Summer 2003

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Cal-Tax Commentary 

Larry McCarthy is president of the California Taxpayers’ Association.

The day before we celebrated our nation’s birthday the proponents of the so-called Budget Accountability Act stood on the steps of the State Capitol chastising lawmakers for not completing a budget on time, a worthy criticism with which we agree. But while one hand was pointing blame, the other was offering the Legislature – the target of their criticism – a blank check to spend even more. This ironic display of bait and switch is playing out as backers of this deceptively titled initiative proposal gather signatures to place it on the March 2004 ballot.

Actually, a better name for this proposal that shamelessly attempts to capitalize on the state’s fiscal miseries to further the proponents’ tax-and-spend agenda would be the Blank Check Initiative. It would open the door to uncontested tax increase after tax increase after tax increase. There would be less accountability, not more, when it comes to raising taxes. Lowering the vote threshold from two-thirds to 55 percent for tax increases would only open the floodgates to higher taxes and more runaway spending.

The measure would trick voters to ease vote requirements for taxes by offering provisions to dock legislators’ pay if they fail to produce a budget on time and create a rainy day fund. Sure, these are attractive ideas. Unfortunately, the initiative sponsors want voters to focus on these reforms while they pursue the one thing they want – a blank check – by reducing the vote requirement for new taxes. It would remove a time-tested safeguard that helps minimize unreasonable tax increases. And initiative sponsors well know, in the ballot booth, you cannot pick and choose between initiative provisions – so while you might like one section and not another, it’s “yes” or “no” on the entire proposal. This initiative is a cynical trick by the spending lobby, led by public employee unions, to get approval of vast new taxes to paper over the budget deficit.

There’s no question our state is in trouble. But we are in this mess because of overspending and mismanagement of the state budget. Passage of the Blank Check Initiative would only institutionalize that out-of-control budget process. A blank check to the very politicians who spent us into debt only compounds the problem.

In the current legislative session alone more than 100 tax and fee increases were proposed, totaling nearly $65 billion. Income tax increases, sales tax increases, surcharges on everything from childcare to telephone service to insurance to beer to diapers. You name it, and there is likely a tax increase waiting to be passed. The car tax has tripled and there is a proposal in the legislature that would slap consumers with a billion-dollar-a-year hidden gas tax – an increase that would not even benefit transportation. These proposals are just for this legislative session. Passing the Blank Check Initiative gives Sacramento your blank check forever.

Californians deserve more for the hard-earned taxes they already pay. The budget process in Sacramento is out of control and unaccountable. The answer to California’s budget crisis is obvious to most taxpayers: It is to improve the allocation of existing tax dollars that are more than enough to pay for quality schools, public safety, highways and critical programs for this state’s poor.

When you overspend your credit card, most of us don’t simply apply for a new credit card. Instead, we cut unnecessary spending, find new efficiencies, start paying off our debts and learn to better manage our money. But Sacramento doesn’t seem to understand this basic principle. State spending actually doubled between 1994 and 2000. Do we really want to give these same politicians a blank check to spend more?

Taxpayers have few protections against unjustified tax hikes. But one such provision was put in the Constitution a quarter century ago when voters approved Proposition 13. One of the elements of Proposition 13 is that it required that all state tax rate increases be approved by a two-thirds vote of the Legislature. The Blank Check Initiative would undermine that threshold by eliminating full debate and avoiding detailed examination of the consequences new taxes would have before implementing them. We need to wisely manage and budget our resources, not raise taxes every time the state’s checkbook gets tight.

Voters can challenge those behind the Blank Check Initiative by not supporting the signature gathering effort and making sure that friends and neighbors understand the cynical deception this initiative represents. This initiative is not reform; it is a blank check for the politicians who have already spent us into debt and created a budget crisis.