Fires Light Up Tax Talk

Thursday, November 6, 2003

Page 7

IN MY OPINION (Column)

Fires Light Up Tax Talk

By JON COUPAL

(The writer is an attorney, president of the Howard Jarvis Taxpayers Association, and a member of Gov.-elect Arnold Schwarzenegger’s transition team.)

Shameless. That’s the only word to describe the opportunists who are calling for tax increases to pay for the horrendous damage inflicted by the Southern California wildfires. Just as victims of this tragedy must be on the watch for scam artists seeking to exploit their vulnerable situation, taxpayers must be on the watch for unscrupulous politicians who will seek to exploit the fires to advance their own tax-and-spend agendas.

It’s not like this hasn’t happened before. In the wake of both the Loma Prieta earthquake and the Northridge earthquake, the siren song for tax increases was heard loud and clear emanating from leading newspapers (with a few notable exceptions) and left-of-center elected officials. Indeed, one editorial cartoon showed a crushed car bearing the license plate “Prop 13” in the rubble of a collapsed bridge. The implication was that all taxpayer protections must be suspended or eliminated in the face of natural disasters.

But this thinking is so wrong for so many reasons. First, existing public revenues are adequate to respond to the damage wrought in Southern California. Second, raising taxes would have precisely the wrong impact on a state that is struggling to emerge from economic doldrums.

By any measure, this tragedy inflicted several billion dollars worth of damage. But few dispute that the lion’s share of the cost will be paid from the following sources: (1) federal government relief; (2) private insurance proceeds; and (3) voluntary relief contributions.

But to the extent that tax revenues are needed for the cleanup and response, won’t local governments be on the hook? Wrong again. Governor Davis has issued an order providing that the State of California will fully (100%) reimburse local governments for their costs in fighting the fires. For this reason, we can quickly rule out any excuse to suspend or repeal local taxpayer protections including the venerable Proposition 13.

Tax-and-spenders are also seeking to exploit the situation as an excuse to keep the car tax at its current high level. (Another recent political cartoon showed firefighters with the words “car tax” on their uniforms). Again, this suggestion is without foundation. To begin with, the car tax is not legally dedicated for public safety purposes. Car tax proceeds are unrestricted, and local government officials are not legally obligated to expend one cent of car tax proceeds for public safety purposes. They engage in public safety scare tactics so that they can divert money to their pet programs, programs whose funding would not likely get voter support if higher taxes were required.

What could be a better example than San Diego, the site of some of the most horrific fire damage? Not surprisingly, the political leadership of City of San Diego is already making noises about a local tax increase to deal with the situation. But isn’t this the same city that pays the San Diego Chargers millions of dollars for empty seats in the stadium? The fact is, our local governments waste vast amounts of taxpayer dollars for overhead, pet projects, redevelopment and some of the most generous compensation packages in the country. Lack of real accountability is the problem - not lack of taxpayer dollars.

Taxpayers would do well to recall Proposition 172, passed in 1993, which provides local governments with an additional half-cent sales tax for public safety purposes. As set forth in the ballot argument in support of Proposition 172, the tax proceeds would, among other things, provide “guaranteeing funds for fire protection.”

We therefore have to wonder why all the existing taxes that we pay to state and local governments are not sufficient to provide adequate public safety services. If politicians truly made public safety their first priority, there would be adequate funds available to take care of public safety without having to resort to Chicken Little cries demanding higher taxes.

Finally, there is the broader issue of the overall economic impact of any tax increase. The nation’s economy is beginning to recover and last week the feds released some of the most encouraging economic news since the 1980s. Even California is collecting higher revenues than anticipated. Indeed, the brightening revenue situation allows Governor-Elect Schwarzenegger to keep his car tax reduction promise and still meet local governments’ demands for the “backfill” that keeps them “whole.”

California is faced with two choices. It can demonstrate real fiscal responsibility by rejecting the calls for tax increases and let natural economic growth and an enhanced business climate generate the revenue we need. Or, it can continue with the tired old policies of the tax-and-spend crowd and use the fires as an excuse to raise taxes. Fortunately for taxpayers, the voters of this state answered this question on October 7. The old regime is over and the adults now in charge are unlikely to even consider tax increases.