The local-tax option

A fascinating gambit—and potential game-changer—in the state budget battle is now being made in the State Capitol. It’s a bill (SB 653) by Senate President Pro Tem Darrell Steinberg (D-Sacramento) that would greatly increase the ability of counties and school districts to raise all kinds of taxes—local income taxes, sales taxes, cigarette taxes, soda taxes, alcohol taxes, oil taxes, you name it.

Those taxes would have to be approved by a two-thirds vote wherever they were proposed, but Steinberg’s bill needs only majority-vote legislative approval and Gov. Jerry Brown’s signature to become law. A number of counties and school districts facing devastating budget shortfalls have voiced support for the measure.

It’s not something any legislator would support in normal times, but these are not normal times. Steinberg is looking at the possibility that the Republican minority in the Legislature will block the governor’s proposal to extend certain temporary taxes now in effect, and thereby force an all-cuts budget in 2011-12. That would wreak havoc on counties and school districts, and Steinberg wants to give them revenue options.

The bill, he insists, is contingent on whether the Legislature reaches a budget deal that includes the tax extensions. If not, he will go forward with it.

Business groups hate the measure, and for good reason. It potentially could create a dizzying array of local tax assessments that would be difficult to navigate. Ordinarily, we would agree with them. But these are not ordinary times. We are witnessing the gradual dismantling of the public sector in California.

Besides, upsetting business appears to be part of Steinberg’s plan. He wants business groups to put pressure on Republican lawmakers sufficient to compel two in each house to join Democrats in passing the tax extensions by the required two-thirds vote.

If that doesn’t happen, SB 653 would at least give local governments and citizens the ability to raise money for themselves.