SACRAMENTO — Were Republicans able to maintain their ideological purity on taxes, or did a crack in the armor appear in their seemingly ironclad no-tax pledge as the state budget was getting resolved?
Republicans asserted a major triumph in the budget aftermath, saying they'd withstood all attempts to raise taxes to resolve an estimated $15.2 billion deficit. But Democrats say the evidence proves otherwise: They point to a vote Republicans cast for an earlier version of the budget that hinged on $4 billion in revenues from a proposed accelerated tax.
That initial budget was rejected by Gov. Arnold Schwarzenegger — and with it, the separate bill that would have accelerated the withholdings on personal incomes. But the sequence of events casts at least some doubt over whether Republicans were as steadfast against taxes as they claim.
The key to adding the $4 billion in revenues was that it was determined to not technically be a tax increase. That enabled Democrats to pass it with a simple majority vote, and gave Republicans the kind of cover to vote against it while voting for the budget that relied on the new revenues.
That was too cute for some.
"It proves they're willing to have a budget passed as long as they don't have to get their hands dirty," said Marty Hittelman, president of the California Federation of Teachers. "They didn't have to vote for it to get a budget passed that had new revenues as part of the fix. AdvertisementSo, they passed the budget with a wink and a nod."
Lawmakers eventually replaced the withholding bill with other revenue sources — by doubling penalties on corporations that are late in paying more than $1 million in taxes.
Republicans said they had no power to stop the Democrats' plan to accelerate withholdings, but had assumed that it would be vetoed by the governor.
"It was always our hope that the governor would veto that piece," said Jennifer Gibbons, spokeswoman for Assembly minority leader Mike Villines, R-Fresno.
Even as Republicans were threatening to override Schwarzenegger's veto of the budget they'd supported, they knew they wouldn't have to support an override of a veto of the withholding bill. Why? Because they couldn't get back to the bill, which had been passed in a special session that was officially closed as soon as the vote took place.
Democratic strategist Jason Kinney called that revisionist history.
"The bottom line is they agreed to the original version, and whether it's the tax acceleration or corporate penalties, that increases tax revenues and does it on the back of taxpayers," said Kinney, a consultant at California Strategies. "But to say the budget is a no-tax budget doesn't pass the blush test. That budget was based on a certain amount of revenue. Yet, they think they did it so cute that they won't be accused of raising taxes."
Taxpayer advocates said they were satisfied that Republicans held firm against permanent general tax increases, though they said that a tax acceleration came close to violating the no-tax principle.
"It's still robbery, but it's better than taking it and not giving it back," said Jon Coupal, president of the Howard Jarvis Taxpayer Association. "Lost their purity? I don't think so. Maybe they got as far as third base."
Small-business owners didn't like the tax acceleration, Coupal said, because it had the effect of "taking money out of their pocket. They'd get it back, but not until the next year."
Through amendments in the tax code, there are acceptable ways to raise revenues, Coupal said.
"Are there things you can do to raise tomorrow's revenues today? Yes," he said. "We think it's awful accounting. But Republicans made it clear that in the hierarchy of evil, that is more palatable than a general tax increase."
To Kinney, that kind of thinking reveals a moral equivalency to the Republicans' anti-tax pledge.
"I've said from day one their position isn't based on logic or ideology," Kinney said. "It's political paranoia, a fear that they're vulnerable to a challenge from the far right in closed primaries. Their anti-tax position is the most laughable charade in California state politics. It's not anti-tax, it's anti-being perceived as pro-tax."
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