By Steven Glazer
July 03, 2020 06:00 AM
Gov. Gavin Newsom showed strong leadership on March 19 when he ordered Californians to shelter in place to slow the spread of the COVID-19 virus. When many of his fellow governors were hesitating, Newsom invested political capital in a decision that promised to anger many voters even as it saved thousands of lives.
Gov. Gavin Newsom is facing mounting pressure to loosen the state’s shelter-in-place order.
Yet the danger to public health is as bad today as it was on March 19 when Newsom issued the order. The virus has not disappeared. The infection rate and hospitalizations have slowed only because the public agreed to avoid social contact.
California tax law has a perverse incentive that has led local governments to give away billions of dollars in tax revenue to private corporations. These deals siphon money from every city in the state and give it away to some of the richest corporations in the world.
Under Bradley-Burns Local Sales Tax Law, sales tax revenue is allocated to the point of sale. For brick and mortar stores this means allocating the revenue to the jurisdiction the store is located in. We’re all familiar with that.
California is about to get a welcome and unexpected windfall – enough new tax revenue to have $19 billion in reserve even after paying for the anticipated growth in all current programs and increases in the cost of living. This estimate from the Legislative Analyst’s office raises the question: what to do with this money? How can we put it to its greatest use?
Much of this revenue boost, about $11 billion, is required to go into a rainy day reserve account, a prudent policy given California’s history of boom and bust economic cycles.