This story was reported for San Diego News Network on September 29, 2009.
California lawmakers are working to revamp the state’s budget. This week they’re looking at a study, considering recommendations and even decided to change the recycling program. Here’s the roundup:
Business-related study: It’s no secret Fortune 500 companies are leaving the Golden State to venture off to brighter opportunities – but a study conducted by Varshney and Associates says businesses could be earning more, which in turn would help Californians.
The study shows the “total cost of regulation to the State of California — direct, indirect, and induced — is $492.994 billion, which is almost five times the State’s general fund budget, and almost a third of the State’s gross product. ”
With the loss of nearly $500 billion in revenue for small businesses comes a loss of 3.8 million jobs and a total loss of $210 billion in labor income, notes the study.
Senate President Pro Tem Darrell Steinberg (D-Sacramento) said in a statement he’ll look into the study but Californians should realize the regulations set on small businesses.
“I look forward to reviewing the study, but Californians understand that there is a difference between unreasonable regulations and laws that protect kids from asthma, the elderly from abuse, and workers from dangerous work conditions,” he said. “We pass minimum wage laws and laws to enable workers to take time off to care for elderly parents or sick children because these laws improve the lives of Californians.”
The tax pitch: California’s Commission on the 21st Century Economy presented lawmakers its recommendations Tuesday for creating a more effective taxing system.
The commission, a group of 14 members given this task nearly a year ago by lawmakers, have asked lawmakers to change the structure of the personal income tax by replacing the state sales and corporate taxes with a new business levy that taxes net receipts.
Steinberg released a statement asking the State Legislature to answer three questions before moving forward with the commission’s recommendations.
His three questions include:
– Does reducing volatility result in more funding over time for education and essential services?
– What has been the experience of a business net receipts tax in the United States or other countries?
– Are there more effective ways to attract and retain a high wage job base to California?
“I will task the Senate Revenue and Taxation Committee, chaired by Sen. Lois Wolk (D-Davis), to begin policy hearings,” he said. “I pledge that the Senate will approach this crucial discussion with vigor and intelligence in the coming months.”
That juice costs five cents more: Lawmakers are considering an additional five cent deposit for Californians who purchase beverages in certain types of containers.
According to the Los Angeles Times, lawmakers have utilized the funds from the state’s recycling program to help balance its general fund.
“Officeholders have yet to repay $451 million they’ve taken from the recycling fund since 2002 to cover the state’s bills, siphoning away $100 million this year alone. Recycling and deposit redemptions, meanwhile, have risen amid the recession and the fund is now facing bankruptcy,” the Times noted.
The State Legislature has already passed the bill but it now waits on Gov. Arnold Schwarzenegger’s desk for his signature. The article states that Californians could be paying roughly “$295 million more per year on beverage containers.”
Projections on key for now: An analysis by MercuryNews.com shows California’s budget projections on target until mid-January.
After though, projections of revenue and expenditures will be most likely off.
According to the article, “While California’s 2009-2010 budget is in good shape for now, the budget deficit for 2010-2011 is already estimated at $7.4 billion. That’s because the state used a blend of accounting tricks, in addition to cuts, to pay its bills this summer. By doing so, it was simply deferring some of the fiscal crisis until next year.”
The reporter noted though, that Schwarzenegger is required to release his budget plan for next fiscal year in January too.
The Associated Press contributed to this report. Hoa Quach is the political editor for the San Diego News Network.