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Swallowing Hard on Budget

March 23, 2003

Nevada Gov. Kenny Guinn is a Republican who has a budget crisis much like California's, although on a smaller scale. But Guinn did not cringe at finding the right balance in reaching solutions. In his State of the State address, Guinn declared, "I refuse to balance this budget on the backs of our children, senior citizens and the poor." He proposed a tax increase of nearly $1 billion to balance a two-year budget of $4.81 billion -- a 20% hike, mostly on business. Guinn's tax bills have not zipped through the Legislature, but at least he is backed by both Republicans and Democrats. This is leadership and cooperation at work.

Certainly no one is suggesting a 20% business tax hike in California. But Nevada does provide one example that this state must follow: It has made tough and unappealing choices. So-called leaders in Sacramento cannot keep avoiding them. On this side of the Sierra Nevada, Gov. Gray Davis and Democratic legislative leaders have supported competing tax hikes. Republican legislators refuse to discuss any tax increase to help close the state's budget gap, as much as $35 billion over the rest of this fiscal year and all of the next. They insist, irrationally, on budget cuts alone but have no coherent plan.

Even when the Assembly passed a modest $3.3 billion in cuts for this fiscal year (and an additional $4.8 billion the next year), 10 Assembly Republicans voted no or did not vote. Some GOP votes are needed to pass the budget and to increase any state tax. Republican leaders seem to think they can escape responsibility in this crisis. They can't.

And Democrats need to unite on a plan. Assembly Speaker Herb Wesson (D-Culver City) and Senate President Pro Tem John Burton (D-San Francisco) are moving toward consensus on a proposal for fewer cuts in public health coverage and reinstatement of the "car tax," the vehicle license fee. Their view of the crisis is expanding, perhaps in response to the crusading of state Treasurer Phil Angelides for broader -- if temporary -- tax increases so that public schools and essential infrastructure can be spared harmful cuts. It is hard to argue with Angelides that, whatever the budget situation, the strength of the future economy depends on the education of today's children. Yes, there are savings to be found in the schools, such as easing overly strict rules about 20-student classrooms, but wholesale cuts are another matter.

Angelides talks of the need for alcoholic beverage levies and a wider-based sales tax, among other things. Because speed is essential, Davis should immediately trigger reinstatement of vehicle license fees, raising an additional $4 billion a year and maintaining the state commitment to local government.

Spending cuts must be part of a budget deal. But Davis and other political leaders are failing to make the case for preserving core missions of the state, which will require at least temporary tax increases. That debate cannot be delayed further. The state has lost $1.3 billion in budget savings since January by failing to make timely cuts. It needs to muster political will.

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