A lot of rider bills worked their way into last night’s marathon budget session, some of them pernicious (high-tech workers will be happy to know that the Legislature just cancelled their overtime).  But one of them should at least cause the state to take a minute to rejoice.  The yacht tax loophole is dead and buried.  Well, partially.

In one of the symbolic gestures of Monday night’s budget debate, lawmakers agreed to close the so-called “yacht tax” loophole.

Under current law, owners of luxury vehicles, like yachts or private aircraft, only had to keep their purchases out of California for 90 days after buying them to avoid state taxes.

That has allowed owners of such crafts to escape taxes to the tune of $21 million annually, according to the nonpartisan Legislative Analyst’s Office.

The new proposal, included in a budget trailer bill, would increase to one year the time that a purchase would have to remain out of state lines to escape taxation.

That’s not nearly good enough, actually, there shouldn’t be any amount of time that you could leave a product out of state to avoid sales tax.  If I can’t do it with toothpaste, rich people shouldn’t be able to do it with yachts.

Anyway, they’re still the Yacht Party, as evidenced by their budget vision, which is cruel and unyielding.  And, we will soon have a chance to make this extremely clear by putting the options before the voters.

Jon Coupal is the head of the Howard Jarvis Taxpayers Association, and by the way, seems to be managing the Yes on 98 campaign. Coupal isn’t much a fan of government. In his world, we’d all fend for ourself in a state of constant battle with nature and our neighbors.

In recent weeks, Gov. Schwarzenegger, legislative leaders and the Legislative Analyst’s Office have called for eliminating what they term “tax loopholes” to help close California’s staggering $16 billion budget deficit.

But one person’s loophole is another person’s legitimate advancement of public policy. This is especially true with those tax credits or deductions that are both broad-based – benefiting large segments of society – and which result in a significant societal benefit.(OC Register 4/2/08)

He then goes on to talk about the home mortgage deduction, and how that’s terrific! If the evil Democrats succeed in eliminating it, surely every house in California will fall into foreclosure.

Uh-huh. There are a few problems with this, specifically that the Legislature isn’t trying to end the home mortgage deduction. There’s a name for this type of argument, ah, yes, it’s called lying. You could call it a red herring, or what ever you want, but, it’s just a lie. The tax loopholes the legislature is trying to close are not as big as the mortgage deduction. Like the yacht tax loophole. Apparently, Coupal is against closing that, but what policy purpose does that encourage? Ah yes, it encourages the time-tested state policy of moving business to Nevada.  A great one, there, Mr. Coupal.

Jon Coupal is comfortable with lying, though. Like when he says that Prop 98 won’t end rent control, it will merely phase it out. (Disclosure: I do some web work for No on 98.) Too bad he fails to mention that Prop 98 also ends tenant protections that block unfair evictions. So, sure tenants keep their rent control, until they get evicted, that is.

Coupal just continues his tired, old rant. “Government is too wasteful, private companies do it better and cheaper.” Yada, yada. Too bad they don’t actually have any evidence of that. In fact, the real evidence ends up quite to the contrary. Just look at the recent news that the Medicare auditor showed that the private medicare plans never provided any savings whatsoever over the regular Medicare plan.  The old, stodgy government run Medicare is in fact better.

But let Coupal rant about how he wants to cut education and cut services. His argument is tired as Prop 13. Let’s see this terrific Republican budget with all the so-called waste.  What Coupal and his cronies call waste, is what everyday Californians call a lifeline to the future: Good schools, safe and effective transportation, and care for those who need it most. If we state our claim clearly, voters will see past Coupal’s snake oil for the progressive truth it is obscuring.

This is really kind of priceless.  So the Assembly caucuses are having their legislative retreats this week.  The Assembly Democrats are meeting at the UC Davis Medical Center.  The Assembly Republicans have booked out this hotel.  In addition to the many amenities at the Le Rivage Hotel, they offer:

Marina – Offers luxury yacht parking, long term and short term

Whether it’s welfare queen Tom McClintock grabbing $300,000 in tax-free per diem payments even though he lives a short commute from the capital, or Jeff Denham pretending to decline pay raises while accepting them a few months after everyone stops paying attention, or Assembly Republicans making sure their retreat has luxury yacht parking, the contrast between the party of the people and the party of self-enrichment is striking.  The Yacht Party detests runaway spending unless it’s spent on them.

So as expected, Assembly Republicans killed a bill that would bring California in line with every other oil-extracting state and charge obscenely rich oil companies for taking our natural resources out of the ground.

With gasoline prices soaring, legislation to slap the oil industry with higher taxes died in the Assembly late Wednesday in the latest party-line battle over the state’s beleaguered budget.

