California Governor Jerry Brown's New Plan Shows He Still Does Not Understand 2 + 2

The California humor show rolls on. Today we find out that because of the recovery, California is only $9.6 billion in the hole instead of $15.4 billion in the hole.

Brown's old plan, because Republicans would not pass tax hikes (and I praise them for holding out), was to do a road show touring the state hoping to drum up support for a referendum to hike taxes.

In the wake of the favorable budget news, the governor has a new plan. He wants Republicans to pass a tax hike now and have a voter referendum later.

Really? Yes.

What is the Governor Smoking?

Proving once again that truth is stranger than fiction, I am wondering just what the governor is smoking.

The appearance that California is not as much in trouble now (I assure you it is a mirage because this recovery is nearly over), makes it less likely that Republicans would go along with tax hikes not more.

Besides, what part of 2 + 2 does Brown not understand? The legislature is 2 votes shy in both the House and Senate of ramming a preposterous tax hike measure down California taxpayers throats.

A few Republicans are willing to bargain if Democrats will scrap California's defined benefit pension plan (a reasonable deal in my estimation if they also agree to make California a right-to-work state), but Democrats, forever beholden to public unions will not go along.

That is the setup. Let's tune into the humor show for more details.

California Expects $6.6 Billion Revenue Gain

Bloomberg reports California Expects $6.6 Billion Revenue Gain

California’s economy is “on the mend,” driving revenue $6.6 billion higher than forecast through fiscal 2012, reducing the deficit of the most populous U.S. state and trimming the need for higher taxes, Governor Jerry Brown said.

The deficit estimate shrank to $9.6 billion from about $15.4 billion, Brown said in revising his budget proposal for the year that begins July 1.

Brown’s initial plan in January asked lawmakers to put those tax extensions directly before voters in June. His revised budget calls for lawmakers to extend the taxes and then ask voters in November to validate the move.

Jim Nielsen, the top Republican on the Assembly budget committee, said he doesn’t expect Republicans to agree to the tax extensions. Brown would need at least four Republican lawmakers to consent. The governor said he’s in discussions with between four and 10 Republican lawmakers.

“As far as our caucus is concerned, tax increases are not something that we would agree to,” Nielsen said at a news conference today. “Raising taxes only continues the spigot of spending.”

California’s constitution requires lawmakers to approve a budget by June 15 and for the governor to sign it into law by July 1. A new law approved by voters in November allows the budget to be passed by a simple majority vote and strips lawmakers of their pay whenever a budget is late.

Unless some Republicans loses their minds or Brown offers up significant incentives such as scrapping defined benefit pension plans and offering right-to-work laws, nothing is going to happen by June 15.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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