Please ensure Javascript is enabled for purposes of website accessibility

A First Look at Fresno State’s Quarterback Battle

Israeli Columnist Alleges Ethnic Cleansing Plan in Gaza

1 day ago

Tesla to Roll out Bay Area Robotaxis With Safety Drivers, Report Says

1 day ago

Thailand and Cambodia Exchange Heavy Artillery Fire as Border Battle Expands

1 day ago

California Cannot Require Background Checks to Buy Ammunition, US Appeals Court Rules

2 days ago

TikTok Will Go Dark in US Without Chinese Approval of Sale Deal, Lutnick Says

2 days ago

Fresno County Authorities Still Searching for Missing Mother and Infant

2 days ago
Walters: State Tax Reforms or State Tax Increases?
dan_walters
By Dan Walters, CalMatters Commentary
Published 7 years ago on
January 16, 2019

Share

There is a substantial list of governance issues that former Gov. Jerry Brown said were important, but that he left on his desk for successor Gavin Newsom.


Opinion
Dan Walters
CALmatters Commentary

As Brown annually introduced new state budgets, he would warn about the state’s precarious dependence on a very narrow and volatile revenue source – income taxes on California’s most affluent residents.
For instance, although he and the Legislature enacted a very modest reform of public employee pensions, he repeatedly said it was only a first step and more was needed to make pension systems financially sound.
Brown never returned to the issue, however, and unfunded pension liabilities remain stubbornly high, forcing state and local governments to cough up ever-greater amounts of money to keep the pension systems afloat.
Early in his second stint as governor, Brown called reforming the California Environmental Quality Act “the Lord’s work,” because it was being misused to block badly needed public and private projects. However, Brown never made a serious effort at reform while granting specific projects, particularly professional sports arenas, CEQA relief.
And then there’s tax reform.
As Brown annually introduced new state budgets, he would warn about the state’s precarious dependence on a very narrow and volatile revenue source – income taxes on California’s most affluent residents.
Tax reform was needed, he would acknowledge to reporters, while adding, in effect, that it was too difficult politically for him to make it happen.

Problem Worsened During Brown’s Second Governorship

In fact, the problem worsened markedly during Brown’s second governorship, thanks to a very progressive income tax system and his persuading voters to raise tax rates on high-income Californians.
When Brown reoccupied the office in 2011, income taxes accounted for about half of the state’s general fund revenues, but by the time he departed eight years later, they supplied 70 percent. The share of revenue from capital gains – the most unpredictable income – doubled during the period to nearly 10 percent. The top 1 percent of taxpayers generate nearly half of state income taxes.
It’s why Newsom, in his 2019-20 budget, projects that a moderate recession would cost the state about $25 billion a year in lost revenue.
Instead of reforming taxes to make the state’s revenue stream more dependable, Brown established a “rainy day fund” and other reserves to cushion the impact of a recession. But at best, they would cover about a quarter of the projected $70-75 billion in revenue losses over three years of recession.
Newsom says he’s “concerned about what’s on the horizon” and reiterates both the perils of revenue volatility and his interest in overhauling the state’s tax system.

Politically Difficult to Lower State’s Dependence on the Rich

It would, as Brown often said, be politically difficult to lower the state’s dependence on the rich and, implicitly, shift a greater share of the revenue stream to those in lower income brackets.

While Newsom, unlike Brown, says he will try to make tax reform happen, he also may need a net increase in revenues to finance the promises he’s made on health care, early childhood education and other expensive entitlements.
During Arnold Schwarzenegger’s governorship, he and legislative leaders appointed a blue-ribbon commission to study revenue volatility and recommend ways to reduce it. A very divided commission recommended to shift some burden to a broader version of the sales tax, but its report was quickly relegated to the political dust bin.
Meanwhile, a coalition of liberal groups has qualified a measure for the 2020 ballot that would remove Proposition 13’s property tax limits from commercial property, generating perhaps $10 billion more in annual revenue. Business groups are vowing to spend $100 million on an opposition campaign.
While Newsom, unlike Brown, says he will try to make tax reform happen, he also may need a net increase in revenues to finance the promises he’s made on health care, early childhood education and other expensive entitlements.
So would a Newsom tax plan really be reform, or just a way to increase Californians’ tax bite which, in overall terms, is already one of the nation’s highest?
CALmatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary.

