California’s Revenue Problem – Educators Should Demand Economic Growth Not Tax Increases

In what is becoming a perennial affair, the California budget deficit is projected to be over $21 billion in the coming year – including a $6 billion hangover from this year.  With the same degree of regularity, in pursuit of stable education funding (a good idea), educators in California are calling for tax rate increases (a bad idea) and blaming Republican legislators for blocking those increases (an unproductive idea).   Rather than call for more tax rate increases – one of the causes of our current problems –educators should call for policies that will increase private sector jobs so we have more people paying taxes – not less.

At first blush, it may be hard to believe that we have another deficit.  After all, in 2008, expenditures were far in excess of $100 billion.   Expenditures for the upcoming fiscal year were just over $90 billion.  With all that cutting, shouldn’t we have a balanced budget?  The answer is no – because budgets are a two-part equation: deficit/surplus = spending – revenues.  In California’s case, revenues have plummeted faster than expenditures – and continue to do so at a perilous rate.  Worse yet, California’s Legislative Analysts Office projects huge deficits for years to come.

Nevertheless, Democrats and many educators are calling for ever more tax rate increases in a dangerous game of economic roulette with California jobs.  Keep in mind that California already has the 6^th highest tax rate in the Country.  Why not shoot for number #1?  Three reasons:

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