(February 6, 2004) The most dangerous and deceptive measure on the March ballot is Proposition 56.
The California Chamber of Commerce is leading a broad and diverse coalition in opposition to Proposition 56 because the measure makes it easier for the Sacramento politicians to raise taxes on all Californians.Buried in Proposition 56’s so-called 'budget reform' language is the provision with the furthest-reaching consequences: an elimination of the requirement that any taxes be approved by a two-thirds vote of the Legislature.
Elimination of this 'check and balance' on the Legislature that mandates bipartisan support for tax increases will give a 'blank check' to Sacramento politicians who spent California into the current budget crisis.
‘Blank Check’ for Politicians
That provision is why the Chamber and other opponents of Proposition 56 call it the 'Blank Check Initiative.' Proposition 56 simply makes it easier for the Legislature to increase income tax, sales tax, property tax, car tax and every other state tax, year after year, without justification or bipartisan consensus.
Voters put the two-thirds legislative vote requirement into the state Constitution with Proposition 13 to rein in runaway taxes and force politicians to reach a bipartisan consensus with strong justification for their position before they could increase taxes. Proposition 56 removes that taxpayer protection from the state Constitution.
Even with the two-thirds requirement, Californians pay $130 billion in state and local taxes every year. For a preview of what tax levels might be without the two-thirds protection, consider the tax and fee increases proposed by state politicians just last year. In comparison to a state General Fund budget of $71 billion, in 2003 the California Legislature sought to increase taxes $65 billion. The two-thirds vote is the only reason these tax burdens are not the law today.
Given the willingness among legislators to support tax and fee increases, it’s no surprise that California ranks as the 'worst-performing state' in a USA Today rating of how the 50 states spend, tax and balance their budgets. By making it easier for the Sacramento politicians to approve unlimited new tax increases, Proposition 56 will only institutionalize over-spending and mismanagement.
Economic Fallout
Another drawback of Proposition 56 is the devastating impact it would have on the California economy. Increasing taxes on individuals and employers would serve only to drive more companies out of business and out of state, taking jobs with them. New job providers and investors would look elsewhere.
The jobs impact, in turn, would ripple through the economy and the state budget. Jobs and the income tax revenues they produce are California’s top resource for funding the budget. Fewer jobs and more families on the unemployment rolls will mean more costs for the state, leading to further cuts in education, health care, law enforcement and other important services.
Proposition 56 = Taxes
In the coming weeks before the election, you’ll be hearing a lot from supporters of Proposition 56 highlighting other, more popular features of their proposal. For the future of the California economy, you need to look beyond that rhetoric and persuade everyone you know to look deeper as well, because even though this measure may include some popular provisions, voters cannot 'pick and choose’' their way through this measure. Ultimately, a 'yes' vote on Proposition 56 means higher taxes for every Californian.
In the final analysis, how you vote on Proposition 56 boils down to this question: do you really want to make it easier for Sacramento politicians to raise our taxes? Like the California Chamber, I’m sure your answer is a resounding 'no!' Vote 'no' on Proposition 56.
Allan Zaremberg is president and chief executive officer of the California Chamber of Commerce.