
Considering the Spending Cap and Taxes
Is a well-written spending cap worth extra years of tax increases? That is the question that confronted our legislators and now confronts every California voter. The deal that was pushed by the Governor was to re-enact a spending cap as good as or better than the original Gann spending limit of 1979. For a variety of reasons, I conclude that this has been achieved. Once in place, this spending limit could be changed only by the voters, although I fully expect future governors and legislators to search for every loophole. This spending limit will not cut taxes. In fact, passage of the measure is linked to extensions of the new tax increases on sales (though 2012), income (through 2013) and cars (also 2013). Can California’s economy survive more years of our being the state that is the least competitive and most hostile to new jobs in the nation? I know it will exacerbate the suffering of unemployment and failing businesses. If this spending limit succeeds in containing spending, then the big budget battles still lie ahead. Future legislatures will be forced to repeal current spending formulas to be able to live within the… Read More