The Issue: California Republicans are holding the line on the California State Budget for the 2008-2009 Fiscal Year based on one major issue: Taxes. While the idea of becoming entrenched along party lines isn’t productive, the Republicans might not be that outrageous in their demands.

The California Government is very large. According to the Governor’s website, the budget expenditures for 2007-2008 were 103 Billion Dollars with a revenue of 101 Billion. For fiscal year 2008-2009 (which is already almost half over) there is a 15.2 Billion dollar shortfall.

Let’s first address the issue of increasing personal income taxes. The current budget proposal includes a tax level increase for families making over $321,000 from 9.3% to 10%, among other taxes. On the surface that seems like a moderate amount of tax to pay. However, remember that families are required to pay Federal income taxes too. for our $321,000 grossing family it amounts to $84,659 or a 26.4% federal income tax rate. This means that a upper-middle class family is paying over $100,000 in income taxes alone every year before this tax increase. If you include their social security, disability, 401k and IRA withholdings these families are only taking home half of their paycheck. There has to be a line drawn somewhere and the Republicans are drawing it.

Now I am not saying that the Republicans have the matter figured out just right: they are proposing borrowing to make up the budget shortfall. Also not a good solution. If the economists could predict a better revenue year in 2009-2010, maybe this would be acceptable, but the housing market isn’t getting any better and it’s revenue is what’s missing in 2008-2009.

The Solution: Cut Spending.

The California Government has a spending problem. A great majority of our budget troubles could be alleviated our expenditures were more in line. Note: This will mean a decline in services in some areas. I’m sorry folks, but that is bound to happen when you need to find 15 Billion dollars. The time for bonds is not when California is getting calls from debt collectors. Let’s build our infrastructure when the economy is booming, not recessing.