FROM SACRAMENTO — Republicans always use it as ammo in tax fights: The claim that Gov. Pete Wilson's tax increases in 1991 backfired.
Raising taxes prolonged the national recession in California and wound up depressing state revenue. At least that's what Republican lawmakers tell themselves and their antitax rooters.
The facts tell a different story. They point to the recession lingering longer in California because this state was especially hard hit by cutbacks in military aircraft production and by base closures.
It was our share of the peace dividend after winning the Cold War. America didn't need to spend so much anymore on military armaments. And much of it had been spent in California, particularly when Californian Ronald Reagan was president.
Republican Wilson's tax increases didn't reap as much revenue as had been projected. But they netted a lot more than Sacramento would have collected without the hikes.
I thought of this Wednesday as somber Schwarzenegger administration officials outlined the depressing lowlights of the governor's proposed budget for the fiscal year that begins July 1.
Actually, the governor and Legislature haven't even balanced the current $104-billion general fund budget. It'll be about $15 billion short on revenue by the end of the fiscal year unless the governor and Legislature get their acts together. Add that to the projected red ink for 2009-2010 and it totals nearly $42 billion over the next 18 months.
State Finance Director Mike Genest announced the governor's solution: $17.4 billion in spending cuts and $14.3 billion in tax increases. Also, borrow $5 billion against future lottery earnings, issue $4.7 billion worth of IOUs and borrow $360 million internally.
The spending cuts -- on top of $11 billion in 2008 -- would include shortening the K-12 school year by a week and paring state government by 10%.
The biggest tax increase would be on sales: 1 1/2 cents on the dollar. In addition, the sales tax would be extended to vehicle and furniture repairs, veterinary services, amusement parks, sporting events and golf.
Also, the income tax credit for dependent children would be reduced to $103 from $309, same as it is for the single tax filer. That kiddie credit is a relic of a decade ago when state government was rolling in money and politicians stumbled all over themselves to spend it all, either on new programs or tax cuts.
