Anti-Tax Initiative Qualifies on California Ballot

California taxpayers will be voting on a new anti-tax initiative in November that would make it illegal for lawmakers to approve taxes disguised as fees without a proper vote. According to Mercury News, both the California Taxpayers Association and the California Chamber of Commerce are supporting the initiative.

California's secretary of state certified the initiative Thursday, the ninth to go before voters in November.

The proposition would stop state lawmakers from approving taxes disguised as fees without the constitutionally required two-thirds vote for a tax increase. Passing a fee right now only requires a majority vote of the Legislature.

Supporters say lawmakers try to skirt the high vote threshold required to approve taxes by labeling charges as fees on everyday items such as food and fuel.

The initiative also would require local officials to bring similar fee increases to voters.

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California Taxes Fall Short of November Target by $439 Million

My home state of California seems to find itself in one financial mess after another. Reports emerged yesterday that the state’s estimated tax revenue for November was $439 million less then the government had expected. With the fiscal year only have over, the state’s revenue is already short by an astonishing $1 billion. Some financial experts assert the decline is only a preview of what is to come, and that the upcoming year will be even more difficult on California’s budget.

Schwarzenegger is due to release his budget for the coming fiscal year in January. California Legislative Analyst Mac Taylor said in November the state will face a deficit of $14.4 billion beginning in July. That’s in addition to a $6.3 billion gap opening up in the current year as several projections within the budget falter or miss revenue projections.

“In many respects, the steps to close next year’s budget gap will be even more difficult and more challenging than what we’ve just had to do this year,” Department of Finance spokesman H.D. Palmer said yesterday.

California has been among the most affected by the recession as a wave of home foreclosures, rising unemployment and the 2008 stock market tumble dissipated expected tax receipts. From February through July, lawmakers worked to close a record $60 billion deficit with spending cuts, temporary tax increases and other one-time fixes. The unemployment rate rose to 12.5 percent in October from 8 percent the year before and 4.8 percent in July 2006.

Continue reading at Bloomberg.com…

IRS & State Target Playmate Pam Anderson

From DET News.com:

Pam Anderson - the actress/Playmate/home movie star and ex-wife of Detroit native Kid Rock - owes more than $1.9 million in delinquent taxes, records show.

What's owed:

The IRS filed a $1,700,173 lien against Anderson on Oct. 19 with the Los Angeles County Recorder of Deeds.

The state of California filed a $252,360 lien April 7 in Los Angeles.

Her side:

Neither Anderson not her publicist could be reached for comment.

California Court Upholds 1% Tax on Millionaires

Last Wednesday, the California Court of Appeals ruled on Jensen v. California Franchise Tax Board, and rejected challenges to Proposition 63. For those of you who are not familiar, the proposition imposed a 1% tax on California taxpayers who earn more then a million dollars per year to fund mental health services. You can check out the following highlights of the ruling courtesy of the Tax Prof, or download the full text here.

We find no constitutional infirmity in the challenged portions of Proposition 63. An income tax may be rationally based on a taxpayer‟s income level and ability to pay, and there is no need to show that a particular taxpayer personally benefits from a tax assessed for the public good. Taxpayers earning more than $1 million annually do not comprise a “suspect class” requiring a strict scrutiny constitutional analysis. Further, Proposition 63 is valid even if it is not a constitutional amendment. ...

We are unaware of any case authority holding that wealthy individuals form a “suspect class” deserving of a heightened degree of scrutiny. Suspect classifications include race, gender, national origin or illegitimacy. Wealth generally confers benefits, and does not require the special protections afforded to suspect classes. Wealth has “none of the traditional indicia of suspectness: the class is not saddled with such disabilities, or subjected to such a history of purposeful unequal treatment, or relegated to such a position of political powerlessness as to command extraordinary protection from the majoritarian political process.” (San Antonio School District v. Rodriguez, 411 U.S. 1, 28 (1973).) ...

The Taxpayers are mistaken in thinking that taxpayers in a particular tax bracket cannot be singled out for an income tax to benefit society at large. ...

