CRP Blog

Friday, June 13, 2008

Republican Budget Reforms Desperately Needed in Sacramento

Republicans in Sacramento recognize the need to reform California's budget process, which is now pre-programmed for higher spending and provides no cushion in times when revenues fall.

There's a healthy diversity of ideas among Republicans about how best to achieve the shared goal of reforming the budget process while at the same time holding the line on taxes. Democrat ideas for tax increases come at the worst possible time for Californians who are already facing a soft real estate market, diminished home values, rising food and energy prices, and an increase in unemloyment.

If enacted into law, Democrat tax increases would further soften the California economy, harm job and personal income growth, and make our state less competitive with other states and nations that are more than happy to take the jobs and capital our state can export.

The pressure inside Sacramento to raise taxes is tremendous. Groups benefitting from government largesse, and those who represent them, walk the halls of the Capitol with plenty of reasons why this tax increase or that would be just fine. Yet, Republicans continue to hold firm, recognizing that when tax increases go on the table, reform comes off the table. Government has a spending addiction. Consequently, the current budget problems are the result not of Califronians not paying enough in taxes, but government spending too much.

Beyond the current budget situation, Republicans recognize the system itself must be reformed. Currently, as tax revenues rise, spending rises as well, often faster. Economic slowdowns and corresponding drops in tax revenue are inevitable (particularly when the state is heavily dependent on wide swings in income and capital gains taxes), yet not provisions are made to set aside revenues to cover eventual shortfalls. Further, no meaningful cap exists on the growth in government spending in times of plenty, exacerbating the problem.

Limiting increases in spending, and diverting surpluses to a reserve fund for use only when a budget shortfall exists, is a common sense approach which Republicans continue to advocate while Democrats resist.

Governor Schwarzenegger and Republican legislators deserve continued support for their drive for reform, and for solving the current budget problem through spending reductions rather than giving in to Democrat calls for tax hikes.

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