I have some good news and some bad news. The good news is that gridlock in the state legislature between Democrats and Republicans has ended. The bad news is that gridlock in the state legislature Democrats and Republicans has ended.
One of the most important aspects of our form of government is that there are checks and balances. On the national level, with the Republicans owning the House of Representatives we can be sure that there will have to be compromise with the Senate and President for anything to get done. That’s a good thing. Unfortunately, with this election, that process has been lost on the state level. With the Democrats in control of two-thirds of the Assembly and Senate, they have reached their holy grail over what is going to become state law in the next two years.
It’s true that elections have consequences. Here are some of the consequences of having one political party in total control of the state legislature and the governor’s office. There will be no compromise with the Republicans and the governor will also be powerless to stop bad legislation because, with two-thirds of both houses, the Democrats in the Legislature can overrule him on everything.
I have always said when the government is owned by one party, the crazies will come out with some of the most extreme legislation imaginable. Now they can attempt to repeal Proposition 13. After repeal, they can raise property taxes, probably in stages so most people will not notice. This will hurt seniors on a fixed income most of all. Renters will not be exempt as their rent will increase so that landlords can compensate for the loss. And of course, Democrats will not get blamed because the raise on rents will be seen as coming from landlords and not actions by the Democrats who have total control the state government.
We have already seen what the Legislature can do to rural California with the fire fee of $150 per year that was only levied on those who lived rural areas. Now the door is wide open for more fees creating a war on rural California. Most likely is a fee for keeping roads open and cleaning debris from storms that, of course, will only be levied on those who live in rural areas.
The next tax to be raised will be the vehicle license fee. I expect it will increase 100-200 percent. This will pass handily with the governor unable to veto it.
Auto insurance rates will rise dramatically because the Legislature will mandate more and more items to be covered by insurance. Naturally those living in rural areas will see their rates rise the most. Again, the “greedy” insurance companies will be blamed.
Homeowners insurers will continue to leave the state because of the increased coverages mandated by the state legislature. The insurance companies will find out that this business is unprofitable. Those that stay will have to raise their rates to stay profitable. Again the increase in rates to the homeowner will be seen as coming from those greedy insurance companies. The renters will see their rents rise too and blame it on the greedy landlord.
The Legislature will take its cue from the federal government and extend class warfare to California and increase state income taxes, with those making over $75,000 being hit the least while those making over $500,000 getting the brunt of it.
Corporate taxes will be increased probably 25 percent, which will be passed down to the consumer in the form of higher prices, which the consumer will blame on the greedy corporations instead of the politicians in the legislature. This is on top of the mandated health care coverage by the feds which will force many companies to make full time employees into part time ones.
But wait, there’s more. Democrats have proposed replenishing the state’s barren unemployment insurance trust fund by raising payroll taxes on employers. The state has also borrowed $10 billion from Uncle Sam to pay for jobless benefits and $313 million this year from the state disability insurance trust fund for debt service on those federal loans. Somebody is going to pay for all of this and, you guessed it, it will be us.
As you already know, sales taxes will be going up by another quarter of a percent starting Jan. 1 along with income tax rates on those making over $250,000. With Brookings only about 25 miles from us it will be more of an incentive to purchase expensive items there and hurt our local economy even more than it has been. But that’s not all. Now the Democrats in Sacramento will be pushing to extend the sales tax to services in addition to goods so look for new sales taxes on haircuts, restaurant meals, attorney fees and movie tickets, just to name a few.
The good news is that the state budget will finally be balanced and passed on time. The bad news is that it will all be done with higher taxes on everyone. And further bad news, most of this legislation will be passed retroactively effective in 2012 instead of 2013 because it will be passed as emergency legislation which ironically needs a two-thirds vote by each house of the Legislature. This means that small companies in Del Norte County will get hit hard because they can’t raise revenue retroactively.
Remember, this is the government the people have said they wanted by the choices they made in this election. I just hope they know who to blame when the bill comes due and they have to write that check.
Bob Berkowitz is a Crescent City resident and runs LifeStyles Research Company.