The tax imposed by Proposition 63 is not arbitrary merely because a person earning $1,000,001 is subject to the tax, while a person earning $999,999 is exempt. The government has leeway in “drawing lines” below which individuals are exempt from a tax. ...

The Taxpayers perceive themselves as victims of a populist movement to “soak the rich.” The desire of the majority of the electorate to tax a minority of citizens based on their earnings is not a basis for overturning an income tax. The courts “do not substitute their social and economic beliefs” to supplant the judgment of the enacting body.

Thousands of Businesses Need to File State Tax Returns

From Business Wire.com:

The Franchise Tax Board (FTB) today announced it has begun contacting more than 35,000 companies that did business in California in 2007 but failed to file a state tax return for that year.

The FTB annually reviews more than 5 million income records from government agencies and financial institutions and matches them against tax records filed to determine whether some businesses have yet to file. As part of this annual effort, FTB collected approximately $31 million last year from businesses that failed to file tax returns.

Businesses contacted by FTB will have 30 days to file their delinquent tax return or show why one is not due. If no action is taken, the FTB will issue a tax assessment that may include penalties and fees. With the state`s automatic seven-month extension, companies doing business in California are provided up to 10 and one half months to timely file their California state tax return.

The failure to file tax returns is one part of the tax gap that is defined as the difference between taxes owed and taxes paid. California estimates its annual tax gap to be $6.5 billion per year.

For those receiving notices, information is available by calling 866.204.7902. Callers should be prepared to provide the 15 digit notice number.

CA Gives Nearly $68M in Hollywood Tax Credits

From Mercury News:

California on Monday announced the first batch of movie and TV productions to qualify for tax credits under a film incentive program that former "Terminator" actor Gov. Arnold Schwarzenegger pushed through the Legislature and signed into law in February.

So far, 25 productions have qualified for $67.5 million in state tax credits, most of which would have relocated elsewhere if the state money hadn't been in place, said California Film Commission Director Amy Lemisch.

"On most of these productions, they were indeed location-scouting and budgeting in other areas outside of California," she said.

The Walt Disney Co.'s "Beverly Hills Chihuahua 2," was slated for filming in Vancouver had the funding not come through, and "Christmas in Beverly Hills" by Fast Lane Productions LLC might have become "Christmas in Arizona" if it had not qualified for state credits, she said.

One TV series, Comedy Central's "Important Things with Dmitri Martin," will likely hire 100 staffers based in California, she said.

Lemisch said the projects are budgeted to spend $347 million on basic production in California, and are expected to spend 30 percent to 40 percent more on actors, directors, producers and other creative talent and rights.

Questions for the Tax Lady: July 27th, 2009

Every Monday I am going to post a set of answers to tax questions I’ve received over the past week. Additionally, I also seek out a few general tax questions from other users in the social communities I am active in. If you have a question you would like to ask me then check out the following links to my profiles. You can send me either a direct message or @ reply, and I will do my best to get an answer for you!

Question #1: Hey Roni, I am thinking about moving to Oregon as property values are lower there. I am hoping my income tax and property tax situation will be better as well as my business. I have one part time employee, and costs here in California are killing me! Would Oregon be better for me personal and/or business-wise?

This is tricky question as there are a lot of things you are going to want to consider in making your decision. First of all, I am going to assume that you have a business that can easily be moved to Oregon without suffering any reduction in revenue. Depending on where you move to you might find a property in Oregon cheaper then the average home in California. However, according to Wikipedia, the minimum wage in Oregon is actually 40 cents higher then in California.

As far as taxes, Oregon has no state sales tax while California levies a hefty 8% sales tax (the highest in the country). According to reports, business tax rates are lower in Oregon then they are in most places in the country. However, the type of taxes you are going to pay will depend on the type of business structure you have (sole proprietorship, corporation, etc). With regard to income taxes, California has a very progressive income tax range of between 1% and 10.3%. California’s 9% tax rate is only for taxpayers making between $47,056 and $1,000,000 per year, and the 10.3% rate is only for those making over a million dollars a year. On the other hand, Oregon’s income tax rates are much less progressive. The top tax rate is 9%, but it’s assessed on all taxpayers making $7,601 or more per year.

