Saturday, May 14, 2011

LA Times Swings and Misses: Jerry Brown's New Budget Will Include Tax Hikes

The Times has a report from Sacramento today that, in typical Times fashion, manages to miss the point completely. To see a piece titled "Gov. Brown to Skip Tax Increases This Year", you might be tempted to think that Brown was backing off from his increasingly unpopular proposal to extend higher income, sales, and vehicle taxes for another five years. But you'd be wrong. Brown's new proposal is actually worse than his original plan.

Curb your enthusiasm.

Brown is actually expected to propose putting off the increase in the income tax for a year, with unexpectedly high tax revenues this year paying for the difference. The higher rate would take effect in 2012 and remain in force for four years. His proposals for five-year extensions of the sales and vehicle taxes are unchanged; if approved by voters, these will go into effect this year. Moreover, he is expected to ask lawmakers to put unspecified new tax levies in place without voter approval before July 1. Which, you know, he's been promising for weeks to avoid doing. Even worse, a portion of the higher-than-expected tax revenues will be used to preserve "enterprise zone" tax credits for businesses that hire workers from "blighted" areas. His original plan called for eliminating the credits and saving almost $1 billion. So it appears that California's RDAs are not as close to death as we would've hoped. And it looks like the Governor's political courage is starting to fail.


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