Child Care Providers United of California Responds to Schwarzenegger's Budget Challenge

Arnold Schwarzenegger has invited Californians to try their hand at balancing the state's 2009-2010 budget by using an online tool provided by the Los Angeles Times.

By submitting to the limitations of the L.A. Times's budget tool and accepting the small range of options it serves up, Californians who wish to balance the state budget fairly and equitably would, by default, have to accept many of the spending cuts Schwarzenegger has already proposed in order to arrive at a balanced budget.

Child Care Providers United (CCPUnited) of California categorically rejects any cuts to education, human service, and health programs whose loss would negatively impact children and families who work for a living such as CalWorks and Healthy Families. CCPUnited also categorically rejects any and all tax breaks, tax credits, and subsidies that favor the wealthy and politically connected.

Nevertheless, CCPUnited of California has decided to participate in this exercise in order to show that revenues and only revenues will be able to right California's fast sinking ship of state.  Between $13.2 billion worth of new revenue solutions that polls show a majority of California voters support and $2.8 billion in cuts that fall largely on the state prison system, which polls also show a majority of voters favor, CCPUnited has managed to reduce the state's $24 billion deficit to just under $8 billion.

At this point in the experiment, it is apparent that it will be necessary to employ options that do not appear in the L.A. Times's interactive budget tool such as ending wasteful and unnecessary tax breaks and credits to private corporations ($2.5 billion), restoring the vehicle license fee (VLF) to 2% ($2 billion), or a carbon tax ($7.5 billion) in order to bring the remaining $8 billion shortfall in line with progressive values.

Read on for more details of our experiment using the L.A. Times's interactive budget tool:

• Raise income tax rates on the wealthy to 10% for those earning more than $300,000 per year and 11% for those earning more than $600,000 per year ($5 billion);
• Require a 3% withholding rate for independent contractors employed by businesses who are paid more than $600 per year ($2 billion)
• Create a split-roll property tax that would allow assessments on commercial real estate to rise ($2 billion);
• Institute a $1.50 per pack tax on cigarettes ($1.2 billion);
• Broaden the state income tax to services such as amusement parks and professional sporting events ($1.1 billion);
• Institute a 9.9% oil severance tax on oil companies ($855 million);
• Institute a 5-cent tax on alcoholic drinks ($585 million);
• Raise the corporate income tax rate to 9.3% ($470 million);
• Accelerate tax withholding for 2009 ($2.3 billion);
• Turn 19,000 illegal immigrants over to the federal government ($180 million)
• Allow early release of non-violent offenders from state prison ($120 million);
• Change sentencing laws to shift 23,000 low-level offenders to county jails ($100 million);
• Reduce prison time for parole violations ($95 million);
• End wasteful tax breaks and credits to private corporations ($2.5 billion);
• Institute a tax on carbon dioxide pollution ($7.5 billion); and
• Restore the vehicle license fee (VLF) to 2% ($2 billion). 

The approach described above preserves funding for the public service programs that a majority of California voters support and creates opportunities for their expansion. At the same time, it seeks the kinds of taxes and revenue solutions that polls show a majority of California voters also support.