CALIFORNIA COUNTIES THREATEN TO KEEP TAXES FROM STATE
February 6th, 2009Via: AP:
California counties are considering forms of tax revolt after the state imposed a 30-day payment delay that could potentially become much longer under Gov. Arnold Schwarzenegger’s proposal to preserve cash.
The Riverside County Board of Supervisors has authorized staff to file a lawsuit, while elected officials in Colusa County decided to impose a 30-day delay on sending any taxes and fees it collects to the state after the state controller announced a delay in refunds to taxpayers, money for college tuition-assistance programs and payments to state vendors starting Feb. 1.
Schwarzenegger has proposed delaying the payments by as long as seven months, which Jim Wiltshire, deputy director of the California State Association of Counties, said could result in $3.5 billion in deferment to the state’s 58 counties.
“I just think we need to look at all our options,” said Don Knabe, a supervisor of Los Angeles County, which is also considering payment delays. “When they say deferred payments, they don’t say you can defer the services.”
The rift between state and county government comes amid growing frustration over the inability of Schwarzenegger and state lawmakers to reach a midyear budget agreement. The state is facing a budget deficit of $42 billion by June 2010, and the governor is battling state lawmakers who oppose possible tax hikes and labor leaders who have sued over imposed state worker furloughs in efforts to save money.
Most counties say their cash reserves can help them weather a 30-day delay, but many are concerned that an extended, monthslong holdup could force some county governments to shut down.
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Schwarzenegger’s finance spokesman, H.D. Palmer, said it was unclear whether the counties’ withholdings would have a significant effect on state government since counties collect property taxes that go to public schools. The state collects sales and income taxes.
Palmer suggested the state could in turn withhold sales tax revenue from the counties because the state needs to ensure it has enough cash throughout the year to pay its debt.
“We don’t put these proposals forward lightly,” he said. “We will move heaven and earth to ensure that bond holders will be paid on schedule.”