Republicans killed the two-pronged oil tax proposed by Assembly Speaker Fabian Núñez, which they considered a threat to the state’s economy as well as political gamesmanship meant more for public relations than problem solving.

In turn, Núñez said at a news conference before the vote that the GOP could not continue to push “knee-jerk, no-tax rhetoric” without coming to grips with its effect on schools and other public services.

Speaker Núñez is in a tough spot, faced with a recalcitrant Yacht & Oil Party who is wedded to failed ideology.  The best he can do is to continue to offer these proposals, argue forcefully for them, and hold the opposition accountable for their votes in November.  On a blogger conference call earlier today, the Speaker talked about PTA members from red districts coming to the Capitol to protest these extreme education cuts.  The Yacht & Oil Party will absolutely face a backlash if they keep this up.  Democrats are making the differences clear, and that’s the best we can hope for at the moment.

Another thing – what exactly is up with this argument from the Yacht & Oil Party that the Speaker timed his proposal to coincide with layoff notices from school districts?  I didn’t realize that POLITICS was out of bounds in the political arena.  Of course it coincided; the only way you get people in this state to pay attention to what’s happening in Sacramento is by taking advantage of opportunities to show the stark philosophical differences.  Saying that “you’re not allowed to tell people the consequences of our policies” is a loser argument for a loser party.

Lieutenant Governor John Garamendi:

“Our state and its people cannot prosper in the 21st century if we force our schools to live on a fiscal starvation diet,” Garamendi said Thursday at Sacramento City College.

Assemblymember Dave Jones:

However, in doing so my Republican colleagues in the State Assembly decided that while they were prepared to cut education funding and health care for the poor, they just couldn’t stomach closing the yacht tax loophole. Too painful, apparently, to the Thurston Howell IIIs of the world. So they refused to provide the 2/3 vote necessary to close the yacht tax loophole. In doing so they robbed the poor to help subsidize tax avoidance by rich yacht owners. Are those the values we want reflected in our state budget? Those aren’t my values, that’s for sure.

Jack O’Connell, who is nominally in charge of education for the state, should find something else to emphasize.

UPDATE by Julia: Watch the video on the Yacht Party.

UPDATE by Robert: Arnold’s now getting in on the follies – the SacBee reports he said he agreed with Elizabeth Hill’s call to close $2.7 billion in tax expenditures but then backtracked a little while later.

Judy Lin at the SacBee took a look at the Yacht Party’s bankrupt arguments about how we simply have to enable tax evasion or poor people are going to starve.

“The immigrant who sprays fiberglass on a boat will lose his job. The small-business owner who installs avionics on an airplane will lose his business,” state Sen. Dennis Hollingsworth of Temecula told GOP members during a Feb. 15 floor debate. “Those are the people who are going to be affected by this. It’s not the rich.”

You know, never does a day go by that the Yacht Party doesn’t show its deep respect and concern for immigrants.  Somehow, though, I have the sneaking suspicion that they’re being, what do I call it, completely disingenuous.  The Legislative Analyst has correctly described this as tax evasion, the Governor has correctly described this as tax evasion, even the TAX EVADERS have correctly described this as legalized tax evasion.

Chuck Lenert, 57, of Sacramento saved nearly $30,000 in taxes when he bought a used 58-foot Kha Shing motorboat near Victoria, Canada, three years ago. It came with a docking slip in Canada, he said, so it was cheaper to leave it there and pay an attorney $2,500 to ensure his tax status was in order with the state.

“I was just following the rules of the state of California, so why should I pay sales tax?” Lenert said. “I wasn’t trying to do anything but follow the law.”

For a year, Lenert, who sells hardware for a living, would travel every few weeks with his family and friends and take the $376,000 vessel, named Knots and Bolts, around the waters off Vancouver Island to catch crabs, salmon, oysters and shrimp. After a year, he moved the boat to Washington state.

“I would say that the 90-day guys are more cheaters,” said Lenert, who has since brought the boat down to Sacramento. “I had a bona fide use.”

Not that it should even be a question, but contrary to the Yacht Party’s protestations, actually making yacht owners pay their sales tax would have no material effect on sales whatsoever.

The analyst’s report found that a longer exemption period had little impact on manufacturers and sellers because their products sell nationwide.

Tim DeMartini, owner of DeMartini RV in Grass Valley, said the length of the exemption doesn’t affect his business because two-thirds of his orders come from outside California. The average 40-foot big diesel, he said, sells for $150,000.

“It won’t make that much difference to us,” DeMartini said, adding that the impact might be greater for the buyer.

Due to this “conflicting” information, Yacht Party members are just so gosh darn confused about the issue that they’d rather just walk away from it, which has the added benefit of, you know, saving Commodore Ackerman’s yacht tax.

