California Beats Its Own Record for Budget Tardiness

Today, California is set to exceed its own prior record with regard to budget tardiness, as it heads into its 85th day without a budget.

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Legislative leaders flew to Los Angeles Wednesday to meet with an ailing Arnold Schwarzenegger, who places blame for the impasse with the Legislature, whose Democrats have a budget proposal of their own–one packed with tax hikes.

Here are just some of the increases the Democrats are seeking:

  • A $1.8 billion middle-class tax increase focused on personal income taxes and car tax to be accomplished via a “tax swap”;

  • A $1.2 billion business tax hike to be accomplished via the delay in use of business Net Operating Loss deductions and “Carryback” provisions;

  • An $842 million tax increase on oil production.

California Democrats are also reportedly looking to incorporate a provision into the budget whereby out-of-state, online retailers who advertise with websites based in the state would be forced to collect and remit California sales tax. This is despite their prior attempt at getting such legislation passed– which some experts say could have been done more simply outside of the budget– having failed, and despite such a tax plan being unconstitutional.

Both chambers of the legislature need to approve any budget by a 2/3 margin in order for it to be passed. Given the rather large $19 billion budget deficit, the current distaste for higher taxes, and the procedural impediments to pursuing them, some political observers are wondering when proposals like these will be abandoned in favor of more prudent spending cuts.

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