This column addresses budget issues frequently and, most recently, reported on how broken the budget process is. While the “budget bill” is constitutionally mandated to be enacted by June 15, it only passed by that date for one reason — so the legislators could continue to receive their paychecks.
Moreover, since the enactment of the budget, there have been two so-called “junior budget bills” amending the fake June 15th budget and around 30 so-called “budget trailer bills” directing the spending of billions in ways that the budget bill itself did not direct.
But it isn’t just the budget process that is wholly broken, the actual substance of the bill reveals perverse spending priorities. Let’s start with the size of this gargantuan budget. One veteran political reporter, who has followed state budgets since the 1960s, remembers when the budget was $3 billion. It has grown since then by 100-fold to a staggering $300 billion.
The old saying that the bigger they are, the harder they fall, can be applied to the California state budget. There remains a legitimate question whether massive new spending programs can be sustained when, not if, we have a major recession, as more and more economists and business leaders are predicting.
For taxpayers, priority number-one in this year’s budget was the long-promised gas tax relief. This is especially important since, on Friday, California’s gas tax went up by about three cents. That might not seem like a lot, but we already had the highest gas tax in the nation. So, while other states are providing immediate gas tax relief directly at the pump, California will not.
Rather than do the right thing and suspend the gas tax for a year — a quick, simple and low-cost solution recommended by Republicans—the governor and Democrats in the legislature agreed on a $9.5 billion tax rebate program which will attempt to target refunds based not on the amount of taxes paid, but on need and family size; and not now, but just before the November election.
Another example is Assembly Bill 208 that will create a new excise tax on lithium extraction. Why? Because lithium is crucially important for battery manufacturing and there is something of a gold rush on lithium occurring in the Salton Sea. The Legislature intends to get in on the action.
The Legislature’s plan would impose a tax of $400 to $800 per metric ton of lithium extracted in California. The industry says that could discourage investment and make locally sourced lithium more expensive than imports coming from half a world away. Currently, lithium is imported from countries including China, where the lithium industry has been tied to forced labor and environmental degradation.
Meanwhile, the California Energy Commission estimates that there is enough lithium in the Salton Sea to meet America’s lithium needs and up to 40% of the world’s demand. Further, it has been reported that the Salton Sea could produce the world’s “greenest” lithium and that the lithium industry has the potential of breathing economic life back into a region that faces high rates of unemployment and suffers health impacts from the drying sea.
Disincentivizing our local lithium industry through taxation is counter to California’s climate and labor values and bad for Riverside and Imperial counties, our state, the United States, and the world.
Space limitations prevent a full airing of all the silliness to be found in the state budget, but this one caught our eye. One of the post-budget “trailer” bills revealed Gov. Newsom’s obsession with poking at pro-business states like Texas and Florida. The bill would give special consideration to businesses seeking state “Go-Biz” grants if they’re relocating jobs away from a state that limits access to abortion or “permits discrimination” on the basis of sexual orientation, gender identity, or gender expression. Apparently, Newsom believes businesses will be more attracted to California for its woke purity than they are repelled by its high taxes and burdensome regulations.