SACRAMENTO — Still smarting from the latest budget fight, Gov. Arnold Schwarzenegger and legislative leaders are gearing up for a new battle -- a push to ease the state's chronic boom-bust cycles by radically altering the way we pay taxes.
A 14-member panel of political appointees dubbed the Commission on the 21st Century Economy has been meeting quietly since the start of the year to ponder potentially revolutionary changes.
As envisioned by Schwarzenegger and legislative leaders, the notion was to bring together a collection of mostly apolitical wonks to settle issues that deeply divide the Capitol.
It has not been easy.
The commission's final report, originally slated for release in April, has been put off as these get-it-done intellectuals risk descending into the partisan gridlock that plagues the Legislature.
They've talked of a carbon tax, boosted business property levies and rainy-day funds. They've wrestled over scrapping taxes on sales and corporations, substituting a broad business toll to spread the fiscal burden. They've haggled over a flat tax on income.
Although nothing is settled, Schwarzenegger has tried to light a fire under the process. He recently called for the commission to wrap up a final report by Sept. 20 and asked that the Democrat-dominated Legislature convene a special session to consider what to do next.
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'A critical moment'
"I'm hopeful," said Gerald Parsky, the Los Angeles businessman and former University of California regent who is the chairman of the tax commission. "I think we have a critical moment in time. . . . The people of California want policymakers to come together and act."
Others urge a more cautious process before launching into what they see as a massive statewide tax experiment that could produce both big winners and big losers.
"The devil is in the details -- and so is Santa Claus," said Richard Pomp, a University of Connecticut law professor appointed to the commission by Democratic leaders.
Many conservatives see altering the tax system as long overdue, a way to ease the volatility that has sent tax revenues soaring during good times and plummeting during bad.
But liberals worry that changes might disproportionately benefit the wealthy in a state that already has a yawning gap between its richest and poorest residents.
With repeated budget deficits dogging them, Schwarzenegger and Democrats agreed late last year to set up a commission to find middle ground.