No matter what, moving to a different state is a big decision. To better understand if it would be a good financial move, I would recommend researching tax rates and property values in cities you are thinking about moving to.

Question #2: What are the tax and legal complications of either short selling or a foreclosure? Do I have to claim to the difference from sales price to loan amount as income on my taxes?

No. Whether you go with a short sale or foreclosure, you will not need to claim the difference between the sales price and new value as income. Unlike forgiven credit card debt, the Mortgage Debt Relief Act of 2007 prevents the IRS from taxing you on forgiven mortgage debt. If you do get a 1099 next January from your mortgage company then you will simply need to file Form 982 with the IRS to exclude the debt from your taxable income.

Question #3: Food blog tax deduction question… Someone told me they write off all their grocery expenses because they blog - is that possible?

Probably not. Moreover, the person could actually get in trouble with the IRS for writing off all of their grocery expenses.

People often make the mistake of assuming that just because they do something for a little extra income means then can deduct all kinds of unrelated expenses. Although your friend might be able to deduct certain qualifying expenses related to their blogging (if they are in fact earning income), they must be able to verify the expenses claimed were ordinary and necessary for the type of business he or she was in. An ordinary expense is one that is common and accepted in the industry. A necessary expense is one that is helpful and appropriate for the trade or business. An expense does not have to be indispensable to be considered necessary. Thus, if your friend blogs about food or cooking as a source of income, then he or she may be able to claim the grocery bills.

It is important to note that the IRS auditors are very aggressive with the self-employed and independent contractors when it comes to claiming business expenses. So, your friend should definitely seek professional advice if he or she plans on deducting any expenses related to his or her blog.

Applications For Home-Buying Tax Credit To Be Cut Off Today

The application deadline for the popular $10,000 California homebuyers tax credit is today. The California Franchise Tax Board had extended the number of applications they would accept, and there are now 75 spots left for California taxpayers who are eligible for the credit. However, according to the Sacramento Bee the California Franchise Tax Board announced this morning that they would no long accept applications past midnight tonight. Check out a clip of Sac Bee’s coverage of the last minute change below.

Early Wednesday, the FTB said it has received 11,925 applications for the popular tax credit - 75 short of its 12,000-application limit.

The state tax agency said last month it would take 2,000 extra applications for the credit because many received are duplicates, invalid or incomplete.

The tax credit program launched March 1 to move statewide home builders' excess, unsold inventory, proved more popular than expected. The FTB said it has already issued 4,808 certificates for nearly $45 million worth of credits. Officials expect to process and award all the credits by the end of August.

Home builders have shifted their focus to efforts to add $200 million more to the original $100 million allocation. But that's proved more difficult than expected in a rancorous budget climate. Some economists have criticized further allocations as a stimulus for home building when the state's larger problem, they argue, is an excess of unsold existing homes.

The California Building Industry Association, a trade group for residential builders and suppliers, maintains that each $10,000 tax credit adds $16,000 to state government revenues and $3,000 to a local government because of the economic activity generated.

Personal Bankruptcies Surge in Southern California

It is getting harder to go anywhere in California these days with out seeing signs of economic struggle. Businesses are closing, houses are getting foreclosed upon, and the government began issuing IOU’s for debt payments. However, in addition to the financial struggles of the state government, citizens in California are also struggling. Just this week, the LATimes.com released an article discussing the surge in Southern California bankruptcies over the past year. Check out a snippet of their article below.

In a recession, bankruptcies are common, but as the numbers continue to rise, some financial experts are hoping the word is being spread as to what a bankruptcy is, and how they work. Luckily, the Sacramento Business Journal recently posted an article all about bankruptcies and how to know if one is right for you. Read more below

Hundreds of thousands of American families have declared bankruptcy in the past two years and foreclosures locally remain high. For-sale signs are staying up longer than in any period in recent memory, neighborhoods are half-empty, and we all know people who have moved out of state.

Bankruptcy lawyers are seeing a lot of people with more than $30,000 in debt, and the volume of filings has increased at all levels.

Are you in this situation? If so, how can you tell when to stay the course, or when to cut and run?

Signs that you can’t go it alone any longer include being unable to meet basic living needs, and needing to borrow to pay past-due debt.

