The Next L.A. / Reinventing Our Future : Governing : IDEA FILE: More and/or Better Taxes

How It Works: Raise state taxes to pay for education, freeways, parks and libraries. Expand the sales tax to include services like dry cleaning and amusement park admissions, while lowering the tax rate. Modify Prop. 13 to split the property tax rolls, leaving homeowner assessments alone but using current market values to assess taxes on businesses. Right now, businesses and homeowners are assessed exactly the same way--at a base rate of 1% of the purchase cost, which can only be increased 2% a year.

Benefits: Tax increases would generate billions of dollars in additional revenue to maintain and improve schools, parks, libraries and such, bolstering the critically important government services that have deteriorated since the state’s boom days of the 1950s and ‘60s.

Is it a short-term or long-term idea?: Long-term

Supporters: Many advocates for better schools, transportation and health care agree that improved services and facilities are worth the cost.

Opponents: Those opposed argue that increased revenues could hinder the drive for more efficient government, and hit taxpayers yet again. The so-called split roll proposal might keep some businesses from relocating to California because they would be taxed at a higher rate than under Prop. 13.

The costs: Consumers could pay an extra $1 billion to $5 billion a year, depending on which services were taxed and how much the existing sales tax rate was lowered. Businesses could pay at least an extra $8.5 billion annually. County tax assessors would have to beef up their staffs, but the cost would be more than offset by the increased revenue. If legal and accounting services were taxed, for example, consumers might buy them from companies in other states, hurting local businesses. And the tax burden would fall more heavily on small businesses than on large corporations with in-house accountants and lawyers.

“REALITY CHECK”: Both proposals would require a two-thirds vote of the Legislature or the electorate. Previous attempts have failed, but many observers say raising taxes is inevitable because the state is in such dire need of the money.