In an interview with the Sacramento Bee on Wednesday, California Controller John Chiang said lawmakers who fear the prospect of automatic mid-year budget cuts should find alternatives soon: “I say if you don’t like the fact that we may have triggers, then you better offer an alternative, and you should offer that alternative pretty quickly.” Here at the Health and Human Services Network of California, we’ve been fighting the deep cuts to our social safety net and rolling out revenue solutions to the California budget crisis for quite a while now, so we were happy to hear Controller Chiang throw down the gauntlet. California legislators, here is our list of revenue alternatives to Trigger Cuts:
•Treat oil companies the same as every other government in the world and tax their extraction of oil in California: California is the only oil producing state in the world that does not tax oil production. Furthermore, an oil severance fee is imposed on the process of extracting oil from the ground, and is not passed on to producers or consumers. An oil severance fee could bring an extra $1.2 billion dollars to our state.
•Eliminate secret corporate tax loopholes: End the corporate loopholes that let corporations avoid property tax reassessment when properties are sold, bringing $1.7 billion dollars to California. Currently, corporations and companies make liberal use of numerous loopholes that allow them to avoid property tax reassessment when properties are sold (i.e. bank mergers, private equity buy-outs). By splitting the property tax rolls, we can make commercial-industrial property owners pay their fair share to the state – California homeowners have grown to pay a far larger share of property tax in the state since Proposition 13, and we need to correct that imbalance.
•Reinstate top income tax brackets to 11%: 25% of the income generated in California is distributed among the top 1% of the state’s wealthiest earners. At a time when unemployment levels are skyrocketing and the state is facing yet another multi-billion dollar budget deficit, reinstating the top income tax brackets to 11% would give the state’s economic recovery a powerful kick-start of about $4 billion dollars.
•Smart savings from Corrections: California could save an additional $1 billion by implementing sustainable and common-sense reductions to the state’s corrections budget — without posing a threat to public safety. Options include releasing 1,500 of the sickest, non-violent offenders, halting additional prison construction, as well as others.
•Apply jobs test to unsuccessful & costly corporate tax breaks: Enterprise zones and other corporate subsidies have demonstrated absolutely NO impact on job creation/retention in California. By eliminating widely discredited enterprise zones, favorable treatment for like-kind exchanges, water’s edge tax havens and other unjustified tax expenditures, California could generate an additional $1 billion in revenues.
•Mandatory Single Sales Factor: Modifying existing law that allows corporations in California to choose how their profits are taxed. Require corporations to use a “mandatory single sales factor” – based on the percentage of sales made within California. This would bring in an additional $428 million to help fix our budget crisis.
These are just a few of the many revenue solutions we have in California to protect our social safety net, help families weather this recession, and return the state to prosperity. Deep cuts to essential health and human service programs will no longer work. We have tried it for years and it’s a losing proposition for California’s families, schools, health, jobs, and economy. These trigger cuts will lead to more lay-offs, foreclosures, and reduced economic activity in California. Republican legislative leaders blocking reasonable tax alternatives are only furthering the economic downturn. It’s time to reinvest in California, revitalize our economy, and find those revenue solutions.
The Health and Human Services Network of California is a broad coalition of organizations fighting on behalf of California’s families, seniors, people with disabilities and others for a California Family Recovery Budget – one that creates and maintains jobs, provides a strong safety net for where there are not jobs and brings in state and Federal funds for the relief of our struggling families.