Background
Over the past two weeks our office has received numerous requests to opine on the state budget
proposal including the flat income tax. The requests came from lawmakers at the state, leaders
within county and city levels of government, economic development professionals, members of
the business community, and several other interested organizations.
In some cases, our informal feedback has been accurately conveyed, while in other instances our
opinions have been misrepresented. To avoid further confusion, the following bullet points are
provided to clearly summarize our position on these matters.
We were not formally engaged to conduct this research. This is a volunteer effort. In terms of
our history in dealing with related issues, we helped design the economic development and tax
policy changes following the Great Recession, analyzed and forecasted all major tax categories at
the state and local levels, examined optimal funding for the Budget Stabilization Fund, and
reviewed and monetized scores of tax policy bills including this year’s Qualified Facilities Tax
Credit and changes to the business property tax assessment ratio. We were also the primary
economic analyst on all things related to Proposition 208 and provided the economic impact
figures that are widely referenced.
Overview
This memorandum includes three brief sections. First, we provide clarification on the broader
economic and tax policy issues that should be considered. Next, a list of recommendations is
provided that reflects our opinion of how to best implement a tax cut in the state. Additional
economic considerations are then provided.
We began with a review of the concepts outlined in the 5/24 budget proposal. The proposal
was reviewed and modifications are listed for making the plan more efficient in terms of
growing the economy. This memorandum is not an outline for a bipartisan tax plan with the
intent of gaining support from both sides of the political aisle.
