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A challenge for voters

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Capitol Journal

Taxes. Fees. Budgets. Distortions. Blatant baloney.

That sums up three middle-of-the-pack state ballot propositions and their campaigns — some on the “yes” side, some on the “no.”

If there’s voter confusion about propositions 24, 25 or 26, it’s no wonder. First, they’re plenty complex already. Second, voters are being bombarded not only with fudging of facts but also with flagrant fabrication.


FOR THE RECORD:
Capitol Journal: In the Capitol Journal column in the Oct. 18 Section A, a sentence that referred to Proposition 25 should have said Proposition 26; it also misspelled “levies” as “levees.” The sentence should have read, “Under Prop. 26, any tax hike would require a two-thirds vote, regardless of a simultaneous reduction in other levies.” —


Briefly:

Prop. 24 would repeal three corporate tax breaks enacted by Gov. Arnold Schwarzenegger and the Legislature as parts of budget deals in 2008 and 2009.

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Prop. 25 would reduce the legislative vote requirement for budget passage to a simple majority, while retaining the two-thirds vote needed for tax increases. It also would strip legislators of their pay for each day a budget wasn’t passed on time.

Prop. 26 would redefine some current “fees” as “taxes.” Therefore, they’d require a two-thirds majority vote to pass the Legislature or, if local fees, a vote of the people.

All are initiatives sponsored by special interests — primarily labor for Props. 24 and 25 and business for Prop. 26. They qualified for the Nov. 2 ballot through signature collecting.

The Legislature and governor had a crack at negotiating a compromise package as part of major systemic, budget and tax reforms. But Sacramento politicians are heavily influenced by interests. The interests wouldn’t give and decided to go their own ways, slugging it out before the electorate.

Here’s some nitty-gritty while trying to keep clear of the deepest weeds:

Prop. 24 is an attempt to undo corporate tax breaks that Democrats granted in order to buy enough Republican votes to reach the two-thirds majority required for budget passage. The tax breaks are worth about $1.3 billion annually.

One tax break, involving net operating losses, already has been suspended for two years by the Legislature as part of the recently enacted budget deal. A second break allows the sharing of tax credits within a corporate family.

The third — involving how multi-state businesses calculate their California tax liability — represented a major piece of a late-night budget deal in February 2009. It was a grand compromise that kept state cash flowing and workers employed on highway projects.

But much of that deal was torpedoed by the voters in a special election. They soundly rejected a spending limit reform that was linked to a two-year extension of broad-based, temporary tax increases.

So now voters are being asked to also torpedo another key part of the deal. And why not? Why leave just the corporate tax breaks?

Answer: Because the governor and the Legislature made a commitment to provide the breaks, and corporations believed them in making their business plans for California.

“You can’t just all of a sudden reverse field,” says Scott Macdonald, spokesman for the No on 24 campaign. “Those jobs will wind up in other states.”

But with the state perpetually in debt, the tax breaks come at the expense of schools, healthcare, public safety. Name it.

It’s a close call.

Prop. 25 is not a close call. It’s a definite “yes.”

The recent 100-day budget stalemate shows the need, in this polarized world, to reduce the two-thirds budget-vote requirement to a simple majority. Break the gridlock and hold the majority party accountable.

Corporate lobbyists and Republicans fear the majority budget vote — which 47 other states have — because they’ve been able to peddle, for a stiff price, the scarce votes needed to garner two-thirds. But while the brokers bargain, private vendors, schools and healthcare providers get stiffed. Bond ratings drop and state interest rates climb.

Prop. 25’s business lobby opposition isn’t arguing against the majority budget vote. They’d have a weak case. Rather — in TV ads, on radio and in mailers — it’s deceptively trying to scare the electorate into believing that the measure contains sneaky provisions allowing taxes to be raised on majority votes.

That view has been adamantly rejected by a state appellate court. And it was hardly a liberal panel. All three judges were appointed by Republican governors.

“We find nothing in the substantive provisions of Proposition 25 that would allow the Legislature to circumvent the existing constitutional requirement of a two-thirds vote to raise taxes,” the jurists unanimously concluded.

Want more proof that the opposition’s argument is nonsense?

“Proposition 25 would affect only the budget bill and other bills providing for appropriations related to the budget bill,” the court found. “By definition, appropriations are not taxes…. Proposition 25 cannot be interpreted to operate as an end-run around the two-thirds vote requirement for raising taxes.”

I’ll take the word of three respected appellate judges over the spin of paid political hacks.

Prop. 26 would be a step backward from reform and should be dumped.

The measure would make it more difficult for elected representatives in Sacramento and locally to do their jobs — specifically, in this case, to generate revenue through fees.

The nonpartisan legislative analyst estimates that it would cost the deficit-plagued state general fund at least $1 billion annually.

This proposal would not affect most user fees — at parks, for example — or property development charges. But it would affect regulatory fees — as on hazardous waste — and put a crimp in environmental protection and health safety programs.

It also would cripple any attempt to restructure state taxes, a sorely needed action to rebalance rollercoaster revenues with spending.

Currently, on a majority vote, a tax increase can be balanced with a tax cut if the net result is no rise in revenue. Under Prop. 25, any tax hike would require a two-thirds vote, regardless of a simultaneous reduction in other levees.

Want to really dig into the details of these propositions? Read the legislative analyst’s wrapup in the official voter information guide. Be sure to mute the TV ads.

george.skelton@latimes.com


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