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How Much Will Brown's $5.5 Billion Cost?

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How Much Will Brown's $5.5 Billion Cost?

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NewsConference; Jerry Brown's Inauguration

This week, Jerry Brown gets sworn in as California's 39th Governor. Monday, Governor Brown releases his first budget. It's not going to be pretty, he says. The state is facing a $28-billion dollar deficit.
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What price a tax hike?

The question is not rhetorical. Gov. Brown is betting big on convincing voters this November to adopt temporary tax increases that, according to the legislative analyst, would produce $5.5 billion a year.

But that's the gross if the tax initiative passes. It's not a net.

In California's blockbuster democracy, initiatives don't pass easily. To win, the governor and his allies will need to win support and neutralize opposition. And that could mean embracing policies that cost the state money, instead of saving it.

The amount that Brown must concede is the number to watch this year. If Brown has to back down from pension changes that labor unions oppose (in order to keep them on his side in the tax fight), that could have a cost to the state.

If Brown has to make concessions in contract negotiations with unions, that could have a cost.

The governor also could help Indian gaming tribes -- at least some of whom are backing the tax initiative -- in ways that have costs for the state and local governments.

Business groups may want some fiscal concessions as part of the price of staying the coalition, from tax breaks to other programs that cost the state money.

Such concessions could add up quickly. Keep an eye on whether such concessions are permanent changes in policy -- a high price to pay for Brown's tax increases, which are temporary.

Given the high prices of building a big campaign coalition for tax hikes, one wonders if Brown's tax increases are big enough.

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