
Balancing Budgets Through Higher Taxes: A History Lesson
Apologists for the massive $14 billion tax increase being advanced as a solution to the chronic state deficit like to point to 1991 as validation of this strategy.
Then, as now, California was in the depths of recession. Then, as now, the confronted a historically huge budget deficit — which at the time was $14 billion.
At the end of the day, Gov. Pete Wilson struck a deal with the Democratic majority to erase the deficit with $7 billion in tax hikes and $7 billion spending cuts, and succeeding in toppling Assembly GOP Leader Ross Johnson and pealing off the necessary 7 Republicans to vote for the deal.
Conventional wisdom, viewing that deal through the gauzy mists of time, hails it as a grand compromise of statesmanlike proportion that restored health to the budget, and as a model that we should emulate today.
Too bad it’s a myth, because inflicting a massive tax increase on a weak economy had the opposite effect, and the next year the state was faced with a $3 billion deficit.
Former Sen. Ray Haynes laid out the truth of what transpired in this 2005… Read More