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The Legislature is Increasing your Taxes
By: Loren Kaye

Just because state taxes weren't extended by the Legislature (or the voters) to close the state budget gap doesn't mean the Legislature is not planning to raise your taxes.

 And when I write "Legislature," I'm including Republicans.


Even as negotiations to temporarily extend sales, income and vehicle taxes came a cropper, both the Assembly and Senate approved legislation - by supermajority votes - moving tax increase proposals to the opposite house.


These tax increases would not support trivial programs like colleges and universities, trial courts or state parks. They go to a core function of state government: subsidizing renewable energy and energy efficiency programs and research.


I'm not kidding: while public four-year institutions are suffering $1.3 billion in cuts, or more, from existing funding levels, a bipartisan legislative consensus is moving a total of $3.1 billion in new tax subsidies for energy investments not supported by private markets:


AB 723 by Assemblyman Steven Bradford would extend the ratepayer subsidy for renewable and energy efficiency projects and energy research for eight years, hitting ratepayers annually for $334 million in higher electricity bills. Assemblyman Das Williams has a similar bill, AB 1303.



AB 1150 by Assemblyman V. Manuel Pérez would extend the ratepayer subsidy for self-generated electricity by one year.



SB 585 by Senator Christine Kehoe would add $200 million to the total tax subsidy for solar programs



These subsidies are not paid out of utility profits, nor are they merely down payments on programs with a guaranteed return on investment. They are uneconomic, which is why the Legislature had to mandate them and require a rate increase to support them. In any other context, a mandatory levy for a general public policy purpose that does not directly benefit the payer is commonly known as a "tax."


Most of these bills recognize their status as tax increases, so require and have achieved a two-thirds vote. The exception is AB 1150 by Assm. Pérez, which has been tagged incorrectly as needing only a majority vote, potentially running afoul of Proposition 26, approved by voters last November.


The timing of these measures adding new economic burdens on homeowners and businesses for low-priority, no-return programs seems terribly inappropriate given our stalled recovery from the recession. And the Legislative Analyst has already slammed one object of the subsidy (the research program) targeted by AB 723.

But the most depressing conclusion from this is the apparently higher priority, for raising taxes, that the Legislature assigns to subsidies for energy projects over higher education, public safety, or parks.

Loren Kaye, President of the California Foundation for Commerce and Education