COMMUNITY COMMENTARY:

Gov. Schwarzenegger recently hinted that this year’s budget proposal was intended to “rattle the cage.” What he meant by this is open to debate. However, judging from initial reactions, it’s safe to say that Californians are definitely rattled.

The governor’s proposed budget contains some unpopular suggestions — closing dozens of state parks and cutting state spending across the board — but it should be remembered that this is just the opening salvo in what is sure to be a difficult budget year.

There will be the inevitable push back from Democrats. Just last week, Senate Pro Tem Don Perata insisted tax increases will be used to balance the budget. The problem with tax increases is that Californians are already overtaxed. Any new tax increases will only damage our already sputtering economy, not solve the problem of California’s chronic budget deficits.

This high tax burden affects not only individuals, but also businesses in California. According to the most recent data available from the U.S. Census Bureau, Californians pay an average of $2,392 in state taxes, the highest per person of the eight largest states. You can be sure that increasing the high taxes businesses already pay will only make employers less likely to either remain in California or expand their operations in California.

It is unrealistic to assume that the targets of tax increases — be they high-income earners, businesses, smokers or consumers in general — will just stand still and take it on the chin with a grumble of resignation.

People do react to tax increases or the threat of one. They move to Nevada. They quit smoking. They reduce the amount of their consumer spending. They relocate their businesses to out of state. Just last week, Volvo’s U.S. headquarters and its employees located in Irvine pulled up stakes and are now moving back to Rockleigh, N.J.

Some will say, “If that’s the inevitable price to be paid for refilling the state’s depleted coffers, then so be it.”

Here’s the rub — higher taxes don’t guarantee increased revenues over time. That’s because prohibitive tax rates tend to drive businesses away, limiting future revenues and taking jobs with them. Business tax savings are one of the primary reasons for large-scale job relocations from one U.S. state to another.

State revenues are expected to grow 2.1% next year. In fact, state revenues have gone up more than $27 billion during the last five years.

Democrats may be content to raise taxes and call it a day. I am not. It is just plain wrong to punish California taxpayers for Sacramento’s out-of-control spending. It has to stop. That’s the only way we will ever solve the budget crisis.

Democrats need to get beyond passing the buck with tax increases. Instead, we need to implement tax incentives that promote long-term and sustainable economic growth and once and for all limit spending to the amount of our actual revenues.

SEN. TOM HARMAN represents the 35th District.