The battle lines in the annual tug-of-war over the state budget became clear on Monday evening, when legislative analysts said there would be $1.1 billion more revenue available for discretionary spending than Gov. Jerry Brown has estimated.
“Today, many jobs that used to be considered non-tradable services are now tradable services. Back-office accounting functions can be done anywhere, as can legal research or title research. Just about any job that is done at a computer is now a tradable service. Unless they have a monopoly, tradable goods and tradable service providers face relentless price competition. California’s high-cost environment is forcing them to relocate to lower-cost communities to survive. Tradable producers won’t be providing 21st Century California jobs.”
Under the LAO outlook, the balance in the Special Fund for Economic Uncertainties (SFEU), the state’s traditional reserve account, is $2.258 billion at the end of 2015-16 under the Governor’s policies, compared to the $1.113 billion under the administration’s estimates. This means that, under the LAO estimates, there would be $1.1 billion more of discretionary resources available for the 2015-16 state budget than indicated under the May Revision estimates.
“In a landmark case before the Third District Court of Appeal, the California Air Resources Board (ARB) recently argued for creation of an unprecedented tax doctrine that could raise billions of dollars in new revenues. The ARB described the new revenue not as a tax or a fee (or any other recognized revenue-raising mechanism), but as a “byproduct” of a regulatory program.”
While two-thirds of Los Angeles County employers expect business conditions to improve this year, they have serious concerns about governmental impediments, such as high taxes and fees, increased regulation and cumbersome permitting processes.
But tucked away on one of the final pages of the 104-page summary of the spending plan was a surprising revelation: Not only will the budget survive when Proposition 30’s temporary taxes are phased out, but general fund revenues are also expected to continue climbing.
In the past five years, roughly a dozen states have enacted laws barring local governments from requiring businesses to provide paid sick leave to employees. The number of states banning local minimum wages has grown to 15. And while oil-rich states such as Texas and Oklahoma are pursuing bills banning local restrictions on drilling, other states where agriculture is big business have been banning local limitations on the types of seeds sown for crops.
There’s no justification for continuing to sock the highest income earners — the people who can most easily move to a low-tax state — when Sacramento is wallowing in surplus money.
The governor immediately mentioned his reservations around a proposal by Sen. Bob Hertzberg to impose a sales tax on professional services such as accounting and advertising.
“We have to learn from history and not keep repeating our mistakes,” Gov. Jerry Brown said Thursday as he unveiled a revised 2015-16 budget. “While there are few signs of immediate contraction, another recession is on the way,” he told the Legislature. “We just don’t know when.”
California, which has added 1.87 million jobs since its employment hit bottom in February, 2010, came in fifth at 13.18 percent, just below Colorado’s 13.45 percent.
The windfall is driven by a jolt of personal income taxes, as California bounds through its economic recovery. Income taxes have come in $2.7 billion above projections.
California’s drought emergency woes have worsened, with a shortage on the Colorado River next year becoming increasingly likely. Odds of a shortage rose from 33 percent to 50 percent from April 1 to May 1, Metropolitan Water District, Southern California’s largest water wholesaler, said Monday.
. . . the California Workers Compensation Insurance Rating Bureau recommended, and Insurance Commissioner Dave Jones approved, a 5 percent reduction in base premiums paid by employers for coverage – although their costs would remain the nation’s highest, averaging $3.48 per $100 of payroll in the latest survey.
Stephen Gordon was mad as hell at California government, and he wasn’t going to take it anymore. So the chairman, CEO and president of Opus Bank launched a $1 billion challenge fund to provide capital to businesses that dare to expand their operations in California. . . And Gordon has tired of California relying on its crown jewels: high-tech companies. “Real America isn’t Silicon Valley,” he said. “The bulk of America is driven by businesses that aren’t sexy. You cannot bet all of California on that [sector] and then shut out the rest of America.”