CLU/CERF: Policy, Politics and Prognostication (Part Two)

By Sheryl Hamlin

This is Part Two in a multi-part article of the CLU/CERF 2016 Ventura County Forecast meeting held on November 10, 2016 at the Serra Center in Camarillo.

In Part One, Dan Walters of the Sacramento Bee, gave the political outlook for the state as well as thoughts on a possible recession. In Part Two, Joel Fox of the Fox and Hounds political blog, drill down into California Tax issues and the current appetite for more taxation.

Joel Fox: Is the tax revolt of the 1970’s about to die?

Mr. Fox opened his talk with a bold question: Is the tax revolt of the 1970’s about to die?


With tax, tax and more tax, he said, this is not your mother and father’s California anymore.

In fact, he said, there were 430 local state tax measures, including bonds tied to property taxes, on the November 2016 ballot. 8 out of 10 of those passed raising sales and property taxes everywhere across the state.

And, with a supermajority in both the Assembly and House, Sacramento can make amendments to the constitution, which could include the landmark Proposition 13.

He told a political tale about the “necessity of life” bill which Governor Brown recently vetoed. The sponsor Cristina Garcia was furious with Brown for this veto which would only have cost $45 million in revenues. So she and her co-sponsors are returning with another bill now addressed at obesity which will cost $1.2 billion and includes candy and snacks and the tampons will be a rider on this bill.

You can read about this bill here. The new “obesity” would require eliminating a reprise to “snacks” and bottled water given in 1992. Ironically, as the Los Angeles Times article points out, the idea of reconfiguring the sales tax for more revenue started back during the Schwarzenegger era when he put together a commission for tax reform to include services, like rounds of golf. With the state needing revenue, Senator Herzberg (D-Van Nuys) has plans to revisit a service tax. With the Supermajority, the 1992 snack tax exemption can be changed to prepare for the new “obesity” bill.

The initiative process activity has increased due to the low voter turnout. The number of signatures required for an initiative is tied to the number of those voting in the most recent gubernatorial election, which was very low when Brown ran against Neel Kashkari. Thus, according to Jim Brulte, the initiative process is also controlled by the Democrats in addition to both houses in Sacramento.

There are groups trying to undo Proposition 13, first by proposing a “split roll”. There is a bill in the legislature to push this forward, Fox says. The business community has already raised $40 million to defeat the split roll, but it will take more, says Fox, especially looking at the $100 million spend on defeating the cap on drugs.

Why undo Prop 13? Unfunded pension liabilities amounting to billions. There are two camps, Fox says. One camp would raise taxes and keep paying, while the other would reform the system and let the unfunded liability eventually decline through a reform of the defined benefits system.

Fox says there is now pressure on the Republican Mayor of San Diego Faulconer to run for Governor in 2018, although the mayor has not expressed interest.

So the question remains: is the tax revolt of the 1970’s which propelled Ronald Reagan to the White House over? Will there be an exodus from California when property taxes escalate like they did in the 1970’s?

Time and an informed electorate will tell.

Part One of this series is HERE.  The next installment of this conference will include the Ventura County forecast from Bill Watkins, founder and chair of CLU/CERF.

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