Governor Puts 200,000 State Workers on Minimum Wage

The Governor of my home state, Arnold Schwarzenegger, issued an order on Thursday that reduces about 200,000 California state workers’ wages to minimum wage. The pay reductions are going into effect this month. Many experts are predicting that this move is a tactic to put pressure on unions that have not agreed to pay and pension concessions.

According to a letter delivered to Controller John Chiang in late afternoon, July pay for most hourly state employees will be withheld to the minimum allowed by federal law – $7.25 an hour – and then restored once there's a budget.

Chiang, whose office cuts state paychecks, said Thursday that he won't follow the order unless a court tells him to.

The letter from the governor's Department of Personnel Administration instructs Chiang to withhold employees' pay because the state started the 2010-11 fiscal year without a budget appropriating money for payroll. Hours earlier, Gov. Arnold Schwarzenegger officially ended 17 months of furloughs for state workers.

The minimum-wage order exempts roughly 37,000 state workers in the six bargaining units that have tentatively agreed to labor deals.

Continue reading at SacBee.com…

New York May Tax Clothing Sales to Narrow Budget Gap

Only a few days after New York raised the state tax rates on cigarettes, Governor David Paterson is now considering a 4% sales tax on clothing purchases under $110. The tax was put into place for 3 years once, but was repealed in 2006. Officials say the tax could raise $660 million annually.

“Taxes on clothes have been brought back to us” by legislators, Paterson said in an interview on New York City radio station WOR today. “It’s in the discussion phase.”

Lawmakers face a June 28 deadline set by Paterson for agreement on a budget covering the year that began April 1. If no agreement is in place by then, Paterson has said he will submit his own budget plan in an emergency spending bill, which lawmakers would have to approve, or shut down government.

Paterson’s $135.2 billion budget proposed earlier this year includes cuts in aid to school districts and a tax on sweetened beverages that lawmakers oppose. Additional taxes should close 10 percent to 13 percent of the deficit, or $920 million to $1.2 billion, Paterson said in an interview on radio station WGY in Albany.

Taxing clothing sales or finding revenue by other means is needed because lawmakers are balking at Paterson’s proposals to raise $710 million by allowing wine sales in grocery stores and imposing a new levy equaling 1 cent per ounce on sweetened beverages, the governor said.

Continue reading at Business Week.com…

Hawaii Governor Vetoes Oil Tax and Other Bills

From BusinessWeek.com:

Hawaii Gov. Linda Lingle is vetoing measures raising taxes on oil, estates and traffic abstracts.

Lingle said in her veto message of the $22 million oil tax Tuesday that it would affect every resident by increasing the amount they pay for electricity, gas, shipping, retail goods, food and propane.

Traffic abstract fees would increase in cost from $7 to $20, generating $6.5 million.

The estate tax would raise $10 million next year.

The Republican governor also vetoed a measure preventing the closure of 31 welfare eligibility offices statewide and consolidating them into two processing centers in Honolulu and Hilo.

The Legislature plans to attempt veto overrides Thursday.

Lingle signed a cigarette tax hike of 1 penny per stick, bringing in $11 million.

Schwarzenegger's Budget Proposes Tax Hikes & Steep Cuts

From LA Times.com:

Reporting from Sacramento -- The administration of Gov. Arnold Schwarzenegger presented a new plan this morning to raise several taxes and cut deep into dozens of state programs to close an 18-month budget deficit that is projected to reach $41.6 billion.

Under the proposal, presented at the Capitol by the governor's staff while he was vacationing with his family in Sun Valley, Idaho, Californians would be dealt a steep sales-tax increase, a new tax on alcoholic beverages and higher vehicle registration fees. A dependent care tax credit would be reduced, and oil companies would be charged a new severance tax.

The cuts in the proposal are deep, including a reduction of billions of dollars in K-12 education spending from current levels. State university and community college offerings would also be cut back as tuition and fees go up. Healthcare programs for the poor would be slashed, as would welfare for the elderly and disabled.

The plan also includes reductions in the state workforce, which the governor already implemented by executive order two weeks ago. The order requires state workers to take days off without pay, amounting roughly to a 10% pay cut. Labor unions are challenging that order in court.

More California Budget Problems

Just weeks after the California legislature passed a budget for this year, Governor Arnold Schwarzenegger is calling out for tax increases, and drastic spending cuts, to help keep the state out of bankruptcy.

According to the San Francisco Business Times, “California Gov. Arnold Schwarzenegger proposed $4.7 billion in new taxes -- including a three-year increase in the state sales tax -- and $4.5 billion in new cuts Thursday to prevent a cash crisis brought on by a projected $11.2 billion hole in the current state budget.

Proposed new taxes include an immediate, three-year increase in the sales tax by 1.5 cents on the dollar; broadening sales and use taxes to items such as car repair, golf and veterinary services; a tax on oil extraction in the state; and an increase in alcohol taxes. The temporary increase would push the state portion of the sales tax to 8.75 percent, before any local sales taxes were considered.”

However, his plans are drawing a lot of criticism, with many claiming that a sales tax increase is not the best option. According to Mercury News, the Governor has plenty of better options to increase revenue.

“Eliminating tax credits for families with children, taxing attorneys' fees and raising business property taxes—these are some of the options Gov. Arnold Schwarzenegger could have proposed before settling on a 1.5 percent temporary sales tax increase.

None are easy choices in a struggling economy.

In laying out a proposal to increase sales tax for three years, the governor stressed an urgent need to raise revenue to maintain police protection and uphold California's education system.

‘We feel very comfortable that this is the best tax to use,’ the governor said Thursday while revealing a $11.2 billion hole in this year's budget. ‘This is the best way to go and we have to not delay it. I think now is the time for action.’

Economists recognize that the best form of taxation is the broadest one at the lowest rate. But California's budget fluctuates because it depends on a narrow segment of high-income earners whose fortunes ride with the stock market. About 50 percent of the state's personal income tax revenue comes from the top one percent of wage earners.

To complicate matters, the state's manufacturing-based sales tax has been shrinking proportionately because it hasn't been modified in decades to reflect service sector growth.

And a higher sales tax at a time when overall consumption is down may not do much to grow revenues.”

Palin Billed Taxpayers for Nights Spent at Home

From Washington Post.com:

Alaska Gov. Sarah Palin has billed taxpayers for 312 nights spent in her own home during her first 19 months in office, charging a "per diem" allowance intended to cover meals and incidental expenses while traveling on state business.

The governor also has charged the state for travel expenses to take her children on official out-of-town missions. And her husband, Todd, has billed the state for expenses and a daily allowance for trips he makes on official business for his wife.

Palin, who earns $125,000 a year, claimed and received $16,951 as her allowance, which officials say was permitted because her official "duty station" is Juneau, according to an analysis of her travel documents by The Washington Post.

The governor's daughters and husband charged the state $43,490 to travel, and many of the trips were between their house in Wasilla and Juneau, the capital city 600 miles away, the documents show.