So what are your alternatives? You could declare bankruptcy, but that’s a heavy decision. Here are some of the mechanics to help you make up your mind.

Continue reading this story, here.

State Cuts Tax Exemptions For Kids

On nearly any list of tax tips you will see the very popular child tax credit. However, starting this year California parents will be seeing less money from that deduction then they had in the past. In their efforts to reduce the State’s debt, California lawmakers have reduced the deduction by about $210 per dependent. Check out the following article on the change courtesy of SFGate.com.

California parents beware: Those little tax deductions running around the house are now worth less (in a strictly financial sense, of course).

To help balance its budget, California has reduced the state tax credit for dependents.

The change will increase a family's California taxes for 2009 by about $210 per dependent compared with 2008.

A family with one dependent that normally gets a state-tax refund will get back $210 less when they file their 2009 return next year. A family that normally owes money will have to pay $210 more. Multiply that by two or more dependents, and it really adds up.

This may come as a shock to parents who have been too busy shuttling between soccer games and viola lessons to keep up with the state's budget fiasco. The Franchise Tax Board is trying to get the word out, so families can prepare.

California’s Solution to $24 Billion Budget Gap Is Going to Bring Some Pain

With a massive debt of $24 billion, there is no doubt California is going to have to make some major cuts in order to break even again. Unfortunately not all of these cuts can be small, and no matter what action the state takes there are going to be people who are affected. The New York Times wrote a great piece examining this issue, and I’ve included a snippet of their article below.

While Democrats struggle to preserve programs for the state’s neediest residents through one-time accounting maneuvers and by passing some of the pain to smokers and oil companies through fees and taxes, Republicans are holding the line on new taxes and trying to force large cuts that will have an effect on policies like health care for children in poor families and the early release of thousands of prisoners.

Lawmakers passed a budget for both 2009 and 2010 in February, but the legislation, which covered 17 months’ worth of spending, was dependent on the passage of several ballot propositions that voters overwhelmingly sank in May. As a result, the state’s budget gap expanded.

In response, Gov. Arnold Schwarzenegger threatened to allow the government to come to a “grinding halt,” rather than authorize more borrowing to cover shortfalls, and proposed $16 billion in cuts. Those cuts would largely be carried out through the state’s programs for the poor: the Healthy Family Program, the health insurance program that covers more than 900,000 children; the main welfare program, known as CalWorks, which provides temporary financial assistance to poor families; and Cal Grants, a college financial aid program.

Continue reading this story at NY Times.com.

California Democrats Seek Tax Boost as Battle Looms

From Bloomberg.com:

Democrats who control California’s Legislature said tax increases are needed to help close a $24 billion deficit, setting up a battle with Republicans that may leave the state short of cash next month.

Speaker of the Assembly Karen Bass, a Los Angeles Democrat, said higher taxes and fees are needed instead of all $16 billion in cuts proposed by Republican Governor Arnold Schwarzenegger. His proposed reductions would eliminate entire welfare programs and leave 1 million children without health insurance. Democrats yesterday proposed a $15 automobile license fee and said they may consider a 9.9 percent per-barrel levy on oil produced in the state.

The Democrats’ stance sets the stage for a confrontation with Republican lawmakers because California law requires a two- thirds vote to approve tax increases. While Democrats control both chambers, they are six votes short of a supermajority. State Controller John Chiang has warned lawmakers since May that they had until June 15 to fill the gap or the state will find itself unable to pay all its July bills.

“The budget that we will be voting for on the floor will be a balanced approach and it will be a combination of cuts and new revenues,” Bass told reporters in her office yesterday.

The state’s projected cash shortage absent a fix to next year’s budget led Standard & Poor’s late yesterday to place California’s credit rating, already the lowest among U.S. states, under review for a possible cut.

“Although we continue to believe the state retains a fundamental capacity to meet its debt service, insufficient or untimely adoption of budget reforms serve to increase the risk of missed payments in our view,” S&P analysts led by Gabriel Petek in San Francisco said in a news release.