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

California School Board Resigns After Audit Reveals $180M in Improper Funding

DON'T MISS

NASA Says 20% of Workforce to Depart Space Agency

DON'T MISS

Frustration, Gaza Alarm Drove Macron to Go It Alone on Palestine Recognition

DON'T MISS

Trump Golfs in Scotland as Epstein Questions Persist

DON'T MISS

Visalia Police Arrest Armed Robbery Suspect at Long John Silver’s

DON'T MISS

Grand Rising Brings Sober Day Party Vibes to Fresno

DON'T MISS

Jack McAuliffe, Who Started a Craft Beer Revolution, Dies at 80

DON'T MISS

Fresno Crash Leaves One Dead After Car Submerges in Canal

DON'T MISS

Lemoore Farmers Fed Up With Lack of Representation on Groundwater Agency

DON'T MISS

‘Jenny from the Block’ Rescued After Camping Out by Calwa ATM

UP NEXT

Israeli Columnist Alleges Ethnic Cleansing Plan in Gaza

UP NEXT

No One Controls MAGA, not Even Trump. The Epstein Files Prove It

UP NEXT

A Pro-Trump Community Reckons With Losing a Beloved Immigrant Neighbor

UP NEXT

Why American Jews No Longer Understand One Another

UP NEXT

Masked Raids and Impersonators Driving Force Behind Terror Campaign Across Nation

UP NEXT

I’m Not Leaving Measure C and COG Can’t Make Me: Brooke Ashjian

UP NEXT

I’m a Genocide Scholar. I Know It When I See It.

UP NEXT

California Is Finally Adopting Phonics, Fulfilling a Grandmother’s Dream

UP NEXT

New CA Budget Papers Over $20 Billion Deficit, Ignores Day of Reckoning

UP NEXT

Trump Is Winning the Race to the Bottom

Trump Golfs in Scotland as Epstein Questions Persist

5 hours ago

Visalia Police Arrest Armed Robbery Suspect at Long John Silver’s

6 hours ago

Grand Rising Brings Sober Day Party Vibes to Fresno

6 hours ago

Jack McAuliffe, Who Started a Craft Beer Revolution, Dies at 80

6 hours ago

Fresno Crash Leaves One Dead After Car Submerges in Canal

6 hours ago

Lemoore Farmers Fed Up With Lack of Representation on Groundwater Agency

7 hours ago

‘Jenny from the Block’ Rescued After Camping Out by Calwa ATM

7 hours ago

Tulare Officer Injured in Crash While Trying to Save Unresponsive Infant. Child Dies at Hospital

22 hours ago

PBS Has a Future by Leaving the Past Behind: Opinion

22 hours ago

Fresno Council Candidate Rassamni Says City Is Investigating Him Amid Allegations by Arias

23 hours ago

California School Board Resigns After Audit Reveals $180M in Improper Funding

The entire board of directors overseeing Highlands Community Charter and Technical Schools in Sacramento has either resigned or been removed...

3 hours ago

The entire board of Highlands Community Charter in Sacramento stepped down after a state audit found the school improperly received over $180 million and engaged in questionable spending. (Shutter
3 hours ago

California School Board Resigns After Audit Reveals $180M in Improper Funding

The NASA logo is seen at Kennedy Space Center in Cape Canaveral, Florida, U.S., April 16, 2021. (Reuters File)
5 hours ago

NASA Says 20% of Workforce to Depart Space Agency

Egypt's President Abdel Fattah al-Sisi and French President Emmanuel Macron visit a ward for Palestinian patients at El Arish Hospital, close to the border with the Gaza Strip, in Arish, Egypt April 8, 2025. Ludovic Marin/Pool via REUTERS
5 hours ago

Frustration, Gaza Alarm Drove Macron to Go It Alone on Palestine Recognition

U.S. President Donald Trump golfs at Trump Turnberry resort in Turnberry, Scotland, Britain, July 26, 2025. (Reuters/Phil Noble)
5 hours ago

Trump Golfs in Scotland as Epstein Questions Persist

Noah Robinson, 38, was arrested after allegedly robbing a Visalia Long John Silver’s at knifepoint and attempting to flee through nearby backyards with $110 in stolen cash on Friday, July 25, 2025. (Visalia PD)
6 hours ago

Visalia Police Arrest Armed Robbery Suspect at Long John Silver’s

6 hours ago

Grand Rising Brings Sober Day Party Vibes to Fresno

Craft Brewer Jack McAuliffe With Jim Koch of Samuel Adams
6 hours ago

Jack McAuliffe, Who Started a Craft Beer Revolution, Dies at 80

fresno
6 hours ago

Fresno Crash Leaves One Dead After Car Submerges in Canal

Help continue the work that gets you the news that matters most.

Search

Send this to a friend