(May 11, 2008, with updated reaction) -- Criticizing Gov. Arnold Schwarzenegger for proposing across the board spending reductions in response to CA's increasing deficit (spending exceeding revenue), the region's Assembly Democrats Betty Karnette (D., LB), Warren Furutani (D, Carson-LB), Hector De La Torre (D., South Gate) and Jose Solorio (D., Santa Ana) floated what they called a "balanced approach" that includes expansion of CA's sales and use tax to apply to "services."

Roughly 80 people attended the Saturday May 10 event at ELB's Marshall Middle School, organized by Assembly Dems and billed as a "regional Town Hall" on "CA's Fiscal Emergency."

The four Dem lawmakers expressed support for prioritizing cuts to spare education, criticized Republicans for not repealing what they called tax loopholes (including a "yacht tax" sales tax loophole)...and advocated expanding sales and use taxes to apply services.

Assemblyman De La Torre said broad across-the-board income tax increases are not on the table and vehicle license fee increases are extremely unlikely...but:

Assemblyman De La Torre: I think a sales tax is on the table, either broadening it into services or increasing the sales tax as it is right now. That's on the table. Those are the taxes we're talking about. And then there's fees specifically related to the services that somebody gets. Those are also on the table.

We're not talking about a whole broad array of taxes that are on the table for this [emphasis in original] budget year. And as I mentioned, our Speaker Elect, who will be our Speaker as Tuesday, has proposed a bipartisan expert panel to look at our tax base in general, but that will be a one year process, it will not affect this year's budget at all. It will be something that would be, again, long term to try to stabilize our revenue in the state of California.

The Dem Assemblymembers variously attributed CA's "fiscal emergency" to the current economic downturn, soaring gas prices and dropping home values and supported a proposal by incoming Assembly Speaker Karen Bass (D., Los Angeles) to have a "blue ribbon" bipartisan group of experts recommend CA tax code changes next year (i.e. after 2008 elections).

Earlier, Assemblyman Solorio said (in terms of the "blue ribbon" commission) commented on CA's sales and use tax:

Assemblyman Solorio: We really have a tax code in California that's built on what our economy was decades ago where we were really more manufacturing based, more product based. For example, our sales tax is based on that type of economy. Well now we have an economy that really is more and more a service-based economy. And there's been ideas, for example, out there maybe a broadening that the things that we collect the sales tax on. For example, maybe, you know, on entertainment services, whether you're buying a ticket to a theme park, a ticket to a concert, or maybe looking at some professional services, maybe a sales tax on accounting services or law firm services, and those are the type of things that we're going ask a balanced blue ribbon commission to look at..

Assemblyman Solorio also indicated the possibility of an oil extraction tax (similar to other states) as part of a "broad array of possible solutions for the long term."

The proposed application of CA's sales/use taxes to entirely new areas and/or raising the state's sales tax overall comes as L.A.'s County Metropolitan Transportation Authority governing board -- which includes LB Vice Mayor and Assembly candidate Bonnie Lowenthal -- is considering supporting a half-cent sales tax increase for L.A. County's November 2008 ballot (no decision yet).

Meanwhile, LB Mayor Bob Foster has indicated that he intends to ask LB's City Council to put a measure on the November 2008 LB ballot to fund what he calls "infrastructure" items (no details publicly revealed yet; a Council decision must be made by August).

No Repub state lawmakers were invited; there are none currently in the LB area's Dem. drawn Sac'to districts.

Asked for emailed comments by LBReport.com prior to the event, Repub Assembly candidates Michael A. Jackson and Gabriella Holt (dueling in the June 08 Repub primary) commented:

Michael A. Jackson: The Democrats are looking for both future votes and to increase the employment of public union employees where they derive the bulk of their money...Republicans are almost completely owned by businesses that want to reduce their payrolls by importing subsidized (erroneously called cheap) labor. The big losers...are the American poor that either lose their jobs or have their wages reduced to a wage closer to Mexico and other third world countries...The middle class get to enjoy higher and higher taxes to subsidize these give aways to non-citizens...[When are these Assemblymembers] going to represent the American poor and middle class and prevent a fiscal meltdown of California by spending too much of the taxpayers' money?

[updated following event] Gabriella Holt: I agree that simply making 10% across the board cuts is not the right way to address this issue. That is a proposal that means that all state programs are of equal value. They are not. Our state leadership needs to make choices. Some of them will be difficult.

The answer for four of these Assemblymembers seems to be tax increases. Make it work with the more than $100 billion you have.

When times were good the people in Sacramento did not save. They went on a spending spree and now we are all paying for it.

Much of the Q & A from the floor was supportive of maintaining funding for education...but the Assemblymembers hit choppy water when LB resident Maria Feldman rose and charged that Sacramento wasn't spending tax dollars efficiently or wisely...and she resented being told, in effect, to sell lemonade to raise money for schools that tax dollars should be paying for.

In response, Assemblywoman Karnette offered what she forewarned would be a "Dutch Uncle" response, telling the taxpayer that the state doesn't have the money it needs...and needs more money. "Every time you do something it costs money...You want to do all these things, you gotta have dollars...If you don't have the money, you don't have the money...All the complaining, if you give me an idea, I'll run with it, and all of us will. You tell us what you want and we'll do it," Assemblywoman Karnette said.

Later in the event, Assemblyman Furutani commented on the issues raised by the taxpayer: "There's a lot of money we have to budget...We have to really look at how we're spending it, and how we can spend it better. The efficiency question I think is very important, and that's why the coming together more holistically and strategically is critically. If we look at it as each little piece, we're going to get lost in the minutia..."

The Dem lawmakers urged audience members to contact Republican lawmakers, who have leverage on spending and increased taxes.

Assemblywoman Karnette said she hopes some Republican lawmakers can be persuaded to drop their "no new taxes" pledge. (Voter-enacted state constitutional provisions require a 2/3 vote of state lawmakers to impose new taxes, giving Repubs some spending leverage in the Dem drawn legislature.)

Those in the audience for all or part of the two hour event included LB Vice Mayor Bonnie Lowenthal, Councilmembers Patrick O'Donnell and Val Lerch, Water Replenishment District Director Lillian Kawasaki, Carson Mayor Jim Dear and LBUSD Superintendent Chris Steinhauser. Mayor Bob Foster's Chief of Staff, Becki Ames, also stopped by to observe.

Invited to make opening remarks at the school venue, Superintendent Steinhauser was more non-partisan, noting that LBUSD has already cut roughly $96 million over the past six years and adding that he hopes Sacramento can provide funding for decisionmaking locally, helping students stay in school and graduate so the best and brightest can remain in the area and contribute to its economic development.