Serving Bread

Dear Governor,

After an unprecedented 85 day stalemate on California’s 2008-2009 budget, the state legislature was still unable to pass a balanced budget, which is requiring you to call a special session of the legislature to address our budget crisis. While I understand why you are proposing drastic cuts (especially to education) and a significant increase in sales tax, I fear and believe that your proposals would only put undue financial strains on lower income families.

First, it seems to me that all state politicians should take responsibility for our current crisis. We have enough data and understanding of economic cycles to have been able to plan better for our current economic downturn. As early as Biblical times, government administrators understood that in times of plenty, we need to take advantage of the abundance to plan and save for the times of need. So it should surprise and concern California taxpayers, that our state government did not manage public resources in such a way to help us through this downturn.

Second, state leaders need to oppose all bond measures until we ride through this downturn. It is fiscally unwise to promote and pass bond measures that put further strain on state resources. The interest we will pay on several bond measures that were just passed will prevent us from paying for expenditures that are already a part of the state budget.

Third, it concerns me that state taxes in California are regressive, in that the tax burden of the wealthy is less than the poor in terms of percentage of income. According to the California Budget Project, the poorest 20% of California residents saw nearly 12% of their income go to taxes, whereas the top 20% saw about 8% of their income taxed. Looking to shore up state revenues through the sales tax system will only put more burden on the low-income residents of our state.

I understand that spending has not increased by much in the last few years and perhaps you are right when you say that what we have in California is not a spending problem but a revenue problem. Let me suggest a few ways to shore up revenue to our state coffers:

• Apply an additional tax on all new vehicles that get less than 16 mpg. The average EPA rating of cars sold in the United States in 2008 is around 19 mpg. Taxing gas guzzlers would in the short-term bring in additional state revenue, while in the long-term it will dry up demand for these types of vehicles that do not help our environment. However, I suggest an application system where businesses can apply to be shielded from the tax if they prove that the vehicle is necessary to the business’s success.
• Curb the tax breaks to the entertainment industry. I understand that tax breaks create incentives for the movie industry to remain in California, but it seems unfair to shield this industry from contributing to the state coffers. If the expectation that all of us should be doing our part in closing the deficit, then the movie industry should also contribute.
• Limit deductions taxpayers can take on the interest portion of their home loans on multiple homes. Real estate investors have found ways to protect themselves from paying taxes on their investments. There are far too many tax loopholes in real estate related taxes. While some of these fixes need to happen on the federal level, the state can take some proactive steps to close those loopholes and earn additional revenue.
• Cut redundant education spending. In surveying our expenditures in education, it seems to me that there are cuts that can be made on administrative levels that do not affect our investment in educating students. My wife is a teacher and I have observed that there are too many levels of input in developing our education system in the state. For example, curriculum input is done at the school, in the district, and on the state level. As an example, I suggest we do away with the position of State Secretary of Education and instead create a commission of district superintendents throughout the state who would fulfill the responsibilities of the Secretary of Education.
• Stop special elections. We need to do a better job consolidating our election process. In 2009, our state is already looking at holding at least three state-wide elections.

I understand that the above suggestions will not close a $10 billion gap in our state budget, but I hope that it’s a start and it would catalyze discussions to generate additional revenue that would not put any more pressure on the poorest taxpayers of our state.

Sincerely,

Eddy E

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