The Assembly Revenue and Taxation Committee continued its series of hearings on the state tax commission's recommendations October 14, taking testimony from several people who said the commission's plan is not feasible. As was the case in the committee's previous two hearings, members of the committee appeared to be far from supporting the commission's plan.
Assemblyman Charles Calderon, who chairs the committee, called the proposal submitted by the Commission on the 21st Century Economy a "starting point." Assemblywoman Fiona Ma described it as "very, very thought-provoking."
There were relatively few questions from the five committee members who attended the hearing, and many of the questions simply asked witnesses to expand upon their testimony. Still, there was a sense that committee members may be leaning more toward taxes that were not in the commission's report – such as a split roll property tax, sales tax on many services, and taxation of Internet purchases – than in the taxes suggested by the bipartisan commission.
Ms. Ma directly endorsed several alternative taxes, including a split roll, sales tax on services, and tax on Internet purchases. She also said she favors a two-year state budget and a strong rainy day fund.
None of the witnesses at the hearing expressed support for the commission's plan as written.
A panel of academics dissected the commission's plan and answered questions posed by the committee. The panel seemed to agree that the tax commission's proposed business net receipts tax (BNRT) is too much of an unknown, and that it would not be a good idea to replace the state sales tax and corporate tax with this untested new form of taxation. There was agreement, however, that the commission's recommendation for a strong state reserve – a "rainy day fund" – was a good idea that would dramatically improve the state's budget process.
Economist Stephen Levy of the Center for Continuing Study of the California Economy said the rainy day fund is critical. He said spending volatility, not revenue volatility, is the issue that should be addressed.
In related news:
Did Commission Violate Open Meetings Law? Laura Mahoney of the Bureau of National Affairs reported October 9 that the tax commission "may have violated a state open meeting law that requires deliberations and votes on the final outcome of their work to be made in public, based on communications between members obtained by BNA."
The story describes e-mails in which Commissioner Christopher Edley Jr. solicits input from several commissioners in an attempt to build support for a proposal. Commissioner Fred Keeley responds by warning Mr. Edley that the e-mails could be considered a "serial meeting," which is banned by the open meetings act. Mr. Edley, dean of UC Berkeley's law school, reacted with a testy e-mail in which he said he believed the commission was not violating the act because a quorum was not engaged in discussions together. "As far as I know, that's not happening," Mr. Edley wrote. "Having different conversations with different people on different issues is not a serial meeting. I'm a lawyer too. I've read the statute."
Peter Scheer, director of the California First Amendment Coalition, told BNA that even if the commission did not change the final report based on serial meetings, the fact that the meetings or communications took place at all still constitutes a violation of the state's open meetings act.
Cal-TaxReports, October 19, 2009
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