EZ Policy Blog

On Friday, the California Taxpayers’ Association endorsed Governor Schwarzenegger’s budget plan including the temporary sales tax increase. From the Sacramento Bee:

Breaking its long practice of opposing tax increases, the California Taxpayers’ Association on Friday agreed to support Gov. Arnold Schwarzenegger’s state budget proposal, including a sales tax boost.

The 82-year-old association is a nonprofit representing all taxpayers, but some of California’s largest corporations dominate its sizable board of directors, which voted 28-19 on Friday to back the proposal.

Schwarzenegger’s latest spending plan would close the state’s $15.2 billion budget gap, in part, by imposing a three-year, one-cent-on-the-dollar sales tax increase on most taxable products, except gasoline and diesel fuel.

The boost would raise $4 billion this year and $9.9 billion more over the next two years, but then would be replaced by a 1.25-cent cut on Sept. 1, 2011.

That cut, along with long-term budget changes the governor is proposing, played into the group’s decision.

“As an association representing taxpayers, we have not arrived at our position lightly,” CTA President Teresa Casazza said in a statement. “Given the current circumstances, however, we can support a temporary sales tax increase as long as it is accompanied by meaningful budget reform, an economic stimulus plan and a future reduction in the sales tax rate that will make the change a net tax reduction over time.”

Lawmakers and Schwarzenegger are 68 days into the new fiscal year without a budget, the longest the state has ever gone.

Schwarzenegger’s fellow Republicans in the Legislature, whose votes are necessary to reach the two-thirds majority needed to pass a budget, have said they will never support a tax increase.

“It doesn’t change our position at all,” Assembly Republican leader Mike Villines of Clovis said of the Cal-Tax endorsement. “I mean, Cal-Tax, I’m not exactly sure what the organization is supposed to do, but if it looks like a tax and it sounds like a tax, it is a tax, regardless of what Cal-Tax or anybody else calls it.”

Villines and Jon Coupal, president of the Howard Jarvis Taxpayers Association, said Schwarzenegger’s office lobbied Cal-Tax’s corporate board members hard over several weeks to get the endorsement.

“We think it’s unfortunate, and we don’t think it really changes a thing because the votes are not there in the Legislature, quite frankly,” Coupal said. “We’ll see. It’s disappointing that Cal-Tax folded under the pressure, but the Howard Jarvis Taxpayers Association will never do so.”

In a statement, Schwarzenegger commended the association’s board members “for having the courage to put the best interest of Californians first in supporting my compromise budget proposal.”

“It’s time for legislators to follow the lead of Cal-Tax,” the statement concludes.