California Budget Fix Onerous to Taxpayers

If voters reject that and the other budget-related measures on May 19, California would face a $6 billion shortfall.

Taxpayer groups are undeterred by the prospect of creating another multibillion dollar deficit if voters reject the ballot propositions.

They say lawmakers should have solved the budget deficit without placing so much of the cost on average Californians. The Howard Jarvis Taxpayers Association estimates the budget package will cost a family of four an additional $1,100 a year, largely canceling any benefit Californians will receive from the federal tax cuts.

By comparison, no tax increases were seriously considered for businesses. Instead, the budget deal contains a long list of corporate tax breaks and credits, including ones for the film industry and a change in the tax formula that will save businesses hundreds of millions of dollars.

Those breaks will cost California's treasury at least $2.5 billion over a five-year period, potentially putting further pressure on future budgets, according to the California Budget Project, a Sacramento-based research group that advocates for working families.

The only tax break given to average Californians is a $10,000 credit for those who buy a new house over the next year, a provision sought by home builders.

"As services are cut and every ordinary taxpayer will have to pay more, it is appalling that major multinational corporations get new tax breaks," said Lenny Goldberg, executive director of the labor-backed nonprofit California Tax Reform Association.

Christopher Thornberg, an economist at San Rafael-based Beacon Economics, said special interests profited from Sacramento's drawn-out budget fight. Striking business-friendly compromises was the only way to get enough Republican votes to pass the budget package, he said.