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Daniel Weintraub

California Insider

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« Direct democracy | | 'Stairway to nowhere' »
April 5, 2006

Drawing contrasts

Phil Angelides made news today by directly and strongly attacking his opponent in the Democratic primary, Steve Westly. His main point: Westly stood with Schwarzenegger when Angelides was standing up for “the people.” That’s what will probably lead the newspaper stories tomorrow. But I think he made even more substantive news in a quick question and answer session with reporters afterward. In response to a question, he laid out, for the first time, a plan to raise between $8 billion and $10 billion in taxes to balance the budget and pay for his priorities in expanding it.

Angelides didn’t use that number. But he did say that, by his calculations, corporations and the wealthy have received $17 billion in tax breaks and tax cuts from California and the federal government in the past several years. And he said he would go after as much of that money as he needed to balance the budget and cover the commitments he has made during his campaign.

Among the items he would need to cover with tax hikes, he specifically mentioned the ongoing structural gap in the budget, which he said is now at about $4.5 billion. According to the legislative analyst, it’s more like $5 billion, but that’s a rounding error in this discussion. I don’t think Angelides has said in the past that he would want to raise taxes to close that gap.

He has also proposed what he calls “fully funding” the schools, by which he means giving K-14 another $2 billion or so that the education community says the school are owed.

And he has proposed rolling back college tuition increases enacted under Schwarzenegger, expanding financial aid, and doubling the number of high school counselors. Those ideas have been estimated to cost about $1.5 billion.

Finally, Angelides already has endorsed Proposition 82, which would increase taxes on the wealthy by about $2.3 billion annually.

Together, that adds to about $8 billion on his own ledger and another $2-billion plus for Proposition 82.

Many observers, myself included, have been inferring all along that this is where Angelides was logically headed. But to my ear, he went farther today than he has ever has in the past in confirming that this is what he is proposing.

Other than returning tax rates on the wealthy to the level they were at under Pete Wilson and Ronald Reagan, which is what Prop. 82 would do, Angelides has not been specific about where he would get that money, and he didn’t offer much more detail today. But he did mention that corporate tax rates were cut in California in the 1990s, and he included that in the measures he would be willing to roll back to raise the kind of money he would need for his program. Before today, as far as I know, he had mentioned corporate “loopholes” but never rates.

So, back to his main point, drawing a contrast between himself and Westly. This is certainly one major area where they disagree. Westly has said he would raise taxes only as a last resort. Angelides appears prepared to make doing so a major plank of his campaign for governor.

UPDATE: The Angelides camp believes I am double-counting the education piece of the deficit he intends to cover with tax increases. I don't think so, because I don't think the money he is proposing to give to schools has been counted in anybody's official or unofficial projections of the shortfall. They could be correct that the money owed would be only a one-time, not an ongoing obligation. The implication in their minds is that he wouldn't have to raise taxes to pay it. But he'd have to come up with the money from somewhere, since the state is short now without paying off that obligation. That point also serves to underscore how small a difference there really is between the Angelides education budget and the Schwarzenegger budget. If he's not proposing any increase in ongoing funding, can the status quo really be as bleak as he paints it? Finally, the campaign notes that his proposals for new counselors and teacher retention measures would come from Prop. 98 funding and would not be in addition to it. That means those earmarks would come at the expense of other things the schools are doing now or from future increases in funding that would otherwise go to expand existing services. So, if he didn't need to raise any taxes to increase the Prop. 98 funding of schools, we can probably say his tax hike would be closer to $6 billion than $8 billion, plus $2.3 billion in Prop. 82, which he has endorsed.

 
 

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