The state’s going broke? Don’t buy it

Taxpayers increasingly are told that state government is going broke, and vital services must be slashed unless new taxes are imposed.

Here’s the truth: Even with falling tax revenue, even in an economic downturn, state government will have more money to spend next year than it has this year – about a billion dollars more, according to Mike Villines, Republican Assembly Leader.

Remember that when the hue and cry hits a crescendo in Sacramento. Remember that when teachers unions claim public school children will suffer. Remember that when Democrats dramatically parade poor and sickly people in the Capitol, wringing their hands about losing crucial services.

It bears repeating: Sacramento will have more money to spend next year than it had this year.

This is vital because Democratic legislators insist taxpayers must make greater sacrifices, even though every dollar counts more than ever for most Californians as the economy hovers just above recession. This is imperative to remember because Californians already are telling pollsters they want to protect public schools and are willing to increase taxes on the rich.

A poll by the Public Policy Institute of California, released last week, found the economy to be Californians’ top concern – 36 percent of those polled. By comparison, 12 percent ranked education and schools as their top concern. Nevertheless, we can expect Sacramento Democrats to whip up support for tax increases by emphasizing concern for schools and downplay Californians’ greater economic concerns.

We believe the public is smart enough to see through the scare tactics, and to realize tax increases would be only a further drag on the economy.

But Sacramento’s tax-and-spend lobby no doubt will seek to divide and conquer by proposing taxes on less popular segments of society such as “the rich.” Indeed, PPIC found more than two-thirds of those polled already willing to impose an income tax increase on “the wealthiest state residents.”

Taxes on less wealthy people divert money that might otherwise be saved or spent on essentials, like $4-a-gallon gasoline. But taxes on the wealthiest Californians are more likely to create former Californians. They can afford to leave.

“When California faced a Mount Everest-sized $14 billion deficit in 2003, one of the major causes for the red ink was the stampede of millionaire households from the state,” economists Arthur Laffer and Stephen Moore have written. “Out of the 25,000 or so seven-figure-income families, more than 5,000 left in the early 2000s, and the loss of their tax payments accounted for about half the budget hole.”

Any tax increase is disingenuous because it’s unneeded. As Villines told the editorial board of the Orange County Register, sister publication to this newspaper, continuing to spend at the current level is entirely possible because “we’ve got the money.”

The only reason to increase taxes, Villines said, would be to continue to expand government programs. Assembly Republicans propose to fund schools with more money than they received this year, without raising taxes, by making cuts in other programs.

We find this far more palatable – and fairer – than imposing new taxes to feed a bloated state government that Villines says already has increased its revenue 32 percent in four years.