3:30 PM Update: The Governor’s Office has responded to Zycher’s observations below, and that response can be found here.

As we rush speedily into a vote tonight on a "Big-5" produces budget plan that includes nearly $15 billion in assorted tax increases, one of the major "concessions" that is in the plan, to "sweeten it" for GOP support is the placing of a Spending Limit Initiative on the ballot (though we note that the Limit, if it passes, also extends the tax increases).

One of the policy experts on economics and state finances that I look to in this area is Dr. Benjamin Zycher of the Pacific Research Institute. Zycher was asked by the Howard Jarvis Taxpayers Association to review the final language.

… Read More

UPDATE: Well, it’s not news. But if you are looking for something to do, click here and look to the bottom of the right hand column. You’ll see Dave Cox mentioned…

Well it would appear that the State Legislature is going to meet into the wee hours.

Conventional wisdom seems to be that in the Assembly, Republicans Villines, Adams and Niello are set to go up on $14 billion++ in tax increases. In the Senate, Republicans Cogdill and Ashburn seem ready to go up on the taxes, but the third vote is being elusive. It belongs to State Senator Dave Cox who is the only other Senate Republican who has not make it clear he is opposing the plan.

Currently Cox is proposing an amendment concerning how Proposition 10 monies are reallocated (a pet issue of his). Apparently Cox has a whole boatload of amendments, and I suspect that one of them… Read More

Mike Genest, Governor Schwarzenegger’s Director of Finance has offered this response to Dr. Zycher’s concerns about the Spending Limit Initiative language in the current "Big 5" deal: Dr. Benjamin Zycher made five observations regarding the budget stabilization fund contained within the current budget agreement. In response to his “observations,” I offer five factual statements. Zycher observed: The degree to which the estimated revenue projection trend and the Budget Stabilization Fund would operate actually to limit general-fund spending is not clear.

Incorrect. The governor could not simply suspend the transfer of revenues into the new rainy-day fund. While Article XVI Section 20 (e) of the state constitution currently allows governors to suspend the… Read More

Anthony York over at Capitol Weekly is reporting that there is unrest amongst Republicans as a result of this "Big-5, Big Taxes" deal.

I typically refrain from commenting on legislative caucus politics, and will continue to do so. But I will continue to express a high degree of frustration that seemingly overnight, the position of Republican leadership went from "taxes are terrible and we completely oppose them" to "taxes are terrible but not having them is more terrible and now we support them."

My overwhelming feeling is one of disappointment at this situation, and that our leaders are going "maverick" when their caucuses overwhelmingly oppose the tax increases.

Again, I am not trying to be critical of Cogdill and Villines as individuals — they are both good people. But I do feel that the "art of the deal" is supplanting the "team" concept that is so important to achieving long-term success.

I do hope that part of the… Read More

I will happily acknowledge that I am NOT a policy wong. Some of the back and forths below from policy-wonks on the language of the proposed spending cap (that would go before the voters, tied to extending taxes that are raised in this Big 5 deal) are above my pay-grade.

That said, my "open question" on the cap is this?

I am going to throw out there that there is distinct possibility that Republicans joinin hands with the Democrats for a plan that includes $14.8 billion in tax increases is going to cause a big problem for the GOP, and that it may very well lead to losses of seats in the Senate and the Assembly. When the smoke clears after the 2010 election, Democrats may have a supermajority of the legislature (yikes).

If that were to happen, AND the spending cap as proposed in this deal were in place (having been passed by the voters) — is the cap strong enough to keep Democrat supermajorities from racheting up spending (beyond the cap)? In otherwords, when we are forced off the beach, and back onto our landing craft, have we left some protection behind?

As I understand it, there is a big gaping hole in this proposal. To put… Read More

Over the last months of budget negotiations, there has not been evidence of a proposal forwarded by a state legislator of either party that reduces spending by the $40 billion necessary to balance the budget without a sizable tax increase. If that proposal exists, it has not benefited from sufficiently wide support from that legislator’s colleagues to become part of the budget debate.

Because of a lack of an alternative that balances the budget solely through spending cuts, it’s been apparent for some time that the final budget agreement will ultimately involve a considerable amount of additional taxes. That’s not a good thing, but it’s a thing. So at this point, Republicans have two options: either continue the stalemate indefinitely or propose that alternate budget. The lack of a state government holds great ideological appeal, but creates practical difficulties. So the question is: where is that alternative budget and the plan for building public and political support for it?

The budget before the Legislature is no cause for celebration. It’s unlikely that the Republican leaders who have been part of the negotiations –… Read More

This just off the transom…

California Assemblyman Chuck DeVore Resigns Leadership Post Due to $14 Billion Tax Increase Deal

Feb. 14, 2009, Sacramento, CA – California State Assemblyman Chuck DeVore resigned today as Chief Republican Whip due to his opposition to a massive tax increase deal brokered by Republican legislative leaders. DeVore said, “The St. Valentine’s Day deal to raise taxes on hardworking Californians will neither close the budget deficit nor control spending. I believe leadership thinks they are doing the right thing – but I cannot be a party to this agreement as I believe it will harm California.”

Excerpts of DeVore’s letter to Assembly Republican Leader Mike Villines follow:

“…the recent agreement you negotiated to increase taxes in exchange for a spending limit will not likely accomplish the twin aims of deficit reduction and budget control that you seek.

“This proposed agreement also strikes at the heart… Read More

We’ve all seen those "what they’re saying" PR missives organizations send: round-ups of media quotes praising the pet project or cause of the transmitting organization.

But it’s downright depressing to see one from the Senate Republican Caucus promoting tax increases!

It was surreal to open my "Republican Budget Solutions" e-mail the Senate GOP Caucus this morning, and find it chockful of quotes from liberal editorial pages, heaping praise upon the massive tax increase package being touted as a Budget solution."

We have entered through-the-looking glass territory. opposing higher taxes and supporting tax reduction is one of the few issues on which California Republican retain credibility with the voters — and it’s absolutely insane to believe it is worth pawning our party’s soul in exchange for a budget deal that is certain to fail as a solution to the budget deficit.

Sen. Dave Cogdill is dead wrong to claim this is the "best deal" we can get. Enabling the state to gobble an even greater portion of the people’s wealth while simultaeously forsaking the Republican Party… Read More