Congrats to California on achieving success at last. Taxes are still much lower than Australia.
http://www.bloomberg.com/apps/news?pid=20601087&sid=azSwuubci._8&refer=home
California Republican Senator to Switch, Back New Tax
By William Selway
Feb. 19 (Bloomberg) -- A California Republican state senator broke ranks with the party and agreed to support tax increases to help close a record $42 billion budget shortfall, potentially ending a political deadlock that has gripped the Capitol for more than six days.
Abel Maldonado, a Santa Maria strawberry farmer who has indicated interest in running for statewide office, said today that he supports raising revenue as part of a Democratic-led plan to redraw the state’s budget. His vote would provide the additional one that was previously lacking in the Senate, causing it to fall short of the two-thirds majority needed for passage.
“This could be a career-ender for me,” he told reporters in the Senate chamber in Sacramento, where a vote is scheduled today. “In difficult times, you need to step up to the plate.”
The Republican’s support came amid nearly round-the-clock budget talks. More than a year of economic recession has hammered California’s tax collections, creating a gap in the budget that forced the state to shut down thousands of construction projects, delay payments of income tax refunds and left it with the lowest credit rating of any U.S. state.
Should the Senate approve the budget package, it would go to the Assembly for ratification and then to Governor Arnold Schwarzenegger for his signature. Democratic Senator Mark Leno, from San Francisco, predicted sufficient votes existed for passage. “We will get to the two-thirds,” he said in an interview.
Two-Thirds Supermajority
While Democrats control both chambers of the Legislature, taxes and budgets must be approved by a two-thirds supermajority equal to 27 of 40 seats in the Senate and 54 of 80 in the Assembly.
The tax increases, totaling as much as $13 billion through June 2010, are part of a budget package backed by Schwarzenegger a Republican and Democrats.
Citing politicians’ inaction, Standard & Poor’s on Feb. 2 cut the rating on $46 billion of California’s bonds to A from A+, giving it the lowest credit grade of any U.S. state. A California bond due in 2036 that pays 4.5 percent interest last traded for 82.8 cents on the dollar to yield 5.75 percent. On Feb. 13, that bond traded for an average 86 cents to yield 5.48 percent, according to Municipal Securities Rulemaking Board data. The higher yield indicates investors believe risk has increased.
Maldonado’s decision followed a tumultuous day of lobbying, as Schwarzenegger and Democrats sought to salvage the budget after Senate Republicans ousted their leader for endorsing the tax increase.
Government Overhaul
To secure Maldonado’s support, Democratic leaders decided to take up government overhaul measures he sought, including a plan to create open primaries where Republicans and Democrats are free to select in which party’s election they want to vote. It would also need to be approved by state voters.
The agreement brokered with Maldonado hit an early snag when the there was insufficient support to approve his constitutional amendment that would change how primary elections are held. Votes were taken on that measure in the middle of the night, ahead of the tax-increase plan.
The revenue proposal would raise the state sales-tax rate to 8.25 percent from 7.25 percent and boost vehicle license fees to 1.15 percent from 0.65 percent of the value of an automobile.
The package doesn’t include a gasoline tax increase, and it would cut a surcharge levied on paid income taxes, depending on how much California receives under the economic stimulus measure signed by President Barack Obama, according to an analysis distributed by Senate Democrats.
Scaling Back Operations
California’s government has slowly began to shut down as politicians debated for four months on how to cut spending or raise revenue to replace lost tax collections. This week, as no agreement was forthcoming, the state told some 20,000 workers that they may lose their jobs.
The tax increases drew fire from most Republicans, who said they would hurt residents who are already reeling from the worst recession since the 1930s.
“We need to stop treating the taxpayers of California as our personal ATM,” said Senator Tony Strickland, a Los Angeles- area Republican.
http://www.bloomberg.com/apps/news?pid=20601087&sid=azSwuubci._8&refer=home
California Republican Senator to Switch, Back New Tax
By William Selway
Feb. 19 (Bloomberg) -- A California Republican state senator broke ranks with the party and agreed to support tax increases to help close a record $42 billion budget shortfall, potentially ending a political deadlock that has gripped the Capitol for more than six days.
Abel Maldonado, a Santa Maria strawberry farmer who has indicated interest in running for statewide office, said today that he supports raising revenue as part of a Democratic-led plan to redraw the state’s budget. His vote would provide the additional one that was previously lacking in the Senate, causing it to fall short of the two-thirds majority needed for passage.
“This could be a career-ender for me,” he told reporters in the Senate chamber in Sacramento, where a vote is scheduled today. “In difficult times, you need to step up to the plate.”
The Republican’s support came amid nearly round-the-clock budget talks. More than a year of economic recession has hammered California’s tax collections, creating a gap in the budget that forced the state to shut down thousands of construction projects, delay payments of income tax refunds and left it with the lowest credit rating of any U.S. state.
Should the Senate approve the budget package, it would go to the Assembly for ratification and then to Governor Arnold Schwarzenegger for his signature. Democratic Senator Mark Leno, from San Francisco, predicted sufficient votes existed for passage. “We will get to the two-thirds,” he said in an interview.
Two-Thirds Supermajority
While Democrats control both chambers of the Legislature, taxes and budgets must be approved by a two-thirds supermajority equal to 27 of 40 seats in the Senate and 54 of 80 in the Assembly.
The tax increases, totaling as much as $13 billion through June 2010, are part of a budget package backed by Schwarzenegger a Republican and Democrats.
Citing politicians’ inaction, Standard & Poor’s on Feb. 2 cut the rating on $46 billion of California’s bonds to A from A+, giving it the lowest credit grade of any U.S. state. A California bond due in 2036 that pays 4.5 percent interest last traded for 82.8 cents on the dollar to yield 5.75 percent. On Feb. 13, that bond traded for an average 86 cents to yield 5.48 percent, according to Municipal Securities Rulemaking Board data. The higher yield indicates investors believe risk has increased.
Maldonado’s decision followed a tumultuous day of lobbying, as Schwarzenegger and Democrats sought to salvage the budget after Senate Republicans ousted their leader for endorsing the tax increase.
Government Overhaul
To secure Maldonado’s support, Democratic leaders decided to take up government overhaul measures he sought, including a plan to create open primaries where Republicans and Democrats are free to select in which party’s election they want to vote. It would also need to be approved by state voters.
The agreement brokered with Maldonado hit an early snag when the there was insufficient support to approve his constitutional amendment that would change how primary elections are held. Votes were taken on that measure in the middle of the night, ahead of the tax-increase plan.
The revenue proposal would raise the state sales-tax rate to 8.25 percent from 7.25 percent and boost vehicle license fees to 1.15 percent from 0.65 percent of the value of an automobile.
The package doesn’t include a gasoline tax increase, and it would cut a surcharge levied on paid income taxes, depending on how much California receives under the economic stimulus measure signed by President Barack Obama, according to an analysis distributed by Senate Democrats.
Scaling Back Operations
California’s government has slowly began to shut down as politicians debated for four months on how to cut spending or raise revenue to replace lost tax collections. This week, as no agreement was forthcoming, the state told some 20,000 workers that they may lose their jobs.
The tax increases drew fire from most Republicans, who said they would hurt residents who are already reeling from the worst recession since the 1930s.
“We need to stop treating the taxpayers of California as our personal ATM,” said Senator Tony Strickland, a Los Angeles- area Republican.
