Web Link "We have the highest state income tax rates in the nation, one of the top sales tax rates (even before the 1-cent increase) and the highest corporate tax rates in the West.
Proposition 13 has given California a low property tax rate. But because of high real estate prices, the property tax burden is near the national average. Besides, many school districts have adopted parcel taxes and bond measures.
Overall, California ranks sixth in the nation, measured by the percentage of income spent on state and local taxes, according to the Tax Foundation, a nonprofit think tank in Washington, D.C.
The problem with California's tax system is not necessarily the average amount of revenues raised over time. It is the volatility of some state taxes."
Web Link "In years past, we planned as if income tax revenues, driven by capital gains, would continue to soar; that property tax values, driven by housing prices, were limitless; that returns on public investments, driven by the stock market, could only go up. And that demand for services, driven by population increases, would continue rise steadily and consistently.
Using those assumptions, public agencies floated bonds to build new facilities, hired new staff, negotiated generous government worker wages and promised benefits and pension to employees that were unmatched in the private sector. We're now seeing that the financial house was built on an unstable foundation that has started to crumble and threatens to bring down the entire structure.
There is much pain ahead. Jobs will be cut and services curtailed, hurting the neediest among us the most. Salaries must be trimmed. Benefits must be brought under control. Sadly, much of the cost is being irresponsibly pushed off through borrowing onto the next generation.
This was avoidable. If only our leaders had remembered during the good times that we need to set aside money for a rainy day. If only they had heeded warnings that the economy could slip; tax revenues could falter; the housing and stock markets could tank; and, yes, as we saw this month from the state Department of Finance, even population growth could slow.
It should all serve as a reminder that, just as most of us at any time could lose our source of income and should maintain savings accordingly, so too are our public agencies vulnerable to major swings in revenues.
Our local leaders should keep solid reserves on hand to buffer against the downturns and resist the temptation to commit to programs, salaries and benefits that are only sustainable when times are good."
This story contains 473 words.
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