Fitch Ratings on May 29 revised California’s credit-rating outlook to negative, indicating a longer-term likelihood of reduction if lawmakers don’t act quickly to solve the latest budget problems. California’s full faith and credit pledge is rated A by S&P and Fitch and a comparable A2 by Moody’s Investors Service, five steps below the top investment grade.

California taxable 30-year Build America Bonds paying 7.55 percent traded at about 93 cents on the dollar today to yield 8.18 percent, down from 94.7 cents and 8.02 percent yesterday, according to Municipal Securities Rulemaking Board trade data.

The Democrats’ new $15 vehicle registration fee would raise about $300 million a year that would be used to finance the operation of California’s 275 state parks. Anyone driving a vehicle with California license plates would be allowed to enter state parks without paying an entrance fee. Schwarzenegger wants to eliminate all funding for parks.

The latest tax proposal comes after six Republicans broke ranks with their party in February and approved $14 billion in tax increases to end a four-month impasse over how to close what was then a record $42 billion deficit. To fill that gap, lawmakers also agreed to cut $15 billion in spending.

Snoop Dogg's Tax Debts Unveiled

Famed rapper Snoop Dogg is the most recent celebrity to have his name added to California’s delinquent taxpayers list. Check out the following article on the new development from ABC15.com.

Rap superstar Snoop Dogg has been named and shamed as the latest celebrity indebted to the state of California - he's failed to pay more than $284,000 in back taxes.

The Drop It Like It's Hot hitmaker, real name Calvin Broadus, had a tax lien filed against him last month, which accused the rapper of owing $284,053.59, reports TMZ.com.

He's not the only musician not up to date with his taxes.

Soul star Dionne Warwick was recently listed in California's top 10 worst offenders, while rappers Xzibit, Method Man and Lil' Kim have also run into trouble with the Internal Revenue Service (IRS).

California's Anti-Tax Crusaders Talk Revolt

From Reuters.com:

Taking inspiration from a landmark 1970s tax revolt, a determined group of activists say the moment is right for another voter uprising in California, where recession-battered residents have been hit with the highest income and sales tax rates in the nation.

And like Proposition 13, the 1978 ballot measure that transformed the state's political landscape and ignited tax-reform movements nationwide, they see the next backlash coming not from either major political party, but from the people.

If the anti-tax crusaders can galvanize voter discontent, they hope to roll back the latest tax hikes, impose permanent, iron-clad spending caps on Sacramento lawmakers and make the issue central in the 2010 gubernatorial election.

"There's a lot of latent anger boiling to the surface out there," said Jon Coupal, president of the Howard Jarvis Taxpayers Association, a group named after the California anti-tax crusader who spearheaded Prop 13.

An angry mob of thousands converged on an Orange County parking lot in southern California on a recent Saturday morning for an anti-tax protest, stunning even the organizers with the size of the turnout. It was just one in a series of public demonstrations that have cropped up around the state.

Talk of a brewing tax revolt has been largely ignored by the mainstream media, and many political analysts are skeptical, though they concede that the taxpayer mutiny that led to the landmark Prop 13 was similarly dismissed by political professionals.

That referendum passed in a landslide despite furious opposition from the political establishment -- and highlighted the possibilities for grassroots campaigners to enact measures with ballot initiatives and bypass the legislature.

California Needs To Refigure Its Taxes

From TheLATimes.com:

Perhaps you heard the dealership's radio spots over the weekend and into Monday: "Don't tell Arnold!" The point being that it was the last few days to buy a car (or anything else) in California before the state sales tax increase. Arnold Schwarzenegger, the no-new-taxes governor, is now maligned in popular culture as the tax collector in chief after he presided over the February deal that finally got California a budget and warded off default, for now, but raised taxes for the next two years at least.

Today, April 1 -- no fooling, unfortunately -- Californians will see a full-cent increase in the nation's highest sales tax rate, to 8.25%. But no one in Los Angeles County will pay that little. County add-ons already in effect mean that most buyers of clothes, books, electronics, automobiles and other hard goods, plus food served in restaurants, will now pay 9.25%. Add another half-cent in Avalon, Inglewood and El Monte, where voters tacked on local levies, and even more in Pico Rivera and South Gate for a stunning 10.25%. And that's just until July 1, when sales taxes rise yet another half-cent countywide to follow the voter dictate of November's Measure R tax for transportation.

