The state’s nonpartisan Legislative Analyst’s Office estimates that the higher taxes yield $6 billion a year, while saying the actual number is “subject to multibillion-dollar swings.” Income taxes provide the largest share of state revenue, followed by sales levies. Rates reach 13.3 percent on those making $1 million or more, the most of any state. Making top earners responsible for more revenue increased volatility.“The top 1 percent pays 50 percent of the income taxes,” [former Brown aide Nathan] Gardels said in an interview. “We’re still subject to the same boom-and-bust cycles in this state.”
Alongside the state’s volatile revenue system remains a $100 billion pension liability and $2 billion (and rising) for health and dental care to prisoners. It’s not clear Governor Brown has the political will to force unions or Democratic lawmakers into reform:
Brown reached a deal this year with the state’s largest public-employee union that grants workers a 2 percent pay increase effective July 1, 2014, if revenue growth continues, and 2.5 percent a year later. If revenue fails to meet a minimum target, the entire 4.5 percent raise begins July 1, 2015.…Brown and Democratic lawmakers also reached a compromise over pensions that fell short of the governor’s goal of ending full pension guarantees for new workers.
Brown may be willing to settle for such compromises because Democratic voters don’t tend to get angry about unsustainably high taxes on the wealthy and high pay for public workers. And if Brown runs again, he’ll have a $10 million war chest on hand, while the two Republicans who have announced their candidacies have $45,000 and $27,000, respectively.On the other hand, plenty of people sense that Brown and his Democratic supermajority in the legislature are still steering a sinking ship. A recent USC/LA Times poll found that only 32 percent of respondents said they’d vote to re-elect Brown; 37 percent said they’d vote for someone else.If the GOP is the master of fiscal responsibility and harbinger of growth and opportunity it seems to think it is, a receptive audience may await in the Golden State. Plenty of voters seem to think that the abyss remains near, and that things could be much better than they currently are.[Governor Jerry Brown image courtesy of Wikimedia Commons]