http://cbs13.com/local/california.counties.tax.2.927411.html Calif. Counties Threaten Tax Revolt Against State
Click to enlarge KUTV 1 of 1 SACRAMENTO (AP) ? Click to enlarge KUTV 1 of 1California counties are throwing another wrinkle into the state's cash crisis as Gov. Arnold Schwarzenegger and legislative leaders try to agree on a way to erase a $42 billion budget deficit. Several counties are considering some form of tax revolt -- either filing lawsuits or delaying tax payments to the state -- because the governor has proposed withholding payments to them for as long as seven months in a move to preserve cash. Local governments already are missing out because the state has imposed a 30-day payment delay to counties. That was part of a move by the state controller to delay refunds to taxpayers, money for college tuition-assistance programs and payments to state vendors. The Riverside County Board of Supervisors authorized staff to file a lawsuit, while elected officials in Colusa County decided to impose a 30-day delay on sending any taxes and fees it collects to the state. "We will have to shut the doors," said Kim Dolbow-Vann, a supervisor in Colusa County, north of the state capital. "We don't have the borrowing capacity" to backfill delayed payments. Los Angeles County also is considering payment delays. County Supervisor Don Knabe said it's important to know whether the state's threat to withhold money is legal. Generally, the state pays counties to operate social service programs and public safety, as well as take the lead on road projects. Counties collect property taxes and other fees, while the state collects sales and income taxes. "I just think we need to look at all our options," Knabe said about withholding taxes from the state. "When they say deferred payments, they don't say you can defer the services." Schwarzenegger's finance spokesman, H.D. Palmer, said it's not clear whether the withholdings would have a significant effect on state government. Counties collect property taxes, which go to public schools. Palmer suggested the state could in turn withhold sales tax revenue from the counties because the state needs to ensure it has enough cash throughout the year to pay its debt. "We don't put these proposals forward lightly," Palmer said. "We will move heaven and earth to ensure that bond holders will be paid on schedule." Some counties could dip into reserves, but that would not buy enough time to run programs that provide assistance to the working poor, foster children and seniors, said Jim Wiltshire, deputy director of the California State Association of Counties. He estimated the state could defer as much as $3.5 billion to the counties. The rift between the state and county government comes amid a worsening economic outlook for California and growing frustration over the inability of Schwarzenegger and state lawmakers to reach a midyear budget agreement. California's deficit is projected to reach $42 billion by June 2010, and the governor has called lawmakers back into special session to close the shortfall. He wants a combination of spending cuts, tax increases, borrowing and steps to stimulate the state's economy. Most Republican lawmakers, however, have signed a no-tax pledge and have dug in, making it difficult to reach a compromise with Democrats, who are the majority party in both houses. Schwarzenegger and lawmakers missed a self-imposed deadline to reach a budget deal by Feb. 1 as the state runs dangerously low on cash reserves. Special interests intent on protecting their turf in the inevitable budget cuts have been threatening lawmakers of both parties. Labor leaders have said they will work to recall any lawmaker who agrees to changes in workplace rules, such as those dealing with meal breaks and overtime pay. At the same time, a Republican state party official has proposed censuring any GOP legislator who votes for higher taxes. Meanwhile, Standard & Poor's downgraded the state's $46 billion general obligation bonds this week, leaving California with the worst state credit rating in the nation. ((c) 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.) -- . . . . . . . . . . . . . Alamaine, IVe "The irrationality of a thing is no argument against its existence, rather a condition of it." Friedrich Nietzsche . . . . . . . . . . . . . . In accordance with Title 17 USC Section 107, the material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. ------------------------------------ www.ctrl.org DECLARATION & DISCLAIMER ========== ctrl is a discussion & informational exchange list. 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