Catch your breath and add it up. In July, Los Angeles County sales taxes will come in at 9.75%, and 10.25% and 10.75% in a handful of the county's smaller cities.

Vehicle license fees -- the "car tax" that swept Schwarzenegger into office in the anti-tax recall of Gov. Gray Davis -- will rise from 0.65% of the vehicle's purchase price (the value is adjusted downward annually when registration is renewed) to 1.15% beginning May 19. State personal income taxes rise this year as well.

If Schwarzenegger and state lawmakers had more breathing room, they most certainly would not have picked April Fool's Day to raise sales taxes and a special election day to raise the vehicle license fee. They would not have chosen income tax month to launch their campaign for the ballot measure to extend the sunset date for these new taxes by two years, and the other measures to move funds around and hold the state's finances together.

But that's just the point. They were out of breathing room. Faced with two choices -- damaging and disastrous -- they chose the merely damaging.

And there should be no misunderstanding: The higher taxes Californians begin paying today will be damaging. One in 10 Californians is out of work, thousands each week face foreclosure, and many of the rest are trying to cope with a faltering economy. As the federal government cuts taxes and doles out money to states, the benefit for most Californians is countered by the increasing difficulty of making daily purchases. The economic stimulus of federal dollars must combat the deadening grip of higher state taxes.

The state is in dire need of tax reform, but taxpayers should not be misled into thinking that the higher taxes they are now paying constitute reform. They are, instead, a response to an emergency. They don't answer the basic questions: Which Californians are paying too much? Which are paying too little? Which taxes raise the most revenue with the least effect on the economy?

These are among the questions to be answered by the Commission on the 21st Century Economy in its report due in two weeks, on tax day. California has had numerous blue-ribbon panels on tax reform in the past, but their unimplemented reports gather dust in archives. If the state is to avoid new rounds of self-defeating emergency taxes, leaders, policymakers and voters must take the issues addressed in the report seriously.

Our View: State Hires Workers as Taxes Rise

California has been having budget problems for a long time, and now some are beginning to criticize the state about the number of new government workers that are being hired. Check out the following article on the controversy courtesy of the Colusa Sun Herald.

Do you ever get the feeling that the public works for the government, rather than the other way around? That’s the sense we get, especially during tough economic times. The private sector is slashing jobs, and taxes are going up, thanks to the recently enacted state budget plan. Freedom Communications Inc., parent company to this newspaper, announced a furlough program Friday that mirrors similar cutbacks being made by the newspaper industry nationwide.

But the government isn’t tightening its belt. In fact, a Sacramento Bee analysis of the state government found that its “full-time workforce continues to grow despite Gov. Arnold Schwarzenegger’s order to freeze hiring amid a historic budget shortfall.”

Over an eight-month period, most state agencies expanded their workforce or kept the same number of employees. A fewer-than-promised number of part-time employees were laid off.

“The overall number of full-time state employees increased by roughly 2,000, or 1 percent, excluding the Department of Forestry and Fire Protection, or Cal Fire, which always shrinks sharply outside of fire season, the figures show,” according to the Bee. “While the increase is modest compared with other years, it clashes with the belief that the state workforce must shrink to meet the current economic downturn and resulting drop in state revenue.”

So once again we see Schwarzenegger’s promises are not to be believed. That should surprise no one given this supposedly anti-tax governor championed a huge tax increase. The same governor who promised to blow up the boxes of government is doing his best to make those boxes bigger. And now his promises to cut the part-time workforce are empty. The permanent bureaucracy seems to rule things in Sacramento, so even as the rest of the state contracts, its ranks expand.

The California Highway Patrol has expanded its workforce by an astounding 3 percent. At the local level, cities are still pushing for expanded pay and benefits for their workers. USA Today reported last year that, “State and local government workers are enjoying major gains in compensation, pushing the value of their average wages and benefits far ahead of private workers.” It’s a nationwide trend, although no other state has the fiscal mess faced in California.

