Tax Revenues

President Obama is convening the top two Senate leaders at the White House on Monday to restart debt negotiations after talks imploded last week over taxes and both sides struggle to reach agreement with a fast-approaching deadline. It marked a crucial moment as both sides hoped to resolve the impasse to send a message to jittery financial markets well in advance of the Aug. 2 deadline. That goal now seems in doubt. The nation risks unprecedented federal default in August if the nation fails to raise the $14.3-trillion debt limit and allow further borrowing.

When it comes to economic matters, such as taxes, who do you trust more, professional politicians who worry first and foremost about being reelected, or professional economists who worry exclusively about the economy? Yeah, me too. So we should all sit up and take notice that a big majority (87%) of economists polled by the National Assn. for Business Economists says higher taxes need to be part of any serious deficit-reducing plan. The deficit is currently expected to top $1 trillion for the fourth straight year.

California taxpayers, already in line to receive a $1.1-billion tax rebate this year, could receive another $428 million next year because of higher than expected tax revenues, a state fiscal advisory commission said Monday. The Commission on State Finance, in its quarterly report on tax revenues and expenditures, said tax revenues are currently running $473 million higher than previously expected by the Deukmejian Administration for the budget year ending in June, 1988.

The City Council will consider approval of a $15.2-million budget for fiscal 1985-86 on June 27. As proposed, the budget represents a 9% increase from the current $13.8-million budget and allows for a $500,000 increase in reserves, now at $2.5 million. During the past year, sales tax revenues increased by 16%, to $10.5 million, adding $1.5 million to reserves. Included in the budget increase is a 4.

This post has been corrected. See below for details. The idea of expansive government and greater spending to prop up a still flagging economy has gotten little support this election year. But two economists issued a warning Monday of a renewed recession if the government continues to restrict spending - particularly with the sharp tax increases and spending cuts scheduled for early next year. “American austerity is precisely the wrong policy at precisely the wrong time,” Dimitri B. Papadimitriou and Greg Hannsgen wrote in their paper comparing American economic strategies with those in Europe.  “Austerity policies can only make a recession worse, as government layoffs and wage cuts undermine already-weak consumer demand, investment and tax revenues.” Papadimitriou is president of the Levy Economics Institute at Bard College in New York.

Eight developers paraded their dreams in front of the City Council this week, each with the hope of becoming surgeon for the face lift of a blighted area. City officials are perusing the proposals for redevelopment of a 20-acre site along the San Diego Freeway at Rosecrans Boulevard that they hope will bring the city added revenue and become a landmark in the South Bay. The council on Monday voted 4 to 0 to hire a consulting firm to evaluate the proposals.

Beginning in January, state law will allocate tax revenues generated by automobile leases to the municipalities where each deal is cut. Gov. Pete Wilson this week signed a bill changing existing rules so that the tax revenue from a leased automobile no longer will be divided by municipalities throughout the county where the person leasing a car lives.

More than $1 million in property tax revenues is expected to be withheld from the Orange County Sanitation Districts during the next three years because of overpayments to them by the Santa Ana Redevelopment Agency, officials said Tuesday. The Redevelopment Commission voted Tuesday to recover tax revenues it lost because of miscalculations during the past four years. The commission's recommendation will go to the City Council, in its capacity as the Redevelopment Agency, for a vote in two weeks.