California earns money in three ways: income tax, sales tax and property tax. All three of those things have been heavily hit during this economic crisis. California has the highest unemployment rate in the nation at 11.5%; consumers are hunkering down and not spending money because of their fears about the economy; and home foreclosures are increasing every day and are at an all time high in California history.
In my district of Carson--which reflects conditions in communities throughout Los Angeles County--some homeowners have caught the public's attention by resorting to desperate acts to save their homes. And what once was a thriving, best-practice model for car dealership row along Avalon Boulevard has dwindled to a ghost-town as dealerships have closed down, taking with them many local jobs. Still on the horizon is the threat of the South Bay Pavilion being sold and perhaps closing down due to the economic downturn. On top of these economic woes, fear of losing funding for healthcare, such as HIV/AIDS, would especially hit the African American community hard, and the elimination of In-home Support Services would likely push seniors and the disabled into already overcrowded nursing and group homes. These are the draconian state budget cuts Governor Arnold Schwarzenegger is proposing and they will exacerbate economic and social conditions that are already in dire straights.
Many people say we should manage California's budget like you do your own family's finances. Well, if your income was reduced by 25% and your spouse lost his/her job, you would first cut your spending, right? You would stop going out to dinner, postpone any home improvements, and maybe cancel cable television or magazine subscriptions. But, what if that wasn't enough? Would you then cancel your healthcare coverage, sell your car, or move to a smaller house or apartment? And what if that still wasn't enough?
Any financial expert would say that you need to cut expenses, but you also need to look for ways to increase your income by taking on a part-time job or doing something on the weekends or evenings to earn extra money.
That's the situation that California is in. Everyone agrees that we must make cuts to the budget, but $24 billion of cuts will destroy education, healthcare, transportation, student's access to college, and services that our most disadvantaged depend on for survival.
We are looking at making budget cuts that will devastate families, children, the elderly and the disabled, putting some of their lives at risk. People shouldn't die because of budget cuts.
Yet that's what the Governor's proposed budget cuts could potentially do. The numbers are staggering: almost 1 million children will lose access to immunizations and preventive medicine; a half-million mothers who are US citizens actively looking for work will be cut off cold from the Cal Works program; and low and moderate income families would lose access to Cal Grants which help their children go to college. Many of these programs are also federally funded, meaning that for every dollar we spend we get federal dollars to fund the program. By cutting programs, we also lose millions of dollars of federal money.
What hope do we have for California's future economic recovery if we cannot take care of our most vulnerable residents, invest in our children's health and education, and give our students a chance at going to college?
The Democrats proposed several areas to increase revenues that will have little to no impact on you and your families.
For years the Republicans have pushed corporate tax giveaways that have benefited large corporations and the wealthiest Californians whose wealth has increased to astronomical levels during the Bush administration. It's time that they pay their fair share to invest in California's future.
We propose to close corporate tax loopholes that have allowed corporations to skirt their tax responsibilities. We also propose an oil severance tax for oil companies. Of the 21 major oil-producing states, California is the only state that doesn't charge oil companies for drilling our oil. This means oil companies will pay a tax for the oil they are taking out of the ground in California. It is not their oil simply because they can extract it from the ground, it is the people of California's oil and they should pay a severance tax like do in Texas. Yes, oil companies pay other taxes but we would still get more revenue for the State if we eliminated all the other taxes and fees and had an oil severance tax. We will also propose increasing taxes on cigarettes. Taxes have not been raised on these items for over ten years.
Unfortunately you will see that the Governor and the Republicans will reject all of these revenue ideas. They prefer to cut education, healthcare and services for our most disadvantaged Californians rather than go against their ideological stance of no taxes no way no how. There is no better time than during this historic recession for the Governor and Republicans to stop with the ideology and start taking responsibility for putting California in the best position for economic recovery.
Finally, Assembly Budget and Conference Committee chair, Noreen Evans, has compared the current budget situation to an ocean liner sinking. The Captain, in this case Governor Schwarzenegger, is going against the basic creed of getting the women, children, elderly and the disabled in the life boats first. Instead, with the Governor's budget he is leaving all of them behind to save the most advantaged in our state.
Democrats proposed a balanced budget that makes deep cuts through program reductions and savings in every policy area of government, but we also proposed some revenue increases as outlined above that total about $2 billion--only 8% of the entire budget deficit. This is a responsible budget that doesn't hurt California's families. I encourage the Governor and our Republican colleagues to join us in supporting this plan.