They like it, they really like it.
That’s the early reaction to Gov. Jerry Brown‘s budget from Bay Area business leaders, economists and a labor representative I spoke to on Tuesday. The governor gets an A+ for “honesty” and for generally grabbing the bull by the horns, even on taxes.
Concerns were expressed on the proposed elimination of state redevelopment and enterprise zone funding, and a requirement that corporations use a “single sales factor,” based on their actual sales in California, to determine corporate tax owed, rather than allowing them to opt for a formula based on employment and property, as well as sales in the state.
Perhaps most important is how the Legislature and the electorate respond. As one business leader said, “Ultimately, the real wild card is whether Californians will be willing to go to the ballot box to tax themselves to stave off more cuts.”
Herewith a sample of opinions, in their own words:
Stephen Levy, director, Center for Continuing Study of the California Economy
The budget is positive for the economy because it’s honest. It says in order to cut $25 billion (the current deficit), everyone’s got to kick in. It’s about allocating pain, and the 50-50 division between spending cuts and tax increases is a strong symbol of Californians sharing the pain.
If we can balance the budget honestly, it’s a signal to business and to investors that California once again can do, rather than the reputation it currently has, which is the state that can’t agree on anything.
Jim Wunderman, CEO, Bay Area Council
The governor is to be commended for a reality-based budget. The state can’t move forward without it. But this is very big and complex and has to be looked at carefully.
We could be supportive of the tax extensions, but they could impact job creation and investments in plants, for example. On the single sales factor, we preferred the more flexible optional approach, and will have to look at the implications of putting every company affected in the one cup of soup.
As to eliminating state money for redevelopment and enterprise zones, we know there are some boondoggles, and money not always used in ways intended, but they’ve also helped with major improvements in areas suffering from economic malnutrition.
We’re currently polling our 275 members on these issues.
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