Budget Woes Solved By Tax Extensions

    It’s great news to learn that we suddenly have a cool $6 billion to spend as we please, but this modest financial boon doesn’t mean we can avoid Jerry Brown’s plan to pass tax extensions and make spending cuts.

    Sen. Tony Strickland (R-CA) has argued that this early Christmas present means spending cuts alone are enough to pull us out of the mire, and there’s no need for tax increases. State Republicans like Connie Conway even believe that we can save $300 million by eliminating Medi-Cal fraud — an extremely optimistic estimate. Their Plan B: Save another $400 million by transferring prisoner medical care to the University of California or to the oh-so-cheap private sector healthcare, whose costs are continuously rising. These solutions, while they seem great, are overly optimistic calculations that distract from the necessary drastic cuts.

    The Republican budget plan avoids tax increases by relying on deep cuts to spending for the poor and elderly, along with taking one-time funds from programs for mental health and early childhood improvement. Attacks on the old, the poor, babies and those with mental disabilities —  all to avoid minor tax extensions are outrageous, especially since the taxes would still be billions below the average level collected over the past three decades. Ideally, local governments would take up the task of helping the poor, but it can be assumed that a struggling local government will also forsake these programs, leaving their constituents in the dust.

    Under Brown’s new plan and budget though, the extra $6.6 billion in revenue means K-12 education funding will be increased by $3 billion, and there will be $2 billion less in tax increases. And if these taxes aren’t extended, it’s likely that the fee hikes we’ve already had won’t be enough to stem the bleeding.

    Included in Brown’s budget extensions are a 1-percent sales-tax increase and .5-percent vehicle license fee to reduce the deficit. Politicians like Sen. Sharon Runner (R-CA) argue that increasing taxes paves the way for more spending. But state governments have to end up borrowing anyway if tax revenue isn’t enough to fund spending.

    Furthermore, the newly revised budget still opens the way for economic recovery by offering tax incentives for firms to hire. Republicans are supportive of hiring incentives for businesses as well as sales-tax exclusion for firms purchasing new equipment. Despite the tax increases elsewhere, Brown has smartly encouraged businesses to stay.

    Tax increases and incentives paired with spending cuts will get California out of this economic rut. Hell, even conservative icon Ronald Reagan increased state taxes his first year as governor of California. If Brown’s budget plan isn’t enacted soon, it’s not just bad news for UC students, but for California as a whole.

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