It's not often that business groups get behind ballot measures that add billions of dollars in taxes, but that's what's happening with the six statewide propositions on the May 19 special election ballot.
Most major business groups in the state including the California Chamber of Commerce and the Los Angeles Area Chamber of Commerce are supporting Propositions 1A through 1F. These measures complete a deal that legislators made with Gov. Arnold Schwarzenegger to close a record $42 billion budget deficit.
"It's a sign of how bad things have become in this state that groups like ours are supporting what amounts to a massive tax increase," said Carol Schatz, chief executive of the Central City Association, which represents business interests in downtown Los Angeles. "It's tragic, but there really aren't a whole lot of alternatives and certainly none that are more palatable."
While the support of business organizations could provide some boost, it won't be anywhere near enough to assure passage: All but one of the measures are trailing by wide margins in the polls.
In early March, the Central City Association was one of the first business groups to voice support for the ballot measures. The measures were a product of budget negotiations that had dragged on for nearly four months, and they were crafted to bring together enough support from various political factions to get the budget passed.
Since then, the Los Angeles Area Chamber of Commerce, the Valley Industry and Commerce Association, the California Chamber of Commerce and the California Manufacturers and Technology Association have joined in support. Last week, the Long Beach Area Chamber of Commerce endorsed most of the ballot measures.
"We're concerned that if this doesn't pass, the Legislature will come back and pass taxes that are more targeted towards business," said Gary Toebben, chief executive of the Los Angeles Area Chamber of Commerce, which endorsed the six propositions earlier this month at press conference with Schwarzenegger.
Proposition 1A, the centerpiece of the package, imposes a spending cap and sets up a "rainy day fund" that could be drawn upon in future hard times. But 1A also calls for $16 billion in tax hikes. The measure creates a two-year extension of hikes in the state sales tax, the personal income tax and the vehicle license fee. Without Proposition 1A, those tax hikes which are just now taking effect would expire by 2011; with Proposition 1A, they would extend to 2013.
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