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Joe Guzzardi Why Gov. Jerry Brown’s tax plan amounts to extortion

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Joe Guzzardi

Posted: Saturday, May 26, 2012 12:00 am

Last week, California's already staggering $9 billion budget deficit ballooned to $16 billion. Gov. Jerry Brown would like you to believe that the state's economic crisis deepened by $7 billion overnight.

Either Sacramento's bureaucrats can't add, or Brown has been playing loose with facts since he was elected 18 months ago. My money is on the latter.

This year, tax collections have run $3.5 billion below what Brown calculated a mere four months ago. Spending has grown $2 billion above projections. The federal government and court ruling blocked some in-home health care savings Brown anticipated while the California Legislature balked at other cuts.

California, with an economy bigger than Russia's, has lost millions of jobs since the 2007 recession. The vanished jobs cost California, the most populated U.S. state, 24 percent of its revenue. As a result, the new $16 billion deficit puts additional pressure on Brown to increase California's income and sales taxes that are already higher than in any other state.

The news may be even worse. California's Legislative Analysts' Office, a credible, nonpartisan source, claims that $16 billion is too low. According to LAO spokesman Mac Taylor, monies Brown plans to collect from now-defunct local redevelopment agencies don't exist. Taylor pegs California's deficit at $17 billion.

Brown's patchwork solutions are familiar to Californians who traveled this road before. Brown wants spending cuts to health and welfare programs as well as a state worker furlough. If Brown has his way, state employees would work four 9.5-hour shifts and take a pay cut.

In other words, Brown's targets are the sickly, the needy and middle-class Californians scratching out a living in the third most expensive-to-live-in state.

Of course, there would be massive education cuts — unless voters approve Brown's tax plan that would keep the wolves from the door, at least for the time being. Some analysts, and I'm one of them, think that Brown's tax initiative is extortion. Pass it or the children will suffer. Since California already has some of the nation's most poorly educated students, it's hard to imagine how little they'll know if funding is cut.

As for colleges, the choices are equally grim. Less money from the state means probable tuition increases — again!

Another crucial question is what does the never-ending budget deficit mean for California's all-but-dead housing market? A few underpublicized statistics, added together, paint a bleak picture. California's unemployment rate (not seasonally adjusted) is 11.6 percent; the more important U-6 rate that includes those who are marginally employed is about 23 percent. That adds up to more than 2 million Californians out of work.

Another discouraging report found that within the last few weeks, more than 200,000 Americans lost their unemployment insurance; about 40 percent of them live in California. When you're out of work and no longer collecting unemployment insurance, you're not a potential home buyer.

April, historically one of the best months for tax receipts, came in at nearly $2.5 billion below the 2012-13 projections. As long as these economic patterns continue, the tax increases and service cuts they produce will keep housing prices soft.

A few other problems you may not have read about include a Department of Labor finding that California ranked dead last among the 50 states in job creation. This is counter to the national trend; 38 states posted job gains.

Finally, California's well-publicized problems have changed the state's image from one where people yearned to live in to one that should be avoided at all costs.

The first step in a recovery is honesty from government. The mostly successful effort to keep the public in the dark about what's really going on in Sacramento is self-defeating.

Joe Guzzardi retired from the Lodi Unified School District in 2008. Contact him at guzzjoe@yahoo.com.

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