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Fuzzy math in California’s budget deal: $19 billion deficit, $315 million corporate tax break???

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With details still hard to come by in California’s budget agreement, there were some revelations that are sure to drive people crazy: in a time of perpetual multi-billion-dollar deficits, when public employees are being laid off and social services are being slashed and burned, a few corporations based in California are due to receive major tax exemptions as part of the budget deal. Humboldt Redwood Co., a lumber company, is the recipient of a very sweet deal that will allow them to deduct $315 million in taxes that were due to the state government as part of a 2008 acquisition; the California Cable Technology Association won a beneficial change in the tax liability formulas, which will cost the state $28 million this year, $95 million next year and $100 million annually thereafter. The deals on tax breaks were key in winning Republican support for a state budget that seeks to close a gaping $19 billion deficit, but they certainly seem to run counter to the need of the state to collect more revenues.


Jack Dolan, staff writer for the Los Angeles Times, based in Sacramento