Senate Republican Leader Dave Cogdill

The Issue: California’s budget has a revenue shortage that is projected to be over $11 billion.  Some in the Legislature are hoping that the termed out Republican members of the Legislature will give in to tax increases.  The Republicans have been very effective at keeping taxes to their current levels and shouldn’t give in to pressure to raise taxes.

Governor Arnold Schwarzenegger has called the California Legislature back to the Capitol to have a special session prior to the end of the current legislative term.  Some speculate that his hope is that elected officials who aren’t coming back to Sacramento will be willing to compromise their values and approve tax increases to balance the budget.

There are few proposed solutions on the table, but some are being discussed:

1. Arnold is proposing a 1.5% sales tax increase to help close the budget gap in addition to a spending cut from civil service pay.
2. Senate President Pro Tem Darrell Steinberg is proposing a voter initiative to increase taxes.
3. Senate Republican Leader Dave Cogdill is proposing spending cuts and incentives for businesses who hire the unemployed.

Analysis: The only one of these proposals that will solve the long term problems of our budget is Senator Cogdill’s.  Taxing those who are supplying the drastically depleting revenue stream is biting the hand that feeds you.  A build up of the private sector is what will help this economy and Dave Cogdill is the only person proposing a change that amounts to that.

The Republicans need to resist the urge to borrow or tax our way out of this problem. That is a band aid that will ultimately harm our economy.  Only by cutting spending will California finally live within it’s means.  This economy is going to get worse before it gets better.  After the holiday season is over, spending will plummet.  We need incentives to jump start our private industry in order to employ people and stimulate our economy through production.

No new taxes.