Outlook Still Grim Until Structural Reforms Are Made

Greg Lucas took a look at tax receipts for the first week of April, and the news is gloomy.

In 2008, not exactly a boom year either, $703,166 in personal income taxes was paid in the first eight days of the month.

During the first eight days of April 2009, $456,227 came over the transom.

By April 30 2008, nearly $12.9 billion in personal income tax revenue was collected.

This year, Governor’s Schwarzenegger’s Department of Finance predicts a monthly total of only $8.9 billion in personal income tax receipts.

If the first week is any indicator, revenues may not even meet that lowered expectation.

Lucas surmises that the $8 billion revenue gap for 2010 announced by the Legislative Analyst a few weeks back could potentially double, based on these returns and the possibility of losing particular ballot measures in the May 19 special election.  I don’t think there’s any question that the legislature will return in June to something over a $10 billion gap to deal with.  And as we know, Zed Hollingsworth and the even Yachtier Yacht Party will want to fill that with cuts to already emaciated state services.

(as a side note, I love that there are almost 200 entries in a Google search for “Zed Hollingsworth.”  Memewatch!)

But in fact, there are ways to deal with these problems, even in a down economy, that make the most sense for the vast majority of Californians.  The Commission on the 21st Century Economy released their latest set of reports today, and what jumped out at me was their report on the potential of a split roll property tax, which would keep residential rates at current levels while modifying those for commercial and industrial properties, and as a result, California could see a $7.5 billion dollar annual boost to their budget bottom line.  Obviously, the typical doomsayers like the Chamber of Commerce will come out and call this a “job-killer” and cite the negative impacts on the economy, but considering that even in these rough economic times, corporate businesses just got a $1.5 billion dollar tax CUT, I don’t take their concerns seriously.  They have cried poor for decades, and as a result the state has suffered deeply.  While carve-outs for local small businesses may be part of a solution, having commercial property taxes frozen in amber has led to municipalities literally passing the cup to fund services.

The City of Orinda wants your help, and your donation is tax deductible.

There are no bake sales in the works, but Mayor Sue Severson plans to solicit donations for extras the City Council does not want to pay for out of the general fund.

Donations could pay for events such as Orinda in Action Day, or they could pay for public art such as the popular frog sculpture in the downtown fountain without draining the city’s general fund, Severson said.

“Our budget is so minimal and we have very little flexibility in what we’re able to do,” she said.

The city’s roads and drains need more than $100 million in repairs the city can’t afford.

And Orinda’s average income in 2000 was $132,531.  Imagine the needs of the cities at or below the poverty line.

We cannot survive as a state with this kind of inequity.  The state must be freed from these artificial bonds and allowed to address needs properly in the way every other state in the union can.

One thought on “Outlook Still Grim Until Structural Reforms Are Made”

  1. It’s actually something we’ve been seeing for a while in schools.  Parents in wealthier schools are just paying for the cost of programs that would ordinarily be part of the school expenses.  Fundraisers for keeping art and music in the schools, that type of thing.

    Of course, as you mentioned, that leaves behind communities like Mendota that cannot afford these luxuries. It really is a sad state of affairs.

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