January 5, 2011—As our new governor takes office he is challenged with a $28 billion state budget deficit over the next 18 months. This amounts to about one third of the entire yearly budget.

For twenty years the California budget has been squeezed between a growing population whose needs include the services necessary for a civilized and thriving society (including quality public education, public safety, public health, and a solid infrastructure) and a dysfunctional budget and revenue producing process.

Over the past two decades the state Legislature has repeatedly reduced or eliminated taxes and fees on the very rich and large corporations. They did that in order to pass a state budget that required a two-thirds vote. As a result of these budget deals, the state's revenue collection has lost a billion dollars here, a billion dollars there, until the cumulative amount lost is over $13 billion per year. One of the worst examples was a year ago, when $1.3 billion in special interest corporate tax loopholes benefiting a handful of large corporations were created.

That won't happen this year. Due to the approval of CFT-backed Proposition 25 by the voters of California in November, one major obstacle to reasonable budget making has been removed—the two-thirds vote requirement to pass a budget.

But the other problem remains very much in place: the requirement for a two-thirds vote to increase a tax or create a new one. The anti-tax contingent still holds just over a third of the votes, giving it effective power to say "No" to reasonable structural solutions.

This is the biggest problem faced by Jerry Brown, and ultimately this is the problem we must fix. Without revenue enhancements, every state budget, and every education policy initiative will fall short in providing the California we all dream about.

California has the riches to fund public service and a change in the tax structure can provide these riches. The top 1% of income earners (people who average $1.8 million per year or more in income) has doubled its share of California's income since 1991 (from 12% to 23%), but pays lower tax rates today than it did then. Corporations that once provided 15% of the state budget currently chip in just 10%. And now, by extending the Bush tax cuts for the top 1% (148,000 California taxpayers), Congress and Obama has just handed these Californians $95,000 each per year, for a collective yearly total of $14 billion—an amount equal to one half the yearly state budget deficit (see article on this).

School employees, and other public employees like firefighters and public health workers, have experienced pay cuts, benefit reductions, furloughs, and layoffs. Critical public services have been cut to the bone. California now ranks 50th in the nation in ratios of teachers, librarians, and counselors to students. This is because, in addition to years of cuts, public education has been cut an additional $18 billion over just the past three years. The core challenge to a balanced and reasonable budget is to restore tax rates where the richest pay their fair share.

It currently appears that we are a ways off from making this happen. Governor Brown said during his campaign he will propose a budget without smoke and mirrors, and he would not raise taxes unless the people voted for it. Accordingly, he will propose deeper cuts in order to match the state's services with its shrunken revenue base. He will also call a special election in June to put before the voters the renewal of $8 billion in temporary taxes scheduled to expire this year. This will begin to hold the line on further massive cuts, but it is not enough to regain the services Californians need and deserve. It is a reasonable first step.

The CFT's Fight for California's Future campaign, which in the past year brought us the March for California's Future and the successful Prop 25 effort, will continue to develop materials, training, and action plans to bring fair tax policies into place so that we can restore the California Dream. All of our members and supporters must be part of this campaign. We will all need to help Jerry Brown convince the public to extend the temporary taxes in June. But we also need to engage in conversation with co-workers, friends, family, and neighbors about the state's financial situation, how it got that way, and what we can do about it over a number of years.

Without this assistance, Brown will have his hands tied. If we are able to build a coalition, and talk to enough people about fair taxes, the June election will be a beginning. If we don't do that, it will be just another detour on the road to a better California.