There is an old expression, “carrying coals to Newcastle,” to describe a useless activity or fool’s errand. Sort of like shipping pineapples to Hawaii or, bringing it closer to home, sending more tax dollars to Sacramento.
The truth is, Sacramento is awash in cash. The Legislature’s budget analyst estimates that this fiscal year will end with $3 billion more than anticipated and, by 2017, state reserves may even top $11 billion.
For the political ruling class, this is an embarrassment. Last summer, the Governor called a special session of the Legislature in an attempt to secure legislative approval of a new health care tax on managed care organizations (MCOs) because the current tax is about to expire. He also called another special session to deal with transportation funding. In both cases, Republicans in the Legislature are making trouble for those backing new taxes by pointing to the obvious: The state already has plenty of money.
This embarrassment of riches is also bad for the morale of special interests looking to increase taxes via ballot measures. Public sector unions are pushing for an extension in the “temporary” tax increase approved by voters in 2012.
But they have yet to show a united front and are fighting over who will get the money. Whether the proceeds go to education, as favored by the state’s most powerful special interest, the California Teachers Association, or to the health care industry, as is supported by other union and hospital interests, has yet to be decided.
Health care interests may also pursue a new tobacco tax of $2 a pack. Since smokers and tobacco companies are only slightly more popular than ISIS, pundits believe – perhaps naively – that this initiative will pass. (They’ve been wrong before as tobacco taxes are highly regressive). Or perhaps the “evil” oil companies will be the target in a state where motorists already pay 75 cents a gallon more than the national average. Good luck with that.
Campaigns for initiatives to impose new or higher taxes tend to use happy talk to focus on the benefits to the needy or the general population and ignore the actual goal. For example, Proposition 30, the sales and income tax increase, was sold as a boon to education when, in reality, much of the revenue is needed to keep the teachers’ pension system solvent.
For any tax increases being pushed by special interests, voters should keep in mind that actual beneficiaries tend to be the providers of services – think pay and benefits — not the recipients.
This brings us to another potential initiative with the sympathetic sounding title of “Lifting Children and Families Out of Poverty Act.” The measure would place a property tax surcharge on higher value homes and property.
If this proposal actually reaches the ballot, it will, no doubt be marketed as a tax on the well-off so they can pay their “fair share” to help needy children. Backers of this tax will not mention that, as usual, those receiving the majority of benefits are likely to be the providers of services, not those in poverty. And don’t expect voters to be told about California’s already generous entitlement programs or, even with record spending, the hefty state surplus. The fact that this measure would be the first step in destroying Proposition 13 protections for all property owners, including those of modest means, will be glossed over as initiative promoters use the less fortunate as human shields to justify themselves.