Republican gubernatorial candidate Steve Poizner said Monday he would restore order to the state's finances by cutting taxes, reducing the state budget by 10 percent over two years and creating a $10 billion rainy-day fund.
Poizner's so-called 10-10-10 plan makes the deepest cuts in welfare, Medi-Cal and prison health care while finding the greatest savings – $3.85 billion over two years – by eliminating government waste revealed after a "top-down review" of programs.
The plan predicts cutting taxes will immediately generate more revenue by encouraging businesses to invest in the state, Poizner said in a news conference.
"My vision for California is we need to do whatever it takes to make California the innovation capital of the world again so people will come here and start companies," said Poizner, who is state insurance commissioner. "And then and only then will we have the money we need to make investments in K-12 and higher education and health care."
Monday's announcement built on earlier Poizner proposals to cut personal income, corporate and sales taxes by 10 percent and halve capital gains taxes.
Poizner's GOP gubernatorial rival Meg Whitman, the former CEO of online auction firm eBay, has proposed making at least $15 billion in permanent spending cuts, including reducing the state work force by 40,000 people.
In May, former Silicon Valley congressman Tom Campbell, the third Republican gubernatorial candidate, released a detailed budget that would cut spending by $12.65 billion and generate $2.7 billion in revenue by asking state employees to give back part of their salaries.
Poizner's plan drew skepticism from Stephen Levy, director of the nonpartisan Center for the Continuing Study of the California Economy.
He said any extra revenue generated by tax cuts would take years to materialize.
Poizner said his analysis showed tax revenues increased on average in seven states, including California, after the states cut taxes in 1996.
Levy said Poizner's plan also doesn't take into account a projected $10 billion budget shortfall for the next two to three years and the expiration of temporary tax increases.
"Tax rates are not the only way that a state like California competes for highly talented entrepreneurs and workers," Levy said. "We compete with good schools and great infrastructure, too."
Whitman spokesman Tucker Bounds repeated conservative criticism of Poizner for allegedly supporting higher taxes, including donating to a successful 2000 initiative campaign making it easier to pass school bonds. "Poizner isn't the solution," Bounds wrote in an e-mail response. "He's part of the problem in Sacramento."
Campbell said Poizner's plan lacked details, especially in the $3.85 billion in savings it found the state could produce through government efficiency.
"If we could balance the budget by cutting waste, fraud and abuse, we would have done it years ago," Campbell said.
Call Jack Chang, Bee Capitol Bureau, (916) 326-5543.
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