, a higher taxes on oil and liquor production, and a state workers’ pay cut for 19 months. He has also proposed that the state slash government spending by $4.5 billion.
It is certain that California has a crisis on its hands, but are raising taxes the proper cure?
The good news is that California generates a substantial percentage of revenue from out-of-state tourists, which means that people living beyond the California border will pay a percentage of the sales tax hike. The better news is that while Schwarzenegger has proposed raising taxes, he also stated the obvious truth that California needs to slow down on spending.
The non-partisan Tax Foundation ranks California as having a higher state and local tax burden than the national average, placing the state income tax as the 6th highest in the country. Moreover, wealthy Californians pay more than rich taxpayers in any other state and all Californians already pay the highest gasoline tax in the nation.
With so much taxation, California still finds itself in a budget mess. For a state that taxes its people so heavily, shouldn't the budget have little trouble balancing itself out?
It’s time California tried something else, besides this tax and spend policy. The government programs that proponents argue we need so desperately need to take a vacation: A Forest Gump “go somewhere and never come back” vacation, to be precise.
Unfortunately, there is a split among California Republicans on how to reverse the deficit. Both Schwarzenegger and the Lieutenant Governor John Garamendi agree that taxes must be raised. In fact, Garamendi doesn't even think spending should be reduced at all. “The governor is calling for another $4.5 billion in cuts," Garamendi said. "My answer is no. Enough already.”
On the other hand, the Republican leadership in the Legislature has made it clear that the only way to fix the budget mess is to reduce spending.
"We believe the only responsible way to solve our budget problem is to cut wasteful spending and start living within our means,” said Assembly Republican Leader Mike Villines in a statement. “One thing is clear – higher taxes will do nothing to solve the problem and Republicans will stand united in rejecting any attempt to raise taxes.”
I encourage all who call themselves independents to stand behind the latter Republicans on this issue, and hold them accountable for their words when they go to Sacramento to cast their vote. Besides, over the next four to eight years, the federal government is going to tax you enough, anyhow.
Ladies and gentlemen, get out your scalpels. Or better yet, grab your hatchets. It’s time to cut the budget.