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CALIFORNIA TAX FACTS AN OVERVIEW OF THE GOLDEN STATE’S TAX STRUCTURE
Visit the CalTax Foundation to see about California's tax structure here
Jerry Brown Wants 42% Gas Tax Hike to Bail Out CalPERS
Despite tax collection increasing by 50 percent in the last 9 years, California’s public pension insolvency is forcing Gov. Jerry Brown to propose a dangerously unpopular 42 percent increase in gasoline taxes and a 141 percent increase in vehicle registration fees.
Breitbart News reported on January 9 that Gov. Brown announced that for the first time since 2012, California’s $122.8 billion General Fund Budget is in deficit by $1.6 billion. Despite a near bankruptcy during the financial crisis, California’s tax revenues have increased by about $43 billion in the last 9 years. Brown on Monday only suggested relatively painless spending reductions to close the budget gap. He was very careful to not suggest highly controversial increases in gasoline tax or vehicle fees.
Click here to read the article on Breitbart.
California’s cap and trade auction another washout
David Siders firstname.lastname@example.org
BY DAN WALTERS
February’s quarterly auction of carbon dioxide emission allowances under California’s cap and trade program was another financial washout for the state.
Results for last week’s auction were posted Wednesday morning, revealing that just 16.5 percent of the 74.8 million metric tons of emission allowances were sold at the floor price of $13.57 per ton.
The state auctions emission allowances to polluters and speculators as part of its program to reduce greenhouse gases. The proceeds are supposed to be spent on public programs to slow climate change.
February’s auction is being closely watched by market analysts because the last three quarterly auctions in 2016 posted sub-par results.
Almost all of February’s proceeds went either to California’s utilities, who sell allowances they receive free from the Air Resources Board, or the Canadian province of Quebec, which offers emission allowances through California. Both are first in line when auction proceeds are apportioned.
The ARB was offering 43.7 million tons of state-owned emission allowances, but sold just 602,340 tons of advance 2020 allowances, which means the state will see only $8.2 million, rather than the nearly $600 million it could have received from a sellout.
The paltry auction revenues will likely stall Gov. Jerry Brown’s 2017-18 budget plan to spend $2.2 billion on a variety of climate-related programs and projects, including $800 million on his bullet train project.
Analysts have cited a glut of emission allowances on the market, and political and legal uncertainty over the cap and trade program for weak auction interest. The current program’s legality is being challenged in a lawsuit and expires in 2020. Brown wants it to be reauthorized by a two-thirds legislative vote to remove the legal cloud.
“Today’s anemic auction results demonstrate that the state’s landmark cap and trade program is in need of reform and the kind of market certainty that only the Legislature and governor can provide via statute,” Senate President Pro Tem Kevin de León said in a statement. “We need a program that both reduces pollution and provides stable funding to clean up climate emissions.”
Gov. Jerry Brown, legislators
Brown to make nearly $183,000, lawmakers more than $100,000
California Citizens Compensation Commission notes officials are 19.6 percent below pre-recession pay
Commission chair: “How many people in the private sector are getting 19 percent?”
The California Citizens Compensation Commission voted Monday to grant 3 percent raises to Gov. Jerry Brown and legislators. Christopher Cadelago email@example.com
BY CHRISTOPHER CADELAGO
For the third consecutive year, Gov. Jerry Brown, state legislators and other state elected officials will receive pay raises, beginning later this year.
Citing the post-recession boom in tax revenue, the panel that establishes state government politician salaries unanimously agreed to the 3 percent increases beginning Dec. 1. The California Citizens Compensation Commission on Monday also moved to restore previous cuts to the state’s contribution toward monthly health and dental premiums.
The raises will boost Brown’s annual salary by $5,324, to $182,791, while the pay for rank-and-file lawmakers will climb by $2,915 to $100,112, although that doesn’t include roughly $33,000 in annual tax-free per diem payments.
California elected officials’ salaries have marched upward as the state transitioned from years of discord over how to tackle massive budget deficits.
