Tuesday, August 26, 2003

on 8/24/03 11:27 PM, Cheryl Bly-Chester wrote:

> Ken, I like your coverage of the California Gubernatorial special
> election. I am the only candidate who is putting forth an actual proposal to
> de-polarize Californians, alleviate the budget and spending problems and bring
> personal power back to taxpayers. I would appreciate your opinion of the
> proposal as it appears on my Website at CherylBlyChester.org - click on
> "Closing the Budget Gap" on the "read more"
> I want to know if you understand the proposal and can see the possibilities.
> Please give me your take on this proposal - Thanks, Cheryl Bly-Chester,
> Candidate for California Governor

Hi Cheryl,

Thank you for writing. It's not often that the candidate contacts the constituent with questions. That's a refreshing switch that has resulted from our multi-candidate election.

You asked specifically about my opinion on your "Closing the Budget Gap" proposal, and whether or not it could be understood and the possibilities seen. I've taken a couple of looks at it, and think it is fairly well understood, has direct-democracy implications that are exciting, but is (ultimately and sadly) not entirely workable.

To give a quick overview of what I think you were saying, you would allow those Californians who itemize their deductions to contribute directly to their "pet state project" while filing their taxes for an immediate 150% deduction on the income side. In theory, that's beautiful. As you point out, farmers could choose to support farm subsidies, artists could support the arts (what artists earn enough to itemize?), etc.

The implication is that this would draw in additional income to the state (more than enough to balance the 150% deduction), and give legislators a view into citizen priorities. (But, only the priorities of those whose incomes and lifestyles lead them to itemize deductions; richer citizens). Another well-meaning idea. But how is this going to work in the real world?

You say that tax payers would earmark these additional donations to specific line items in the budget. But with the thousands of line items that exist, who will be responsible for tracking this? Or deciding which of the hundreds of line items having to do with education a vague reference to "schools" would go to? The bureaucracy in tracking this alone would cost more than the additional revenue realized.

While you wisely point out that the contributions should serve as pointers to legislators to tell them about voter priorities, you also say that those line items that get no donations should lead legislators to reduce that line from the general fund. Dangerous idea. Sure, lots of people will earmark dollars to education, roads, public transportation, and environment. But who will remember to donate to "Mosquito Abatement District 5" until California becomes the malaria capital of the west?

You also say that to not put the state in competition with nonprofits, you would cap these donations at 50% of all charitable deductions. This is more a matter of opinion than analysis, but as a nonprofit guy, I'd still be worried about the attraction of the 150% deduction taking money away from the sector.

So what variation of your plan do I think would work? Maybe checkboxes for general funding areas (education, health, safety, roads/transportation, environment) to which folks could donate for an immediate 100% deduction. In other words, just a better implementation (and deductibility) of the additional donation box that's already on the California tax form. This would be easier and cheaper to implement, and could be used to encourage voluntary "donations" to the state to fix the deficit, but should not be used as a type of initiative process to set priorities.

I hope you don't regret asking me my opinion now, but as I said before, candidates don't often ask constituents to review their proposals, so I wasn't going to waste the opportunity by being anything less than totally honest.

Best wishes, and thank you,

- Ken Goldstein

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