Schnur notes how difficult it will be to close a $40 billion hole without some form of new revenues in the next 18 months. He also notes that Assembly Republican Leader Mike Villines may be more flexible on new revenues than his public statements would indicate.
Villines has hinted that a package of tax and regulatory incentives that could improve the state's business climate could be part of a tradeoff for some revenue increasesBecause he was careful not to promise such an exchange, Villines was roasted by the state's mainstream media for intransigence. But while he was not willing to negotiate against himself by offering up absolute assurances of Republican support before any serious discussions had occurred, he was effectively sending a message to Schwarzenegger and the Democrats that he and his allies would be open to the conversation if significant job-creation measures were part of the discussion as well.
Schnur's essay is well timed. I hope he'll soon follow it up with another one that analyzes what type of temporary tax increase would be least harmful to the economy. Lawmakers need to have that conversation. Here at The Swarm, we think a broad-based increase in personal income taxes is preferable to a sales tax increase. Much of it would be deductible.
But kudos to Schnur and the Flash Report for at least going this far.