Dan Morain

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Dan Morain: Dems lob tactical bomb: Let locals raise taxes

Published: Thursday, Apr. 21, 2011 - 12:00 am | Page 11A
Last Modified: Friday, May. 25, 2012 - 9:47 pm

There are many ways to raise taxes. Democrats are contemplating them all.

The latest: Grant all 58 counties the power to tax everything from booze and cigarettes to oil extraction and personal income. Don't forget cars, soda pop and more, assuming voters would approve the new local levies.

It's such an audacious concept that you might shrug it off as an example of wild-eyed legislators having fun and games. That'd be a mistake.

The author of one of the main bills is the leader of the California Senate, Darrell Steinberg, D-Sacramento. Senate Budget Committee Chairman Mark Leno, D-San Francisco, is carrying a related bill.

Lobbyists representing the oil, tobacco, soft drink, auto industry and many more are taking the latest tactic in California's budget battle seriously.

"I know it has gotten the attention of a lot of people, and I'm glad," Steinberg told me Wednesday.

Back in February, when he introduced Senate Bill 653, it took up all of one paragraph. It was nothing to raise any industry lobbyist's concern. That changed last week when Steinberg added 26 pages to the bill.

As it now reads – and take a deep breath – Steinberg's bill would give counties the power to "levy, increase or extend a local personal income tax, transactions and use tax, vehicle license fee, and excise tax, including, but not limited to, an alcoholic beverages tax, a cigarette and tobacco products tax, a sweetened beverage tax, and an oil severance tax, as provided."

That's pretty much everything, except there's more. Steinberg intends to amend the legislation once again to permit school boards to place all those tax measures before local voters to help pay for public education.

By law, the Legislature must muster a two-thirds vote to approve a statewide tax or fee hike.

Gov. Jerry Brown and the Democratic majority in the Legislature have failed to coax the requisite two Republicans in the Assembly and in the Senate to approve Brown's plan to put an $11 billion tax package to a statewide vote.

Steinberg's bill, set for a hearing on May 4, doesn't propose a direct tax hike. His bill merely would give local authorities the power to place tax hikes before local voters. He can push the measure through with a simple majority in both houses, no Republican support needed.

On the surface, Steinberg's bill is intended to help fund local services as the state plans to shift more services to cities and counties. But as any Capitol denizen knows, what's on the surface often isn't the point.

By targeting virtually every big business operating in the state, Steinberg is pressuring business leaders and their lobbyists to lean harder on Republican legislators to reach a compromise on a statewide tax package.

It's not coincidental that many businesses targeted by Steinberg's bill – tobacco and oil among them – help fund Republican campaigns.

"The majority party needs to begin, appropriately and intelligently, using the power of its majority," Steinberg said. "One way or another, it is our responsibility to do everything we can do to avoid $5 billion in cuts to education, and billions in cuts to public safety."

Will it succeed?

"No," said Sen. Tony Strickland, who is leading several other anti-tax Republicans in what he calls the Taxpayers Caucus. "It's just more of the same."

Perhaps Strickland is right. But pressure surely will build.

"Having 58 different counties levying targeted taxes on anything and anybody is going to be harmful to the economy," California Chamber of Commerce President Allan Zaremberg said.

Zaremberg noted that he and other business leaders have been trying to "find that sweet spot" that would persuade Republicans to support a "comprehensive budget solution." But negotiating and cajoling hasn't worked, leading to the Democrats' harder edge.

As the fight over California's budget continues, year after year, there is a growing sense inside the Capitol that Californians should receive the level of government they're willing to fund.

Strickland hails from Ventura County. Voters there and in many suburban and rural parts of the state consistently elect Republicans who oppose taxes. People in San Francisco, Los Angeles and Sacramento elect Democrats who are willing to raise taxes.

Steinberg's bill would grant residents their wish. They could raise taxes, or not. It's not the best solution. This is one state, not 58. Taxes should be roughly equal from region to region. But as the year wears on, more teachers and cops will face layoffs. More voters will become nervous, Democratic legislators will become desperate, and ugly ideas will start to look better.

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