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Funny Business
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"God help the Republican who supports this."
Those words from John Kobylt, who, along with Ken Champeau, bring in huge ratings for KFI AM 640 every afternoon in Los Angeles with "The John and Ken Show." Kobylt sounded about ready to have a coronary Thursday when word came down that Governor Arnold Schwarzenegger wants to raise taxes by $4.4 billion to avoid a "cash crisis." The Governor also wants to cut spending by $4.5 billion.
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Briefly, the spending cuts include:
- A $2.5 billion cut in education funding.
- Requiring state employees to take a one-day furlough every month.
- No parole supervision for "low-risk non serious offenders" after they leave prison.
- Cut Medi-Cal payments "to the level provided in most states".
Briefly, the taxes include:
- A 1.5% hike in the state sales tax for three years, which could bring in $3.5 billion (assuming everyone keeps buying things). The sales tax would be expanded to cover new goods and services, like furniture making, auto repair, golf, and veterinary services.
- A $12 hike in the car registration tax.
- An oil company tax mounting to 9.9% of the gross value of every barrel of oil extracted from the state, whether from the ground or offshore.
- A five cent raise in the tax on every alcoholic drink, a tax that hasn't been touched since 1991.
I happened to interview the CEO of Grill Concepts [GRIL
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] this week, owner of The Daily Grill chain of restaurants, when the news came out. Philip Gay is not happy about what this means to his already struggling business. "When a guest eats at one of our restaurants, they don't distinguish between the price and sales tax, they just see their bill at the end of the meal," Gay says. "What we try and do is give guests value, so anything that raises that is something that's not good for business."
California's budget is heavily dependent on capital gains taxes, which are way off right now. "You don't want rich people to succeed?" John Kobylt said on the radio Thursday afternoon. "This is what happens when wealthy people don't succeed, they (the government) comes after you!"
But what really set him off were comments by the Governor saying the state doesn't have a spending problem, it has a revenue problem. "He's a liar!!" Kobylt screamed into his microphone, pointing to a study which says state spending is up 40 percent since Schwarzenegger took office. The salt in the wound: raising the car registration fee, a fee Schwarzenegger cut in his first act as Governor.
John and Ken stand ready to unleash their legions of loyal listeners on every Republican in Sacramento. A two-thirds majority is needed to pass the Governor's plan, which will require some Republican votes. The Governor says he's hoping that politicians who refused to support a similar tax hike last summer will feel differently now that the situation has deteriorated. He also hopes to find Republicans more willing to compromise now that the election is over and no one's worried about his or her political job for at least two years.
But John and Ken—and their listeners—have very long memories.
WATCH MONDAY: I'm flying to North Carolina to interview Tiger Woods this weekend about his real estate development there. Interesting timing... I plan to also ask him when he'll be back on the Tour. The reports will air Monday beginning on Squawk Box. BY THE WAY: flying US Airways. Water is now $2. NO MORE FREE WATER. At least you get a whole bottle...
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