ShareThisSACRAMENTO, Calif. - California Gov. Arnold Schwarzenegger threatened last week to veto a bill that would reduce a corporate tax break, calling it a tax increase. He says requiring Amazon.com to collect tax dollars already owed is a new tax burden.
But he believes a new surcharge on property insurance is a "fee" that Californians ought to pay.
The Republican governor has pledged not to raise taxes in his final year in office, but whether that holds true depends on what your definition of a tax is. Legislative counsel already has drafted the insurance fee as a tax bill.
Since becoming governor, Schwarzenegger has learned that tax promises are situational when it comes to resolving the state budget.
He spent his first term as an ardent opponent of new taxes. He won the recall election partly on a promise to cut the state's car tax, which he fulfilled his first day in office. Schwarzenegger also won re-election on a no-new-taxes pledge in 2006.
But with the state battered by the recession and facing a $42 billion deficit last winter, Schwarzenegger proposed new taxes on everything from alcohol to veterinary services. He ultimately signed $12.5 billion in temporary tax hikes on income, sales and vehicles, the last of which was the very tax he came to Sacramento to reduce.
The governor defended his switch by saying the historic downturn had become so severe that California had "a revenue problem rather than a spending problem."
"After watching Schwarzenegger over the course of several years, it seems he is philosophically opposed to raising taxes except as a last resort," said Dan Schnur, a GOP strategist and director of the University of Southern California's Jesse M. Unruh Institute of Politics. "People on different sides of the aisle might argue that the last resort has come too quickly or too slowly."
Jon Coupal of the Howard Jarvis Taxpayers Association recalled how Schwarzenegger had won his group's support in 2006 by outlining potential ways in which Democratic opponent Phil Angelides would raise taxes. But Coupal said Schwarzenegger ended up adopting what he accused Angelides of planning to do.
"From a taxpayer perspective, it was a knife in the back," Coupal said.
Schwarzenegger was never an anti-tax hard-liner. In the recall election, he opposed taxes but refused to sign a popular conservative no-new-taxes pledge because he said the state may need money in an emergency.
Still, the backlash to Schwarzenegger's actions last year influenced the governor's tack this year against more taxes. "It cost me a lot of pain with my party and with conservatives," he said in November.
Schwarzenegger and lawmakers know they have to cut programs to help balance a $19.9 billion deficit. They also remain desperate for revenue, so they are seeking cash streams that can avoid the "tax" label.
Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he is not proposing general tax increases, but not because he believes state programs don't deserve more revenue. His position is based on a strategic interpretation of the political landscape, in which Republicans oppose tax hikes.
"I just believe the smarter strategy and the strategy that has the greatest chance of success is to focus on the tax credit, tax loophole and tax expenditure side of the equation," Steinberg said.
As a result, most tax battles this year will take place around the edges, the murky areas that Democrats can describe as a rollback of corporate tax breaks or Schwarzenegger can describe as a fire fee.
Reach Kevin Yamamura at kyamamura(at)sacbee.com. For more stories visit scrippsnews.com
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I believe this is why we need
I believe this is why we need to put on the ballot a proposition that says taxes can never be called fees and which clearly defines taxes and fees. But they ignore the fact that the whole point of a flat percentage is to make the rich pay more dollars.