Californians Cling To Easily Dispelled Tax Myths

From The New York Times:

Seems like only yesterday that I was at the Orange County fairgrounds to watch Arnold Schwarzenegger drop a wrecking ball on a car, symbolically crushing the auto tax to the delight of supporters who never asked how the governor-to-be might cover the lost revenue.

Since then, he's continued to put that wrecking ball to use, crushing one campaign promise after another.

But not until the governor signed on to raising taxes, including the car tax, did GOP leaders and good citizens get angry, vowing to go after not just Arnold but any Republican legislators who voted with him on a budget that includes the new revenues.

It didn't matter that state services of every type were threatened from Chico to Chula Vista, that the bus was headed for the cliff, that inmates were packing their bags for early release, or that firing every state employee wouldn't have balanced the budget without new revenue.

All that mattered were taxes.

"California has the highest taxes in the country," a reader named Mary wrote to me.

"I guess it's our patriotic duty, as residents of California, to pay the highest taxes (or close to it) in the country, for the most incompetent government in any state," wrote Art.

Most incompetent government? We're probably in the running, but two other states I've lived in were at least as screwed up, with Pennsylvania actually taking pride in its monumental incompetence.

As for the claim that Californians pay the highest taxes of any state or close to it, I'm sorry to disappoint, given the great joy so many people seem to derive from hyperventilating.

Californians Back Higher Taxes, Spending Cap

A new poll by the Public Policy Institute of California found that most Californians are ready to take drastic measures to ensure their State’s financial stability. A snippet of the article accompanying the poll can be found below, but you can read the full study at the SF Chronicle website.

Battered and worried by the onslaught of dire economic news, Californians are much more willing than their legislators to take drastic moves to stop the state's financial tumble, according to a new poll by the Public Policy Institute of California.

Solid majorities of the state's voters - Democrats, Republicans and independents alike - favor tax increases and spending caps that have left the Legislature gridlocked in its effort to close California's $42 billion budget gap over the next 18 months.

"Voters are scared and willing to be more flexible," said Mark Baldassare, head of the institute. "Some of the concerns break along party lines, but there's a surprising level of support for (budget) plans that share the pain."

Concern over the economic slide has skyrocketed in recent months, with 59 percent of Californians convinced the state is in a serious recession, up from 39 percent last October. Only 18 percent, a record low for the survey, think the state is heading in the right direction, while more than three-quarters are convinced tough economic times lie ahead in the next year.

"The worries are across the parties and across the regions," Baldassare said. "In California, no group is immune to the downturn and the worry that it could affect them next."

Two-thirds of Californians now name either jobs and the economy or the state budget as the most important issue for the governor and the Legislature, dwarfing schools (12 percent) and immigration (4 percent). But only 39 percent of California adults - and 35 percent of likely voters - are convinced Schwarzenegger and the legislators will be able to work together to accomplish a lot this year.

California May Delay State Refunds for 30 Days

From the Sacramento Union:

California’s controller said Friday he will be forced to impose a 30-day delay on tax refunds and some other payments starting Feb. 1 if lawmakers fail to agree on a plan to erase a nearly $42 billion budget deficit.

Controller John Chiang, who acts as the state’s accountant, said he will have no choice but to delay $3.7 billion in payments next month because the state is running out of cash.

Doing so, he said, would buy the state a few more weeks before its accounts run dry. The state is on the brink of issuing IOUs as it faces a $41.6 billion shortfall over the next year-and-a-half.

“Let me make this perfectly clear: This is a painful decision,” Chiang said during a news conference in Sacramento. “It is an action that is critically necessary. The fallout from issuing IOUs, or for the state going into default, are significant and long-lasting and something to be avoided at nearly all costs.”

A severe drop in revenue from sales, property and capital gains taxes has left the state’s main bank account depleted. The state has not had a positive cash balance since July 12, 2007, Chiang said.

The state had been relying on borrowing from special funds and Wall Street investors, but those options are no longer available. Democratic and Republican legislators and GOP Gov. Arnold Schwarzenegger have been at odds for months over to fix the budget gap.

Chiang said his office must continue $6.6 billion in education and debt payments next month but will defer money for tax refunds, student aid, social services and mental health programs.