Business Groups Concerned Democrats Plan To Raise Taxes Disguised As Fees
By Tiffany Rider
November 20th, 2012 – The 2012 election has proven to be quite a haul for Democrats in California.
On November 6, voters supported Democratic party gains from last year’s redistricting and elected what becomes a two-thirds majority of Democrats in the state legislature. This power, called a supermajority, gives Democrats the ability to pass new tax measures, constitutional amendments and urgent legislation, or bills on a fast track without being concerned about how Republican legislators vote.
The California Assembly is officially two-thirds Democrat, with the last Republican candidate conceding “just the other day,” John Vigna, press secretary for Assembly Speaker John A. Pérez, told the Business Journal on November 15. The other races still being counted are Democrat versus Democrat, he said, so no matter the outcome of those the party will take the supermajority in the assembly.
“In the assembly, the speaker takes a very collaborative approach to the policy process with the members,” Vigna said. “We have the largest freshman class in the modern era since we’ve had a full-time legislature. There’s a lot of folks, and they certainly have a diversity of background and of opinions in terms of how we approach the challenges facing the state, so that will be worked through over the next couple of months. There’s no set policies that we know we’re going to go with right away because the speaker is very keen on ensuring that every member has the chance to participate and help shape the priorities of the caucus as we approach the next session.”
Vigna assured that Pérez will not pursue any new taxes or tax increases next year since the voters passed Proposition 30, the tax increase said to support public schools. He also vouched for the speaker, saying Pérez wants to “have an open and collaborative process” and “work with the Republicans.”
John Kabateck, executive director of the National Federation of Independent Businesses (NFIB) California, said he is approaching the new supermajority with cautious optimism. NFIB was one of the statewide chairs of the No on Proposition 30 campaign.
“No sooner have the doors of the polling places closed, have our legislators been proposing ways to tax and spend on the backs of California,” Kabateck told the Business Journal. “[Sen.] Ted Lieu is already looking at raising the car tax again. There’s also been discussion about looking at raising the property tax, oil excise tax and local parcel taxes. Main Street [businesses], California’s number one job creators, are very concerned about what the future holds for them and their employees.”
At a press conference in Sacramento on November 7, California Senate President pro Tem Darrell Steinberg described the soon-to-be Democrat supermajority is an “easy target.” “We’re 120 members and all with different agendas and different districts and different goals,” Steinberg affirmed. “And lord knows we are imperfect. But I take last night’s result, not only our senate elections but also the passage of Proposition 30, as a real validation for the work we have done over the last four years.”
Kabateck said while the NFIB respects that the people have spoken, the focus should be on making sure those elected will spend tax dollars wisely. “We absolutely have the highest taxes of any state,” he said. “Spending is already up $5 billion this year, the highest level of history. All the politicians want to do is raise taxes.”
Robert Lapsley, president of the California Business Roundtable, described the two-thirds majority in the assembly as a “political earthquake,” and that neither side had any indications that would happen.
“We knew the risks that were in front of us for the business community after the redistricting,” Lapsley told the Business Journal. “We had a strong effort to try to influence the outcome.” Moving forward, Lapsley said the governor is now the backstop for the business community, hoping Governor Brown would keep spending under control but also pass an agenda that will have “some reforms.”
“We have been appreciative of the [assembly] speaker’s perspective saying that they are not going to go out and raise taxes,” Lapsley said. “Now all of the taxes will be called fees. The legislature can now go out and legislate fees to generate for whatever they want to do.” He also said pent up demand from government unions to backfill cuts means that there is going to be a lot more pressure on the Democrats to generate more revenue.
“[They should] take the businesses that we have and create a climate where they want to invest and grow jobs,” he said. “They could change the business climate overnight. They could call a special session. They literally could turn the challenges in our business climate and say that California is open for business in less than 30 days.”
At his post-election press conference, Steinberg said that he looks at the power of a supermajority as a responsibility to move the state forward, produce and make changes to California. “I look at this as a great opportunity, but also we take on this responsibility with great humility because we have a responsibility,” he said. “. . .and I promise that we will exercise this new power with strength but also with humility and reason.”