In its first 10 years, California’s “temporary” income tax increase enacted 13 years ago extracted $75 billion of extra payments from taxpayers. Since then, two more tax years have elapsed, implying $95 billion of total extra tax payments to date.
What have taxpayers received for that extra $95 billion? School performance — the issue on which the temporary tax measure was sold to voters — remains poor, the state runs deficits despite hefty revenue growth, and little progress has been made on homelessness and other core issues. But one group — public employees — has done very well. Staffing, salaries and benefits for state employees keep growing, total statewide spending on public employee compensation has reached $240 billion per year, and taxpayers are spending more than ever to service hundreds of billions of dollars of stealth retirement debts. That’s why public employee unions led the efforts to enact and extend the temporary tax — and they’re at it again.
Word on the Sacramento street is that public employee unions are quietly crafting a plan to extend — if not boost — the temporary tax increase before it expires in 2030. But we should deny any extension unless accompanied by a major reform to the employee-employer relationship. GFC is evaluating potential options in that regard and would like your input. My own preference is to seek repeal of the statutes that granted collective bargaining rights to public employees for the reasons I explain here. You might agree or have other reform ideas and if so we want to hear them. Let us know.
