EDITORIAL: California taxpayers may catch a break this year

Orange County Register (CA)

May 6—California taxpayers may catch a break this year as state revenue stages an impressive rebound, while progressive Democrats find their most ambitious proposals running aground on the rocks.

No doubt many progressives thought the Legislature's Democratic supermajority, along with the party's control of every statewide office, would enable smooth sailing for liberal policy priorities. Instead, some of the most ambitious bills, and the tax increases that would accompany them, have been stalled.

Assembly Bill 310 is an unprecedented tax on "extreme wealth" that aims to collect an annual percentage of the global assets of the wealthiest Californians. It failed to get out of the Assembly Revenue and Taxation Committee.

AB 65 is a bill that proposed a universal basic income of $12,000 per year for state residents earning less than twice the median income in their county of residence. It narrowly passed its first committee, but lawmakers said it will not move forward this year. A "funding source," also known as a tax increase, was stripped out of the bill before the committee vote, leaving the bill's author struggling to explain how all those UBI checks would be paid for.

AB 1400, a wildly expensive proposal to replace all private health insurance policies with single-payer government health insurance, was quietly shelved.

It's noteworthy that these bills were halted at a time when the state is enjoying a surprising rebound in revenues after last year's pandemic projections of fiscal doom.

The Department of Finance announced on April 23 that state revenue for the first three quarters of the current fiscal year is $16.7 billion ahead of projections. For the month of March alone, the state collected $2.3 billion more than the $8.9 billion that was predicted in the governor's January budget.

Property tax collections are up, too. The State Board of Equalization released its 2019-2020 Annual Report showing that property tax revenue to schools rose from $38.1 billion in 2019 to $40.5 billion in 2020. In addition, local governments collected $34.9 billion, up from $32.7 billion.

These numbers should put to rest the perennial charge that Proposition 13 is hurting schools and local governments. Property tax revenue rises steadily under Prop. 13. If it's never enough to meet the escalating demands of public employee unions, or the wish-list of big-government progressives, that may be a demand-side problem.

It's good news for taxpayers that state revenues have strongly rebounded, and it's good news that the Legislature is not rushing headlong into adopting huge new entitlement programs. Talk of tax increases should end, full stop, in a state that already has the highest income tax, sales tax and gasoline tax in the nation.

There's another factor in play this year that acts as a restraint on the tax-and-spend impulse: the looming recall election. It's unlikely that Gov. Gavin Newsom will want to sign a bill that raises taxes just weeks or months before voters receive a ballot that asks if they want to remove him from office.

So although things could change, it appears that taxpayers have a good chance of getting out of this legislative session alive and without losing their shirts. It's a reminder that no matter what happened in the last election, the most important election is always the next one.

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