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No Way Around State Cuts

January 30, 2003

Give state lawmakers credit for making a start Tuesday toward fixing the state's terrible fiscal dilemma. The debate has, however, focused too quickly and too sharply on whether the Legislature should restore the vehicle license fee cuts of the last four years.

The state Assembly's package of budget cuts, sent to the Senate on Tuesday, is conditioned on also raising the so-called car tax -- a traditional source of money for local government -- back to 1998 levels. Gov. Gray Davis doesn't want to increase the car tax. It might jeopardize other tax hikes he wants by giving grist to Republican lawmakers who adamantly oppose any tax increase, even though they have declined to produce a realistic plan of their own.

The car tax must not become the life-or-death political struggle of the bigger budget picture. The more important question is whether the state should take away from local government the $4 billion in revenues provided in compensation for the car tax -- one of Davis' chief cost-cutting proposals. That is far too much for hard-pressed cities and counties to lose, a virtual repeat of the budget crisis of the early 1990s, when the state took away more than $3 billion in local property tax revenues.

The car tax increase should remain an option, but it won't solve the state's budget problem. In fact, it won't put a penny toward closing the gap if it is turned over to local government, as it should be. The governor and the Legislature must seek broader solutions, such as expanding the base of the state sales tax to services, which would prevent a rate hike and, once the economy recovers, allow a reduction in the state's already high sales tax rate.

The first step, however, should be meaningful budget cuts -- the kind that powerful special interests, including education, prisons and health care, will howl about. But that's where the big money goes and that's where savings are to be found.

Assemblyman Tony Strickland (R-Moorpark) complained Tuesday that Democrats were cutting vital programs while refusing to do away with unnecessary boards and commissions such as the Integrated Waste Management Board, which offers cushy $100,000-a-year jobs for former legislators. Never mind that the board was created by a Republican governor and has benefited pols of both parties. Such boards should be eliminated, an important symbolic move. But they're trivial in terms of dollars and cents.

Nor should lawmakers be fighting over whether the 17-month shortfall is the $26 billion estimated by the nonpartisan legislative analyst or the $35-billion figure of the governor's finance department when they can't even agree on $10 billion in cuts. The shortfall will be known to the dollar in May when final tax collection figures come out. Higher taxes will have to be part of the solution. But first the focus has to be on cutting as much spending as possible, then cutting more.

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