STATE BUDGET UPDATE:

By State Representative Debbie Lesko
August 2, 2009

The legislature passed a balanced budget without a tax increase twice. Once on June 4th, then again on June 30th.

The June 4th budget bill was not transmitted to the Governor because she said she would veto it, so the legislature changed portions of the bill at the Governor’s request and passed another balanced budget without a tax increase on June 30th. The Governor vetoed it because it did not include the sales tax increase she requested.

It has become abundantly clear that the Governor will veto any budget bill without a referral to the ballot of a sales tax increase, something most Republicans, including myself, oppose.

On July 29th-31st Republican leadership struck a deal with the Governor. It is a deal that will be tax revenue neutral after approximately 4 years and then become a tax cut.

DETAILS OF THE LATEST BUDGET PROPOSAL:

In exchange for asking the voters if they want to increase sales taxes by 1 cent in year one and year two and ½ cent in year three, the following will take place:

1. Permanent property tax cuts of $250 million/year whether the voters approve the sales tax increase or not.
2. Permanent individual income tax cuts of $200 million/year starting in 2011, whether the voters approve the sales tax increase or not. The percentage cut will be the same over all income brackets.
3. Permanent corporate income tax cuts of $200 million/year starting in 2011, whether the voters approve the sales tax increase or not.
4. Cap state spending at the 2009 budget level ($10.2 Billion) for 3 years.
5. Ask the voters if they will temporarily suspend Proposition 105 for 3 years, so that some “auto-pilot” increases in state spending approved by prior voter propositions can be suspended temporarily.
6. Make permanent state spending cuts of $580 million, in addition to the roughly $500 million in permanent spending cuts made in January for the 2009 budget.

This budget plan was passed out of the House on July 31st and is one vote short in the Senate as of July 31st.

A vast majority of Republicans do not want to ask the voters to increase sales taxes. It is against what we believe in. However, since the Governor has made it abundantly clear that she will veto ANY budget without asking the voters for a sales tax increase, the choice was accept this deal, settle for a worse deal later, or let the state run out of money so that schools and everything else suffers. We’ll be back to work again next week.

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