NCPA - National Center for Policy Analysis

California Taxpayers Win!

August 7, 2003

Despite its $38 billion budget shortfall, last week the California state assembly passed a $100 billion budget without major tax increases. There were spending cuts, one-time borrowing gimmicks and increased fees (such as tripling the vehicle license fee) -- but not a big tax increase. Why?

The answer is that California taxpayers, like those in a number of other states, are protected by the requirement that a supermajority of the state legislature must approve state tax hikes.

California's supermajority requirement enacted in conjunction with Proposition 13, spurred taxpayer revolts in a number of states.

  • Of the seven states with comprehensive supermajority limits that enacted budgets by July, six did so without raising taxes.
  • The American Legislative Exchange Council says the spending-cuts-to-tax-increase ratio in these seven states was an astounding 137 to 1.
  • In the rest of the nation, state tax hikes exceeded spending cuts.

California's recall law also helped prevent tax increases, says Michael New of the Cato Institute. With the threat of recall hanging over Gov. Gray Davis, Democrats were unwilling to encourage the effort by hiking taxes. So regardless of the outcome of the recall election, says New, California taxpayers have already won.

Source: Michael J. New (Cato Institute), "Taxpayers Are First Winners in California Recall Election," Investor's Business Daily, August 7, 2003.


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