Dec. 15, 1995
Contact: Ron Roach (916) 441-0490
SACRAMENTO -- If you're looking for a theme for 1996, why not The Year of the Big Decisions? It just may fit.
Let's look ahead to the elections. California ballots will be loaded with controversial issues in March, and probably in November as well.
On the March 26 presidential primary ballot, for openers, are three initiatives which promoters say are needed to rein in an out-of-control civil justice system, or tort reform. Another measure would authorize $2 billion in seismic safety bonds for California's freeways and bridges.
On the November 5 ballot, depending on the success of initiative drives to qualify, could be these propositions: a consolidated flat tax; a restriction on benefit assessments, coupled with a restated constitutional requirement for a two-thirds vote of the people to allow a special tax, and a majority vote on general taxes; and taxes on alcoholic beverages and tobacco to fund education.
Also in the fall, there may be major bond proposals for education and/or prison construction. There could be a counterattack by trial lawyers against the tort reform measures on the March ballot.
Meanwhile, revolutionary change may be proposed by the California Constitution Revision Commission. Its final recommendations to the Legislature are due next month, and could include statewide ballot questions in November to amend Proposition 13, the 1978 tax-cutting initiative.
There have been preliminary indications from the commission that proposals will include ways to make it easier for local governments and school districts to raise taxes and gain authorization to market general obligation bonds that are backed up by sources of revenue.
Other hot-potato issues in 1996 include efforts to hold government to standards of performance, hopefully reducing waste; modified prevailing wage rules to follow the lead of the federal government and stretch public works construction dollars, and competitive service delivery, whereby the public and private sectors compete for state contracts.
Another decision facing our policy makers in Sacramento relates to what appears to be a growing surplus of tax revenues. During the first four months of this fiscal year, personal and business income taxes and sales taxes from an improved economy were more than $700 million above last summer's budget projections. The unexpected revenue probably will exceed $1 billion for the fiscal year.
This additional revenue will require big decisions by Governor Pete Wilson and members of the state Legislature. They must choose whether to lower taxes, increase spending or build an emergency reserve, or to what extent can they, or should they, attempt to do all three?
Will policy makers set a course that improves the state's ability to compete both globally and with other states that have lower tax rates and fewer regulations?
Competitive tax structure and efficient government services are essential to the long-term viability of California's economy. Decisions in 1996 loom large in these areas. They could have a lasting effect on the state's economy.