California Lawmakers Approved $4.4 Billion in New Taxes

State lawmakers and the governor approved more than $4.4 billion a year in higher taxes and fees this year, even as the state was experiencing a revenue windfall from existing taxes, according to the new Tax and Fee Report published by the California Tax Foundation. 

The increases enacted this year include a renewal of California’s Managed Care Organization tax, two cellphone surcharges and a renewal of a surcharge on electricity ratepayers.

Many tax and fee proposals are still pending in the Capitol, and could be pursued when the Legislature returns in January – unless the sponsors decide that enough is enough. 

The state has a $7 billion operating surplus and $26 billion in reserve accounts, according to a new projection from the nonpartisan legislative analyst. The analyst noted that revenue from California’s three largest taxes – the personal income tax, sales tax and corporation tax – increased an impressive 30 percent from 2012-13 to 2018-19 (in 2018-19 dollars).

Property tax revenue also is increasing throughout the state. The State Board of Equalization just reported that the taxable value of property in California increased 6 percent this year, pyramiding on top of similar increases during each of the past four years. This translates to billions of dollars in additional property tax revenue for local governments and public schools.

The property tax revenue is increasing even as individual property owners are protected from unmanageable increases. Under Proposition 13, property tax increases are capped at 2 percent per year, unless there is a change of ownership or new construction (including stadiums and office buildings that generate large amounts of property tax revenue, with no negative tax impact on homeowners).

Thanks to this influx of tax dollars, the state constitution’s minimum guarantee for education funding in 2020-21 will be $84.3 billion, an increase of $3.4 billion (4.2 percent) over the current level, according to the legislative analyst. With school spending already at a historic high, this is very good news indeed for education. 

The government’s tax windfall illustrates the well-known principle that the best source of new revenue for schools and other government programs is a thriving economy. When income goes up, income tax revenue goes up. When sales increase, sale tax revenue increases. When businesses put more workers on the payroll, payroll tax revenue increases. 

Given the revenue surplus, the $3.4 billion increase in school funding and the big state reserves, is there any possible scenario in which tax and fee increases would make sense?

Lawmakers will provide their answer to this question in a matter of months. The Tax and Fee Report reveals that they proposed a total of $20.4 billion worth of annual taxes and fees this year, and 19 proposed tax and fee increases remain in the hopper awaiting possible action in 2020. Additional taxes and fees might be unveiled in January and February, the peak months for introducing legislation to be considered in the new year.

Taxpayers also will have a chance to directly answer the question of whether tax increases make sense. A large property tax increase initiative already has qualified for the ballot, and an income tax measure has been filed, so voters will decide in November 2020 whether they want to keep filling the state reserves or find their own uses for their money.

Dustin Weatherby policy and Communications Associate for the California Taxpayers Association.

This article was originally published by Fox and Hounds Daily.

Comments

  1. Guaranteed! Democrats will waste it.
    Even now, with the surplus, I doubt that it will be utilized wisely.
    I have no faith in anyone with a (D) after their name. They seem to lie a lot an deception has always been utilized by them to get propositions passed and to steal from the Citizen. Even now, I would suspect that the Citizen is getting raped by taxes and regulations. Not really proud of this state anymore. Sure there great weather and landscapes, but the ballot box and the legislature has been corrupted by Democrats. They have taught me to hate anything Democrat. Bye bye freedoms in this unconstitutional state. Chains and slavery of Socialism-Communism are just around the corner because of Newsom, Brown, and the incompetent legislature in Sacramento. The burial will come soon with the economic collapse caused by the greed of Democrats.
    It’s getting scary, living in this anti-American state!

  2. Jimmy, you doubt that it will be utilized wisely? Come on, the Democrat Socialist Party has deceptively diverted funds for decades. Fix dams? Nope let them fail and then spend millions more, why be proactive? Rape the drivers of autos by diverting tax money from roads and bridges and then claim and emergency they created.

    How about them schools….another Democrat failure. Should we bring up the illegals and voting that is both a Federal and State felony? How about driving up government worker wages far above the private sector and then using them as PAC’s to get elected?

    The Democrats have become the Party of felony theft and bunko artists.

    When you ask a Demo if they would manage their personal economics this way? The answer is no and privately they will ask you are you crazy?

    These are mean and insensitive politicians who have no sense of honesty.

  3. Why don’t they fix the roads in the Bay Area? The roads are so bad that it’s getting to the point you need a 4 wheel drive and when I was there on a visit I noticed something that friggin floored me, rather than fix these roads they spent money on permanent sign posts that read something like Rough Road Ahead. Another brilliant democratic fix.

  4. Sadly, because the State is about 80% registered Democrats who think that the only ones who actually pay the taxes are the billionaires, there are not enough people in California to vote DOWN any tax law no matter how onerous. Only a campaign that clearly demonstrated that the additional taxes will be paid by those earning, say, $50,000 per year or more, might have a chance to be defeated. But since the titles on ballot measures will never reveal that, because of the people who create the titles, we few homeowners are just screwed — again!

  5. I hate democrats

  6. What will these uncontrollable commie-fornia democrats do when they have finally gotten to the point where they are taxing us at 100% of what we earn? Most likely they will again deride us just like Jerry Brown did for being freeloaders just because we will no longer have the ability to be robbed of anything more.
    Don’t laugh. At the rate they are going, and judging from their past record of forever increasing taxes and fees, I now believe that their ultimate goal is nothing less than to tax and fee us clean out of existence. Why else would they be increasing taxes when they already have such a large surplus to tap?
    Their lust for more of our money, and their insane desire to exert more power and control over us is nothing less than an insatiable mental illness.
    Disregarding all reason, they always want more.
    ALWAYS!
    And they will never stop.
    Fox.
    Out.

  7. No! More taxes we have enough taxes as it is our tax dollars don’t go on what they are supposed to.Maybe cut some of the house speaker money and the legislation and by all means the GOVERNOR doesn’t spend our taxed money where it is intended to be for.NO MORE TAXES FOR CALIFORNIANS NO!

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