Our view: Trifecta of trouble from the Legislature
It's shaping up as a bad season in Sacramento. A legislative committee this week killed a badly needed bill to overturn the Draconian AB32 — the 2006 Global Warming Solutions Act — with its onerous costs and regulations that will punish nearly every sector of California's economy, certainly aggravating already dire conditions. Another committee voted to impose yet another tax, a 12.5-percent levy on extracting oil and natural gas that will drive up fuel costs and discourage energy production while at least 12.3 percent of Californians are out of work.
To cap the trifecta of woes, state Legislative Analyst Mac Taylor said California has virtually no chance of getting $6.9 billion from Washington, D.C. Not that the bailout is a good idea, but Gov. Arnold Schwarzenegger is banking on it to partially fill a $19.9 billion budget deficit over the next 18 months.
Can things get worse? It's only January.
California already is one of the most regulated and heavily taxed states. For years the governor and Legislature have played fast and loose with finances, moving money from where it was intended to be spent to shore up deficiencies elsewhere. The Legislative Analyst's Office repeatedly complained about the governor's overly optimistic revenue and savings projections.
This year, Taylor said it's "very unlikely" Washington will rescue California. Meanwhile, full costs of implementing the Global Warming Solutions Act are yet to be felt as bureaucrats draft regulations that will devastatingly burden businesses and consumers, according to a Sacramento State University study.
The study estimated $52 billion annual costs to consumers would result in $149 billion of lost output, and $63 billion costs to small businesses would result in $182 billion of lost output. Those hardest-hit, the study said, will be professional services, manufacturing, arts, entertainment and recreation sectors. That translates to about 1.1 million jobs in small businesses.
The oil-extraction tax faces Republican opposition, but the GOP was unsuccessful last year warding off "temporary" sales, car and income tax increases that fell short of balancing the budget when other revenue and savings didn't materialize. Those temporary taxes expire this year. Meanwhile, state Controller John Chiang said he will restore full pay to California's correctional officers to comply with a court order that found the governor improperly imposed unpaid furloughs last year during which the prison guards said they worked without pay. At issue, about $40 million a month.
Taylor suggested the state could raise revenue by increasing various fees, eliminating some tax credits and extending last year's reduction in income-tax credits for parents with dependent children. Yes, it probably can get worse.
