California voters should keep this news from the nonpartisan Legislative Analyst's Office in mind when they vote in November: State operating budget shortfalls under the spending plan are expected to reach "nearly $4 billion in 2007-08 and nearly $5 billion in 2008-09." Then voters should reject Propositions 86, 87 and 88, because the three measures would raise taxes without fixing the structural shortfall.
Good-government types call measures such as these "ballot-box budgeting" -- special interests cook up initiatives designed to appeal to voters because they dedicate spending to a pet cause. Voters believe that in approving these measures, they ensure that tax dollars will go to their preferred areas of spending -- as if they can get Designer Government. Wrong. Because these pet initiatives do not curb the automatic growth in off-the-rack programs, the state's general fund spending will continue to grow as each Designer Program widens the gap between what the state takes in and what it spends.
To fix the problem, Sacramento has to cut state spending or raise taxes that can go into the general fund. Having failed for legal and political reasons to cut the state budget, Gov. Arnold Schwarzenegger is crossing his fingers, in the apparent hope that economic growth or time will fill the hole in the state's finances. If there's a downturn, a big tax increase during hard economic times could be in California's future.
These three measures would only make things worse.
Proposition 86 would raise the state excise tax on cigarettes by $2.60 per pack. The California Legislative Analyst's Office estimates it will raise $2.1 billion in 2007-2008, with revenues declining thereafter. The measure would create a new Designer Fund, the Tobacco Tax of 2006 Trust Fund, to pay for emergency services, health care for children and anti-smoking campaigns.
Yes, some smokers would quit and some would smoke less -- a good thing, to be sure -- but other smokers would be more likely to buy cigarettes on the black market or out of state. That could cut into state receipts by gouging the poorest taxpayers. As Healthvote.org noted, this measure "hits the poor harder than the rich, because the poor are, on average, far likelier to smoke."
I was surprised when a doctor showed up at The Chronicle Editorial Board meeting as an opponent of Prop. 86. Neurologist Susan Hansen of Mountain View, Calif., said she supported Prop. 86 in August, but when she looked into a provision that exempts hospitals from some anti-trust law, she determined that Prop. 86 would give hospitals too much economic clout and make it easier for them to overbill patients. That turned her against Prop. 86, she said, because it would affect "my ability to practice medicine."