No. 1 pri­or­ity for Gov.-elect Gavin Newsom

Imperial Valley Press - - OPINION -

The elec­tion of Gavin Newsom as the state’s next gov­er­nor marks a new era in Cal­i­for­nia pol­i­tics. Gov. Jerry Brown’s pru­dent man­age­ment of the state’s lim­ited fi­nan­cial re­sources will be a thing of the past.

If Newsom’s time as San Fran­cisco’s mayor is any in­di­ca­tion, he is more likely than Brown to think and talk big.

But he won’t be able to act big with­out sig­nif­i­cant changes in state pri­or­i­ties and fund­ing. For starters, he should dump the costly high-speed rail and Delta twin-tun­nels boon­dog­gles that Brown un­wisely viewed as his legacy projects. That would stamp Newsom as a com­mon-sense gov­er­nor who un­der­stands fi­nan­cial re­al­i­ties.

Then Newsom should get to the state’s big­gest chal­lenge: tax re­form.

We know, we know. It isn’t sexy. It won’t garner the sort of head­lines his “like-it-or-not” edict on same-sex mar­riage gen­er­ated 14 years ago. But fix­ing Cal­i­for­nia’s con­vo­luted tax sys­tem would give Newsom his only real chance to pur­sue and de­liver on the promises he re­peat­edly pushed dur­ing the cam­paign.

Con­sider that wish list: uni­ver­sal health care, uni­ver­sal preschool, uni­ver­sal pre­na­tal care, free com­mu­nity col­lege tu­ition for two years, more fund­ing for higher ed­u­ca­tion, cra­dle-to-ca­reer ed­u­ca­tion, build­ing hun­dreds of thou­sands of hous­ing units by 2025 to ease the home­less and hous­ing cri­sis. And that’s just for starters.

The pro­jected costs sim­ply don’t pen­cil out with­out a com­plete fi­nan­cial over­haul. Es­pe­cially so dur­ing the in­evitable, and now over­due, eco­nomic down­turn. Brown has been warn­ing that a mod­er­ate re­ces­sion would blow a $60 bil­lion hole in Cal­i­for­nia’s bud­get.

The state’s tax struc­ture is overly re­liant on rev­enues from in­come taxes, mak­ing the state flush with money dur­ing strong eco­nomic times and short on fund­ing dur­ing down­turns. Cal­i­for­nia’s ad­di­tional de­pen­dence on its high sales tax only wors­ens the prob­lem. How bad is the cur­rent tax struc­ture? Nearly three decades ago, per­sonal in­come tax ac­counted for 35 per­cent of the state’s gen­eral fund rev­enues. In more re­cent years, it’s closer to dou­ble that amount.

Now is the time for se­ri­ous ac­tion on tax re­form: A bal­lot box bat­tle royale on Propo­si­tion 13 is loom­ing in 2020 with a pro­posed mea­sure to tax busi­ness and in­dus­trial prop­er­ties based on reg­u­lar as­sess­ments of their value. The prospect should mo­ti­vate the busi­ness com­mu­nity to ne­go­ti­ate an al­ter­na­tive ap­proach that would bring more sta­bil­ity to the state.

Newsom had it right dur­ing his cam­paign that “we need to have a grownup con­ver­sa­tion” on tax re­form and that “ev­ery­thing would be on the ta­ble,” in­clud­ing Prop. 13, the in­fa­mous 1978 prop­erty tax-cut­ting ini­tia­tive.

Ma­jor tax re­form should be his No. 1 pri­or­ity. It’s the only way the state can both se­cure its fi­nan­cial fu­ture and se­ri­ously ad­dress other is­sues plagu­ing the Golden State.

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