California Dems Screw The Taxpayers With Questionably Legal "Fees"

The Dems in the California State Legislature just can't help themselves. Faced with a soaring budget deficit they can only find new taxes and fees, while silly state programs go on with full funding. And the only way they can try and make their plan work is to convince a judge that increased "fees" are not new taxes:

Reporting from Sacramento -- Unable to find common ground with Republicans, California's Democratic leaders today announced they would unilaterally pass legislation to raise gas, sales and income taxes through a series of legal maneuvers aimed at easing the state's fiscal crisis.

The Democratic gambit to raise $9.3 billion, scheduled to be voted on tonight, would increase sales taxes by three-fourths of a cent and gas taxes by 13.5 cents a gallon. The plan would also add a surcharge of 2.5% to everyone's state income tax bill.

In addition, the Democrats said they would cut $7.3 billion from schools, healthcare and other programs. The complete package would total $18 billion and nearly halve the state's budget shortfall, projected to reach $41.8 billion within 18 months.

Inside the Capitol, the strategy is considered revolutionary, because it aims to completely sideline the GOP. Though Republicans are a minority in both the Assembly and Senate, they have repeatedly blocked tax increases and thwarted budgets they did not like, because California is one of only three states requiring a two-thirds vote of the Legislature for tax increases. Achieving that threshold requires some Republican votes.

"I still believe in bipartisanship," said Senate President Pro Tem Darrell Steinberg (D-Sacramento) at a Capitol news conference. "But there is an even greater responsibility than practicing bipartisanship, and that is to govern. And that is what we intend to do here today."


The plan would employ an arcane loophole in state law that lets legislators pass a revenue bill with a simple majority vote rather than two-thirds -- if the measure ultimately does not cost anything extra.

The Democrats intend to eliminate existing fees, including those on gasoline, substituting tax increases that would include a 9.9% levy on oil extraction and the income tax surcharge. Then, they would reimpose the gas charges at a higher rate; fees can be passed with simple majority votes.

Courts have defined a tax as something imposed compulsorily and used for general government purposes, while a fee is charged to users of a specific benefit provided by government, such as a road.

Similar proposals have been considered in past budget crises but never acted on out of concern that they would unravel in court. The Democrats said today that the plan had passed muster with the nonpartisan Legislative Counsel's office, which provides legal advice to lawmakers. But the only opinion from that office that Democrats released was from 2003.

"Sen. Steinberg and I are committed to getting this job done with or without our Republican colleagues," said Assembly Speaker Karen Bass (D-Los Angeles).

Matt David, a spokesman for Gov. Arnold Schwarzenegger, said the Republican governor would not sign the measure unless Democrats could prove it was legal and it included cuts to the state's workforce, which public employee unions are resisting.

The Republicans need to sue to stop this, unless Arnold stops it first. The changes they are proposing will add $.13 to every gallon of gas and will increase the state sales tax by .75%. They might as well put a "Going Out of Business" sign at the state border.