Dan Walters

Jerry Brown’s bucket list doesn’t include vital reform of taxes

Gov. Jerry Brown uses a graph to demonstrate how unpredictable taxes on capital gains, mostly paid by the wealthy, have been as he announces his revised budget revise at the State Capitol May 13. Brown, however, was noncommital when asked whether he would try to reform state taxes to make them less volatile.
Gov. Jerry Brown uses a graph to demonstrate how unpredictable taxes on capital gains, mostly paid by the wealthy, have been as he announces his revised budget revise at the State Capitol May 13. Brown, however, was noncommital when asked whether he would try to reform state taxes to make them less volatile. hamezcua@sacbee.com

It should be obvious by now that Jerry Brown has a political bucket list of things he wants to accomplish – or appear to accomplish – before ending his two-stage governorship in 2019.

He’s already crossed education finance, pension reform and a workers’ compensation overhaul off his list.

He’s hoping that history will remember him as a visionary on reducing carbon emissions.

He’s proud of reducing the state’s prison population and wants voters to support a ballot measure that would go further.

However, his two pet public works legacy projects, twin water tunnels and a bullet train system, are languishing.

And there’s the state’s most stubborn political conundrum – a state budget that’s dangerously dependent on taxing a relative handful of wealthy Californians and thus is prone to boom-and-bust cycles.

The budget is balanced at the moment, thanks to the state’s powerful emergence from the Great Recession and temporary tax increases that Brown persuaded voters to approve in 2012.

However, were surtaxes on the highest income Californians to be extended for another 12 years, as a November ballot measure proposes, the probability of a fiscal meltdown in even a mild recession would continue. The “rainy day fund” Brown touts would be, by his own projections, only a relatively small cushion.

Were he truly committed to protecting the budget from the kind of disaster that hit California nine years ago, Brown would elevate tax reform to the top of his agenda.

He knows that, but has been unwilling to spend political capital on a cause that’s difficult at best and perhaps politically impossible.

Asked about tax reform last month, as he was unveiling his revised budget and worrying aloud about an economic slowdown, Brown replied tersely: “Hope springs eternal.”

In other words, he’s interested in having it done but so far isn’t motivated to try it himself.

As Brown dithers, other political figures are at least trying to generate conversation.

Bob Hertzberg, a former Assembly speaker who returned as a senator in 2014, is trying to get it going, and was joined recently by state Controller Betty Yee, who issued a report on the subject but shied away from specific recommendations.

Everybody is aware of what happened when Brown’s predecessor, Arnold Schwarzenegger, and legislative leaders appointed a blue ribbon tax reform commission.

The commission, headed by investor Gerald Parsky, proposed to move away from personal income taxes on the very affluent, whose incomes go up and down much more steeply than the economy as a whole, and institute a new form of sales tax that would embrace services as well as hard goods.

The report was discarded as quickly as it was issued. Politicians were not willing to face the angst of taxing middle-class Californians more and the wealthy less.

Yet, in some form, if California is to fix its precarious budget system – one that slams education and services to the poor during inevitable downturns – that is precisely what must happen.

One could throw corporate taxes into the mix, plus closing outrageous loopholes and perhaps tweaks to Proposition 13, the 1978-vintage ballot measure that limits property taxes.

In the end, however, having a few in upper income tax brackets provide close to half of state revenues is self-defeating and no matter what the budget numbers may be in 2019, Brown’s failure to deal with it would be a haunting legacy.

Gov. Jerry Brown, issuing an ominous appeal on climate change, spoke at a climate change conference in Vatican City on July 21, 2015, saying the world may already have “gone over the edge” on global warming and that humanity must reverse course o

Gov. Jerry Brown once against struck a cautionary tone as he unveiled his May budget revision on Friday, May 13, 2016. Video courtesy of the California Channel.

Though he campaigned for Proposition 30 in 2012, Gov. Jerry Brown on May 13, 2016 would not say whether he supported an initiative this year to extend its tax increase on rich Californians. Video courtesy of the California Channel.

Lt. Gov. Gavin Newsom told The Sacramento Bee editorial board in February that he's in favor of extending a temporary tax increase.

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