Tax proposition divides labor, business

Alicia Robinson

A variety of the area’s business, taxpayer and labor groups have

lined up on both sides of Proposition 56, the March 2 ballot

initiative that would reduce the vote required to pass budget and tax

bills in the legislature.

The issue also would require legislators to stay in session when

they don’t pass a budget on time and cut off their pay until they do.

It also would create a budget reserve fund.

Proponents say Proposition 56 will end legislative gridlock and

restore stability to the state budget by reducing the required vote

from 66% to 55%, but critics say it’s like giving legislators a blank

check by making it easier to raise taxes.

“Basically the idea is to reform the budget process so that the

budgets will come in on time,” said Jim Rogers, president of the

Newport-Mesa Federation of Teachers.

School districts suffer from late state budgets because they don’t

know how much money they’ll have for the school year, he said.

“School districts are looking at not knowing exactly what’s going

to happen,” Rogers said.

Among those in favor of the ballot initiative are the California

Federation of Teachers, the Service Employees International Union and

the California League of Women Voters.

The issue will streamline budget approval and take some of the

politicking for special interests out of the process, said Judith

Gielow, co-president of the League of Women Voters of Orange Coast.

The league would prefer that budget decisions be made by a simple

majority, but it will support the 55% proposal, she said. Under the

current two-thirds majority rule, a few legislators can use their

votes as bargaining chips to get funding for their pet projects, she

said.

“It’s the minority that’s holding these things up every year,”

Gielow said.

But those against the measure, including business and taxpayer

groups, say it will open the door for tax increases that will hurt

everyone in the state.

“Passage of [Prop.] 56, in my opinion, would not only destroy the

economic recovery that’s going on now, it would throw California’s

economy into a new downward spiral,” said Ed Fawcett, Costa Mesa

Chamber of Commerce executive director.

Some legislators already have proposed taxing commercial

properties at a different rate than residential properties, and other

business-specific taxes would likely be in store if Proposition 56

passes, said Newport Beach Chamber of Commerce Executive Director

Richard Luehrs said.

Another opponent of the measure is 70th District Assemblyman John

Campbell, a Republican who recently filed papers for his own ballot

initiative that would limit legislative budget increases and require

a budget reserve and balanced budget.

“There’s no question had this thing been in effect, say, three

years ago, the tax rates in California would probably be about 25%

higher than they are now,” Campbell said.

Tax and spending increases proposed by Democrats could pass easily

under Proposition 56 because they hold 60% of Assembly seats and more

than 62% of the Senate, he said.

The battle over Proposition 56 is likely to be an expensive one,

with spending by both sides reaching as much as $30 million, Campbell

said.

“The question becomes what do voters think it is,” he said. “If

voters understand it reduces the threshold for tax increases, I think

it’ll lose and it’ll lose handily.”