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County Adopts Fiscal Year (FY) 2009/2010 Budget

Are Californians Overtaxed?

Budget Woes, Building Drop-Off May Prolong State's Hardships

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Main Office:
385 N Arrowhead Avenue
San Bernardino, CA 92415

Chino Hills District Office:
14010 City Center Drive
Chino Hills, CA 91709

Staff Members:
Mark Kirk,
Chief of Staff

Joy Chadwick,
Deputy Chief of Staff

Brian Johsz,
District Director

Annette Taylor,
Executive Secretary

Michael Delgado,
Executive Analyst

Naseem U. Farooqi,

Burt Southard,
Media Relations

Roman Nava,
Small Business Liason

Grace Hagman,
Field Representative

Anthony Riley,
Field Representative

Jeanna Pomierski,
District Secretary
July 2009

County Adopts Fiscal Year (FY) 2009/2010 Budget

The San Bernardino County Board of Supervisors, on June 23, 2009, unanimously adopted its FY 2009/2010 budget at its regular Tuesday Board meeting. It represents a balanced, on-time budget for the fiscal year that begins on July 1, while also remaining fully aware that the state’s attempts to solve its fiscal crisis could wreak havoc on the county’s successful effort to maintain vital services in the face of an epic economic crisis.

The county has so far been able to avoid the layoffs, severe cuts in vital services, and bond rating decreases suffered by other counties and cities by detecting and acting upon the economic downturn in its infancy and refraining from using reserve funds to support recurring costs.

Thanks to the foresight of our fiscal team, the county has been able to continue providing services now when they are needed the most. Although it may be too late, the county hopes the state also chooses fiscal responsibility over short-sighted schemes that will make the problem worse.

The budget calls for total spending of $3,890,528,742, which represents a reduction of $60,965,450 from the current year budget.

The vast majority of county departments were forced to cut 8 percent from their budgets for the coming fiscal year in addition to 8 percent that was cut for the current year. The budget also reflects a voluntary decision by the unions that represent most county employees, including Sheriff’s deputies and other sworn public safety officers, to forgo a previously agreed-upon pay increase.

The most significant departmental cuts occurred in the Assessor’s Office, which lost $2.8 million due to the state’s discontinuation of funding for the Property Tax Administration Program; Economic Development, which lost $2.1 million in one-time funding that was granted last year but will not to be repeated in the coming year; and Facilities Management, which was trimmed by $2 million due to a reduction in demand for services.

By acting when signs of a fiscal crisis first appeared three years ago, the county was able to reduce spending without laying off employees or cutting services to the public. The county also maintained a healthy reserve fund, which is why rating agencies have maintained or raised the county’s bond ratings while other counties have seen their ratings decline.

The state, however, is facing a gargantuan fiscal crisis of its own. And decisions in Sacramento threaten to undo the county’s careful planning and hard decisions. Various proposals floated by the state could cost the county nearly 1,000 jobs and more than $670 million in funding, $143 million of that in funding for locally financed services such as public safety.

The County of San Bernardino provides a remarkable array of vital services to the 2 million people who live in what is by far the largest geographic county in the contiguous 48 states.

The diverse collection of services provided by the county includes police and fire protection, elections, regional parks, aid to abused and neglected children and seniors, airports, immunizations, libraries, aid to the mentally ill, a state-of-the-art acute care hospital and trauma center, landfills, road construction and maintenance, museums, financial support to needy families, business attraction and retention, animal care and control, flood control, vital records, assistance to military veterans, and much more.

To view the budget visit www.sbcounty.gov

Are Californians Overtaxed?

On the face of it, the question should not even have to be asked. Californians pay the highest sales tax in the nation. Their top-bracket earners have the second-highest income tax rate in the country. The middle class to upper class — those making $48,000 to $1 million — are right up there among the most highly taxed, too. California's gas tax, at 35.3 cents per gallon, is third-highest in the nation. Corporations face the highest tax rates in the West.

If you mix in the contention that California has the nation's third-worst business climate, any argument for new taxes would appear to stand on wobbly legs. Why would you raise taxes, even if it is just on the wealthy and corporations, when the state is facing the deepest recession since the Great Depression, when jobs are scarce and companies are being driven out of the state by its burdensome tax and regulatory system?

Added taxes would be ruinous to the already-teetering economy. Californians already are facing $12 billion in new taxes over the next two years.

The car tax is the highest in the country. I can't imagine any additional transference from the private sector to the government sector that would do the state any good.

According to rankings compiled by the Tax Foundation, a conservative Washington, D.C.-based think tank, California is in no position to absorb any more taxes. The state is ranked as having the nation's third-worst business climate because of its high corporate, individual income, and sales taxes. Only New Jersey and New York were worse, the study said.

California's corporate tax rate, at 8.84 percent, is ninth highest in the nation and highest among Western states. Its top bracket-income tax is at 10.55 percent, second only to Hawaii's 11 percent. In addition, the state's 8.25 percent sales tax is the highest in the nation.

It is a ranking — along with the argument that companies are leaving the state in droves because of high taxes.

Higher taxes that make California even less affordable at a time of high unemployment and economic uncertainty is a prescription for failure.

There are other ways, however, to determine the tax burden on businesses and the wealthy.

A study by giant auditing firm Ernst & Young showed that, as of 2007, businesses in 34 states paid a higher share of overall tax collections than in California.

California ranked 17th in tax collections as a percent of income in 2006, the most recent year data is available from the U.S. Census Bureau. In addition, a 2007 study by the Public Policy Institute of California showed that only a small number of businesses leave the state — and for many reasons other than taxes.

Where California Ranks Nationally in tax rates:

Sales: 8.25 percent (first)
Income (for highest bracket): 10.55 percent (second), trailing only Hawaii's 11 percent.
Corporate: 8.84 percent (ninth)
Alcohol: 20 cents per gallon (49th)
Cigarette: 87 cents per pack (30th)
Gas: 35 cents per gallon (third)
Source: Tax Foundation

Budget Woes, Building Drop-Off May Prolong State's Hardships

Unemployment will reach 12.1% by the end of the year in California, UCLA economists forecast. Despite some healing in the national economy, California still faces significant difficulty, in part because of the state's budget woes, economic forecasters at UCLA say.

Driving California's difficulties are a shrinking state budget, a disappearing non-residential construction market and sluggishness in housing construction.

Construction jobs, which fell 12% in 2008, are expected to drop more than 15% this year as demand continues to fall for both residential and commercial development. Already, activity has dropped so dramatically in the state that developers are now under-building for the size of California's population, sowing the seeds of another housing bubble, the report said.

The state's fiscal woes make the picture bleaker. The budget for the 2009-10 fiscal year will probably lead to program cuts and layoffs on top of spending decreases in last year's budget.

California's state government has no choice but to contract at the worst time.

The cuts don't affect only government jobs. Some of the program reductions will be in healthcare and education, damaging two sectors that haven't yet experienced massive job losses in California during this recession.

California faces a rougher road than the rest of the nation. California's economy is quite a bit weaker than the U.S. economy so an economic recovery any time soon, is highly unlikely. The state will not come out of recession until the second half of 2011, according to the Anderson Report.

The state's regulatory agenda is making it more expensive to do business here, and higher-education cutbacks will probably affect the state's competitive advantages in the long term.