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Taxes, fees at center of the budget crisis

By Laura Anthony
December 18, 2008

SACRAMENTO, CA (KGO) -- Trying to balance the budget came down to semantics for the Democrats. Any new taxes require a two-thirds vote by the state legislature. But fees are a different story.

One by one, Republican lawmakers voiced their concerns that the Democrats' revenue package is against California law.

They were joined by taxpayers' groups, which threatened several lawsuits hours before the senate or assembly took a single vote.

"This is the wrong time, the wrong time to be doing anything here to increase fees, taxes on the people of California," said Peter Foy from Americans for Prosperity.

The Democratic plan is based on the legal distinction that a tax is imposed broadly for general purposes, while a fee is charged to users of a specific service or item -- like gasoline.

As amended by Proposition 13 in 1978, the California constitution requires taxes be passed with a two-thirds majority.

But Democrats cite a loophole in the law that allows for the passage of a tax by a simple majority as long as it does not raise more revenue.

They call it "revenue neutral." Republicans call it "illegal."

"If this door is opened, California taxpayers will be losing all their future protections when it comes to a Sacramento that doesn't know how to control its expenditures," said State Senator George Runner (R) Lancaster.

"We are forced to move forward with solutions that don't require a two-thirds vote," said Assembly Speaker (D) Karen Bass.

Democrats claim their plan passed muster with legislative legal counsel.

"When you face a crisis, you have to look every way that we can possibly do this, and the legal opinion that we have is that we're on solid legal grounds, for proceeding in this fashion," said Assemblyman Tom Torlakson (D) Concord.

Governor Schwarzenegger promised to veto this plan because it left an economic stimulus component. He did not voice any objections to the method that is the simple majority, so that is very well possible that this could come back in another form and if it does, opponents say they will take it to court.

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