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Darrell Steinberg throws a tax pitch

California Senate leader threatens local levies if GOP won't back Gov. Jerry Brown.

May 12, 2011|George Skelton | Capitol Journal
  • California Sen. Darrell Steinberg, speaking recently at the state Capitol, is pushing his proposal (SB 653) to give local governments and citizens more control over taxing.
California Sen. Darrell Steinberg, speaking recently at the state Capitol,… (Associated Press )

From Sacramento — If it's spring, they're playing baseball, and that means brushback pitches. The batter has an attitude. He's acting arrogant. Toss him a message.

Throw the ball high, hard and inside. Send him sprawling. Make him think.

Senate leader Darrell Steinberg (D-Sacramento) is hurling a few brushback pitches at Republicans and business interests, trying to get them thinking about the consequences of not extending the state tax increases that were passed two years ago.

He's telling them: Don't like state tax hikes? Then we'll allow counties and school districts to raise a whole bunch of taxes on their own.

So far, however, Steinberg's tosses have had the effect of gentle lobs. Republicans aren't backing off their no-tax positions. And the business lobby has just lined a pitch back up the middle, targeting Steinberg's threat with a radio and mail ad campaign.

Steinberg's proposal (SB 653), which easily cleared its first Senate committee on a party-line vote last week, would be revolutionary. It would give local governments and citizens more control over taxing.

This scares business and antitax interests that have had the state Capitol pretty much wired and can conveniently influence California tax policy.

Under Steinberg's bill, counties and school districts would have a huge menu of potential taxes to choose from — subject to local voter approval — in raising money for services, including K-12 education.

For the first time, they could impose local income taxes. They could hike the sales tax and the vehicle license fee. They could boost levies on liquor, tobacco and soft drinks. And they could enact their own tax on oil production. For starters.

This isn't just a Steinberg pipe dream. His bill could be passed on a simple majority vote with no Republican support.

Actually, it seems like policy worth seriously considering. Regions of the state that abhor taxes could reject them and live with the public services they can afford. Areas that put a premium on education, public safety and healthcare for the poor could raise the money needed for those services.

State government could lighten its load while loosening its control over local communities.

And that's just the kind of thinking that worries Allan Zaremberg, president of the California Chamber of Commerce, which strongly opposes the Steinberg bill.

Acknowledging the measure may only be a brushback pitch, Zaremberg says "it's entirely possible that people will fall in love with it. When school districts say it's a great idea, how do you just turn off the spigot?"

He worries that "1,000 school districts will be able to raise taxes limited only by someone's imagination."

Zaremberg argues — and many Democrats agree — that there should be consistency in taxation throughout California "No business would have any certainty or be able to plan future tax liability," he says. "It's a real barrier to investment."

Steinberg's reply: "If the opponents of my bill would show the same level of intensity, speed and determination toward helping reach a budget agreement, we'd have a balanced budget deal in no time."

Fact is, Zaremberg and other business leaders have been working behind the scenes to prod Republicans into voting for Gov. Jerry Brown's proposed tax extensions — just not aggressively enough for Steinberg.

"We've told Republicans," Zaremberg says, "that a budget solution is good for the economy long run. And if they get criticized by antitax groups, we'll be there to back them up."

The chamber and other business interests prefer broad-based taxes — such as Brown's proposed levies on income, sales and vehicles —rather than narrower hits on the super-rich or oil companies.

Ballot initiatives are being nurtured to tax the highest income earners and oil producers, and they're not just brushback pitches. They're being aimed at the November 2012 ballot.

Steinberg says his local tax bill "is both real and tactical."

Brown's tax extensions would generate roughly $11 billion through the next fiscal year. That revenue, coupled with earlier budget-balancing — mostly spending cuts — plus a recent unexpected $2.3-billion surge in income tax receipts, would fill the $26.6-billion deficit the new governor faced in January.

But if he and Democratic leaders can't persuade at least two Republicans in each legislative house to vote for the tax extensions, which require a two-thirds majority, Steinberg says his bill "is one of the very few tools left to fund education and public safety."

He adds, "I'm tired of just hoping that reason will prevail. Democrats have an obligation to exercise their power and be more assertive. And this bill is one way to do it."

The Senate leader is trying to pressure the business lobby to pound on Republicans.

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