LA MALFA REVIEWS STATE BUDGET NEGOTIATIONS WITH REALTORS
LOCAL GOVERNMENT, SHASTA COUNTY
October 29th, 2008
State Assemblyman Doug LaMalfa addressed a group of Realtors this morning at the Shasta
Association of Realtors. His primary topic of discussion centered around the state budget that was 85 days late due to key philosophical issues between Republicans and Democrats to address a huge budget deficit.
One option, he explained, could have been to fund programs and services both parties agreed upon to minimize the impact of a delayed budget. However, Democrats wanted to keep the pressure on Republicans to increase revenue through a 1% sales tax hike. He went on to say such an increase represents a 14% increase in sales tax. In our area, this would encourage more Californians to cross the border to Oregon to buy durable goods and big ticket items to avoid the proposed 8.25% sales tax.
The Republicans dug in their heels and made it clear to the Democrats and the Governor that no tax increases would be approved. Around day 73 of the budget impasse, Senator Don Perata, finally understood the Republicans were serious about not raising taxes and worked toward closing the gap with accounting tricks and optimistic revenue projections.
Now California is using a check-into-cash scheme to fill the gap of dropping revenues by utilizing RAN’s or Revenue Anticipation Notes. Doug said the “state’s eyes are always bigger than their checkbook” balance. During the good years (2003-2004), revenues soared more than 40%, but spending increased by 44%, he said. Now, state budget analysts are predicting an $8 billion shortfall in revenue by year’s end despite nearly $700 million tax windfall from gasoline tax revenues which soared due to high gas prices this year.
The problem is due in part to one time expenditures being made permanent. He believes the state needs to get control of spending and increase reserves in a rainy day fund to smooth the ups and downs of revenues resulting from economic swings.
Doug has 32 days left before he is termed out. He plans to run for the Senate in 2010 at which time Senator Aanestad is termed out too.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
