Balancing act

SN&R readers favor additional revenue plans, including taxation, over cutbacks to solve the state’s budget crisis

When SN&R asked last month for readers to fix the California state budget, we didn’t expect more than a hundred responses, with a variety of solutions to the state’s current fiscal mess, to arrive via snail mail (see Related Stories to the right).

What’s more, reader solutions favored additional revenue, including taxation, over cuts by a nearly 2-to-1 margin.

Whether it was repealing the corporate tax breaks negotiated in the February 2009 budget deal, adding corporate taxes to oil extraction and independent contractors, or upping the income-tax rate in the highest bracket by 0.7 percent, SN&R readers think that the wealthy ought to shoulder more of the burden.

In fact, the only tax increase that was overwhelmingly spurned by our readers was the suggestion that Social Security benefits become subject to state income tax. “No,” wrote Don McGovern of Fair Oaks. “That only hurts those who need and have earned it.”

Some local residents managed to create a surplus. Miranda Fram of Sacramento ended up with a $1 billion surplus, mostly by reforming Proposition 13 to protect the homeowner rather than industrial- and commercial-property owners. Of course, she also made some cuts to the prison system, including sending low-level, non-sex offenders back to the counties (with reimbursement) and using an early-release “house arrest” GPS program for others.

Dave Kuhler offered some additional ideas: Close UC Merced and end the state mortgage-interest deduction—but only for second homes and mortgages worth more than $750,000.

“We’re tired,” wrote Michael Retzinger of Sacramento. “The well-being of future generations, medically and academically, should not be made sacrificial in the wind of corporate dominance.”

On the other end of the spectrum, there were a minority of suggestions that involved cuts.

“Cut welfare and state aid from people who should not be getting it,” wrote Bob Engel of Sacramento. “Then you’ll cut the $26 billion [deficit] in three years.” However, he did favor some tax increases and reforming Prop. 13.

But, as Art Soinski pointed out, “Balancing the budget can be a trivial exercise.” A handful of changes, like reforming Prop. 13 and revising the vehicle-registration fee, can, as he noted, “get you halfway there.” Soinski advocated a mix of budget cuts and revenue increases.

“The big problem,” Soinski wrote, “is getting the legislators to correct the long-term problem. If they accept the challenge not to run for office again, they can do what needs to be done.”

Scott Kiley suggested adopting State Controller John Chiang’s January 2008 recommendations. “To solve the budget crisis fully, you close all tax loopholes for the wealthy,” he wrote. “In doing so, you save/gain $50 billion. The budget deficit is solved totally, and a ‘rainy day’ budget surplus attained.”

And David Reed of Folsom suggested that we just start over. “Go to a fair tax, with deductions for mortgage/rent and charitable contributions,” he wrote. “A 5 percent tax on all purchases except insurance. Keep Prop. 13 for homeowners and small businesses only, and have the [Department of Motor Vehicles] go to a two-year license fee of $100 for every $5,000 of the car’s value.” He’s certain these changes will lead to a budget surplus.

“Wow! I learned a lot,” wrote Shelly Keller of Sacramento.

So did SN&R: Our readers are smart, compassionate and engaged with the process. We’ll soon be drawing names for prizes (like restaurant gift certificates) from among the readers who participated in our budget challenge.

Who says there’s no such thing as a free lunch?