Just like in the Matrix, if you get a sense of déjà vu, you’re in real trouble. Legislative leaders, along with the blessings of the governor and CTA, are trying to push together another “compromise” budget, which does nothing but guts our schools and state services.
Please contact your legislator before tomorrow and ask her/him to vote no. Thankfully, the California Federation of Teachers has a link that will allow you to send the message to your legislators.
The new budget doesn’t appropriately fund critical state services and doesn’t fix the long-term structural problems in the state government. In fact, it digs a deeper hole for the future.
Any discussion of the $7.5 billion we could gain each year if we change Prop. 13? No. Any discussion of oil severance taxes? No. But the oil companies do get to drill off shore. Any deal on the two-thirds requirements for the budget and new-taxes? No. Vehicle License Fee? You guessed it… no discussion. Where’s the compromise in this compromise?
The irony is that the republicans might torpedo the deal because it cuts too much… from prisons!
Steve Miller, a high school science teacher in Oakland for 25 years and long-time building rep. for OEA, highlighted the corporate tax breaks written into the budget deal:
“So what was accomplished? If you are a corporation, you are rubbing your hands with glee.
“1) Secret negotiations in February now permit these special breaks: Corporations can choose to be taxed on ANY ONE of these categories: property, sales or payroll. Not all three – they get to pick one. Remember Prop 13 has left corporate property valued at close to the 1978 level.
“Then corporations that have maxed out their tax credits can share them with a family of corporations. This means you set up a phony corporation to fail and give them some of your tax credits, so you can get some more. Lastly, corporations can claim tax refunds early on taxes they have already paid.
“The banner headlines are not going to present these little details, but you can read them in the Oakland Tribune, July 11, 2009.
“2) Negotiations last Fall put in place a series of upfront and backdoor loans to corporations in exchange for some early revenue.
“A) The first gimmick suspends corporate ability to carry forward net operating losses to offset future profits for two years. Sounds good, doesn’t it? What a deal this was! Corporations could take today’s losses and use them to reduce future expected profits. Good that it was eliminated.
“Except now corporations can carry back losses against past profits and claim tax refunds from prior years. According to Dan Walters of the Sacramento Bee (Oakland Tribune, October 6, 2008), this deal will produce about a billion dollars a year during the suspension, but means the state will be paying back a half a billion a year forever – “another extremely high=interest loan from business to the state”.
“B) Gimmick #2 allows a second corporate tax break: Businesses received in the past certain income tax credits to encourage certain kinds of investment. These will be suspended for a couple of years, producing about $600 million a year in revenue for the state. Then It allows corporations to transfer those unused tax credits to affiliated companies in the future. This will produce revenue losses in the future that will be many times the mere 3%+ of the budget deficit this fixes.
“State Treasurer, Bill Lockyear, had this to say about that, “This giveaway makes the budget a massive corporate boondoggle that does nothing to fix our structural debt, and, in fact, will make it substantially worse.”
“Schemes like these mean that corporations will pay less and less. It is already pretty bad. In 2001, profitable corporations, over half the state’s profitable corporations paid only the $800 fee to register their corporations’ existence in the state. Those were the good old days!
“California already subsidizes corporations in a wide variety of ways. There is no budget crisis at all even if these giveaways were simply cut in the same proportion with social services. Once again, the budget does not impose a severance tax on extracting petroleum (though it does open the door to the highly unpopular off-shore drilling near Vandenberg Air Force base near Santa Barbara). The state’s water is provided to agribusiness at something like 1/400 the cost that consumers pay. Insurance companies that control the state’s health care pay zero income tax. The state’s constantly growing system of jails subsidizes all sorts of business, while giving the state the highest rate of incarceration in the world.”
So, once again, we have to watch as local school boards are forced to shred our schools, knowing that county governments, senior care and health care services are getting cut even more dramatically.
In addition to all the corporate give-aways, we also know that there is money out there... ACLU's current research has shown that there's $12 billion savings available from over-incarceration, $7.5 Billion available each year if we fix the Prop. 13 corporate loophole, potential income from oil severance, vehicle license fee, and billions of other potential revenue if corporations are simply asked to pay a fair share.
I'm caught up with the realization that, again, CTA barely put up a fuss. And, the democrats were partners in the deal. How do we get our Union to fight back? How do we get our "progressive" state legislators to act on behalf of the majority of people in the state?
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