“I haven’t been able to conclude which argument makes the most sense,” said Assemblyman Roger Niello, R-Fair Oaks, who abstained from the vote.

As for Dan Walters’ predictable media “he said, she said” argument, I think there’s a slight difference between yacht owners avoiding sales tax and income tax credits for children for working-class families.  Call me nuts.

Yesterday we got almost a thousand views of this video message from the California Yachting Association, and we shut down the California Republican Party’s phone linestwo days before their state convention.  But I’m not certain that the CRP got the message yet.  They need to hear from us again today.

916.448.9496.  Please call.  Operators are standing by!

In all seriousness, this visibility campaign is of a piece with some contemporaneous attempts at legislative activism.  Yesterday seniors and the disabled descended on the Capitol to protest cuts to the In-Home Supportive Services (IHSS) program.  Low-income community groups are organizing against what they believe is an insufficient state cap-and-trade program that would allow polluting industries to buy the rights to continue to pollute (I’m not sure if I totally agree with them, but it’s an interesting article).  This entire year is going to require this kind of activism if we want to wind up with a state government that doesn’t dismantle its public education system, make health care less accessible and preserve tax avoidance strategies for the wealthy like evading the sales tax on yachts.  These people have to be watched, vigilantly, and through that sunshine will come eventual change, whether they accede to it themselves (unlikely) or we go ahead and take their seats away (likely if we work our butts off).

It’s a pretty solid message.  I think all of us yacht owners out there, or those of us who sympathize with their daily hardships, should give a call to 916.448.9496 and let the state GOP know how much we love them protecting yachter’s interests, instead of those lucky duckie poor people or children or the sick.

Also, the CRP is meeting in San Francisco this weekend.  What a perfect opportunity for yacht owners and maybe even a bunch of people dressed up like yacht owners to confront their members and thank them in the loudest way possible.  Maybe someone should hold up a boom box and play “Come Sail Away” on an endless loop.  I just want to show my gratitude.

Maybe the contact form on the CRP website needs to be flooded with this message, too.  There are a lot of possibilities.  I just want them to know how much yacht owners appreciate them.

YACHT OWNER ALERT: That CRP Convention is at the Hyatt Embarcadero in San Francisco, starting Friday.  Wear your best finery!

UPDATE: I’m going to get out of character know.  Here’s the thing, there’s anecdotal evidence that we got the CRP to turn off their phones.

I got vm and then was transferred to an extension that had no vm. But I’m sending them an email. They can’t get rid of me that easily!

Great idea, dday. We need to band together all over the country to fight these corrupt, incompetent politicians who are giving away our tax dollars to their cronies.

I spent two dollars making this video, and a few hours of online organizing.  And the Republican Party in California turned off their phones.

Let’s keep the call-a-thon going tomorrow!

Piggybacking on Brian’s item about the Speaker acknowledging that cuts will be part of an overall budget compromise, apparently the first concrete proposal has cleared the Senate Budget Committee, and this isn’t meeting halfway, it’s actually mostly cuts.

The Senate Budget Committee, meeting late Wednesday, approved a $1 billion package of emergency cuts to education and other services aimed at preventing the state from running out of cash.

Republicans, saying they had inadequate time for review, did not vote on the package, which cleared the committee with nine Democratic votes. The full Senate is expected to consider the actions Friday.

This is the first in what is expected to be a number of measures on the budget.  This one, closing the $800 million dollar gap in the current fiscal year, had to be executed before the Feb. 23 deadline for the fiscal emergency that the Governor called at the beginning of the year.

The numbers are bleak.  $500 million is coming out of education.  Medi-Cal payments to providers will be reduced by 10%, which will directly impact patients with longer wait times in emergency rooms and diminished access.  And a good deal of other social spending programs will see their budgets frozen.

There weren’t ALL cuts, though.  Dick Ackerman’s precious yacht tax is scheduled for the chopping block.

Democrats also voted to abolish the so-called “yacht tax,” a loophole that allows purchasers of boats, motor homes and airplanes to take possession outside the state’s boundaries and avoid California sales taxes if they leave it out of state for a specified period.

The committee’s Democratic chairwoman, Sen. Denise Ducheny, said that for all the cuts under consideration, “wealthy people who can buy yachts should pay the proper sales tax.”

But that’s the only silver lining, it appears.

The decline of California as a national leader is greased by unfortunate measures like this, which are not the result of bold leadership but foolish priorities and an obsession with antitax rhetoric that leaves the state in a perpetual fiscal hole.  New leadership might alter this a little bit, but really this is about the Democratic caucus rejecting Republican spin and recognizing the structural needs to move the state into the 21st century and ditch its 19th-century budget constraints.