Dems Propose New Way to Raise $13B

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In the "There's More Than One Way to Skin a Cat" file, state Senate Democrats have opened a new door to capture the $12 billion needed to balance the state budget without any additional cuts.

Senate President Pro Tem Darrell Steinberg has introduced a bill that would allow counties and school districts to place before the voters proposals for additional income taxes, sales taxes and motor vehicle fees, as well as excise taxes on liquor, tobacco, oil extraction, soft drinks and medical marijuana. Each category would have an outside limit, for example, cigarette taxes could be increased by no more than $1 per pack and wine could be taxed by no more than 5 cents per 5

In effect, Steinberg's bill would reframe the revenue search from the state level to local governments. Senate staff members have concluded that if every county imposed the maximum levels on these fees and taxes, $13 billion would be raised annually -- remarkably close to the amount sought by Gov. Jerry Brown through temporary five-year extension of income, sales and motor vehicle taxes.

Numbers aside, the Steinberg bill differs from Brown's approach in three respects. First, the bill has no sunset clause -- that is, it would be permanent until changed by the Legislature. Second, it spreads the taxing ability to areas not proposed by Brown. Third, and most critical, the bill requires a simple majority to pass in each house, a much lower threshold than the two-thirds vote that has escaped the Democrats by two votes in each house.

Republicans are furious over Steinberg's proposal. Not only would the bill allow counties and school districts to place all kinds of proposals before the voters, but the new revenue streams could vary wildly from county to county.

Democrats aren't so hot about the idea either because it has the potential to create vast differences in services among the counties and school districts. But as much as Democrats don't want to cut any more from the state budget than the $14 billion they have already trimmed, they may choose this as the lesser of two evils.

Whether Steinberg is serious about his proposal or is using it just to smoke out Republican support for the statewide vote remains to be seen. One fact is clear -- the bill has already passed its first test in the Senate Government and Finance Committee, providing some early momentum. For that reason alone, legislators will need to take it seriously.  

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