Though the salaries for Brown, Lt. Gov. Gavin Newsom, Attorney General Kamala Harris and others are a small fraction of the budget, they have been an important symbol for the public since before Californians overwhelmingly voted to create the governor-appointed pay panel under Proposition 112 in 1990.
Despite having their pay cut during the recession, legislators here have remained the best compensated in the country. In approving a 2 percent salary boost last year, at least one commissioner noted that the driving force behind the government’s recovery was a voter-approved sales and income tax increase.
Chairman Tom Dalzell, a labor attorney appointed by Brown, said he believed the across-the board 3 percent raises were appropriate, particularly when compared with some of the salaries earned by elected leaders elsewhere. He also noted that many state workers will get 2.5 percent pay raises on July 1.
“In bad times, we needed to take into consideration that it is bad times. And while what we do has no effect whatsoever on the budget, there still is a leadership or symbolic importance,” he said. “When there are deficits, especially when state employees are asked to suffer, it’s important for there to be some recognition in the state officer salaries and benefits.”
Politicians during the economic downturn experienced reductions of almost 23 percent – a nearly $50,000 cutback for the governor and $26,000 for legislators. Dalzell noted that their pay remained nearly 20 percent behind pre-recession figures. Lawmakers also do not receive government-funded pensions.
Still, Dalzell said he understood that taking a more aggressive approach to restoring salaries could be difficult for a wary public to stomach.
“I think that to come in and say a 19.6 percent increase to get them back to 2007, that sounds like a nice idea, but that’s a huge number,” he said. “How many people in the private sector are getting 19 percent?”
Health plans’ finances a big unknown in California tax swap package
Proposal’s goal is tax neutrality for plans, securing federal money
Some plans almost certainly will come out ahead or behind with proposal’s offsetting ‘tax reforms’
Individual plans helped shape legislation
BY JIM MILLER
A $2.4 billion managed-care organization tax package awaiting votes in the California Legislature reflects the heavy imprint of the state’s health insurance industry, which pushed for major changes to avoid any tax hit that could be passed on to customers.
The approach has earned the backing of the California Chamber of Commerce and neutrality from the influential Howard Jarvis Taxpayers Association. It has a strong chance of winning enough support from Republican lawmakers to reach the needed two-thirds vote threshold to pass. Then, the state would be on the verge of its ultimate goal: continuing to pull in more than $1 billion in federal matching money.
State policymakers normally have detailed knowledge about how government programs receive and spend money. Yet the current package, hammered out in weeks of private talks between the Brown administration and health plan representatives, rests on a major unknown: How each plan would fare after the “tax reforms,” or offsets.
Health plans have crunched their numbers, but most of the information is proprietary and not available to the Brown administration or the statewide trade group that helped lead negotiations on the proposal. The extent to which any plan could come out ahead or behind under the three-year proposal is unknown.
“It’s certainly not a pretty process,” said Anthony Wright, executive director of Health Access, a group that advocates for affordable health care. The importance of maintaining the flow of matching federal dollars justifies the approach, he added.
“It would be very bad for the industry as a whole if we lost a billion dollars for the health care system,” Wright said.
Renewed in 2013, California’s tax on managed-care organizations expires July 1. It applies to about two dozen health plans with Medi-Cal managed-care patients.
In July 2014, though, the Obama administration said any renewed tax needed to apply to all health plans. Gov. Jerry Brown released such a proposal in January 2015, and publicly available information collected by the state made clear each plan’s potential tax hit.
Republican lawmakers, as well as many health plans, quickly came out against the idea. They warned that the expanded tax would drive some insurance carriers to leave the California market while raising rates for millions of people with commercial coverage.
The current legislation seeks to address those concerns. It hinges on giving some plans a break on two other taxes: reducing their gross premium tax rate and exempting them from the corporation tax. Officials have overall estimates of those offsets, but not plan-by-plan details.
Health insurance is closely regulated by the state and the subject of multiple bills annually. In 2015, health plans overseen by the Department of Managed Health Care and the industry’s trade group spent almost $7 million on lobbying, records show. They gave $34 million to state campaign committees during the last election cycle.
The California Association of Health Plans announced its support for the tax-swap legislation earlier this month.