Subject: Studies in the News 04-8 (February 6, 2004)

Studies in the News:
Revenue, Taxation and Budgeting Supplement

Contents This Week

   Correctional agency budget
   Improving business tax climate
   Federal per capita appropriations
   Bond allocations for populous states
   Federal budget details
   California perspective on federal budget
   Veterans Affairs budget proposal
   Local government finance almanac
   Deficit reduction bond
   Total government revenues drop
   Preliminary state budget analysis
   Terminating the deficit
   Governor's budget documents
   Fiscal survey of states
   Tax and budget review
   State budget cuts in health care
   Tax increases shore up revenue
   Internet taxes
   Remote collection of sales tax
   Trends in corporation tax revenues
   California's tax system
   Studies in the News, October 2003
   Studies in the News, November 2003
   Studies in the News, December 2003
   Studies in the News, January 2004
Introduction to Studies in the News

Studies in the News is a very current compilation of items significant to the Legislature and Governor's Office. It is created weekly by the State Library's Research Bureau to supplement the public policy debate in California’s Capitol. To help share the latest information with state policymakers, these reading lists are now being made accessible through the State Library’s website. This week's list of current articles in various public policy areas is presented below.

Service to State Employees:

  • When available, the URL for the full text of each item is provided.

  • Items in the State Library collection can be checked out to state officials and staff.

  • Access to all materials listed will be provided by the State Information Reference Center, either by e-mail to or by calling 654-0261.

The following studies are currently on hand:



Budget Backgrounder. By the Youth and Correctional Agency. (The Agency, Sacramento, California). "Public Safety." IN: 2004-05 Budget Highlights. And "Corrections and Law Enforcement." IN: California Governor's Budget Summary (January 4, 2004).

["The Governor's Budget includes funding to support the various programs within the Youth and Adult Correctional Agency, Department of Justice, Commission on Peace Officer Standards and Training, Office of the Inspector General, and the California Highway Patrol. Funding for these programs will be approximately $8.2 billion in total funds, and reflects a 7.3 percent decrease over the revised 2003-04 Budget."]

Budget Backgrounder. 4 p.:

Budget Highlights - Public Safety. pp. 63-67:

Budget Summary - Corrections & Law Enforcement. pp.143-156.:

[Request #S1150]

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"Improving California's Business Tax Climate." By Chris Micheli. IN: State Tax Notes, vol. 30, no. 9 (November 24, 2003) pp. 743-745.

["Tax reforms and incentives enacted in past years have to be expanded so that California's competitive position is improved and its tax climate continues to encourage job growth and economic development.... [The article lists] recommended tax reduction measures."]

[Request #S1151]

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FY 2003 Earmark Rankings Per Capita. By Federal Funds Information for States. (FFIS, Washington, DC) 2004. 1 p.

Full Text at:

["Using data from Citizens Against Government Waste, FFIS has compiled rankings for per capita earmark appropriations in FY 2003."]

[Request #S1152]

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Population Data for 2003: Impact on Bond Caps, SSBG Allocations. By Federal Funds Information for States. FFIS Issue Brief. 03-59. (FFIS, Washington, DC) December 30, 2003. 8 p.

["This Issue Brief summarizes the new Census population estimates and calculates their effect on the 2004 tax-exempt private-activity bond limitations and Social Services Block Grant (SSBG) allocations... According to estimates released by the Census Bureau, the nation's population grew by approximately 2.8 million from July 2002 to July 2003. California continues to be the most populous state, followed by Texas and New York."]

[Request #S1153]

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Budget of the United States Government, Fiscal Year 2005. By the Office of Management and Budget. (The White House, Washington, DC) February 2, 2004.

["Aided by the biggest revenue increase in five years, (President) Bush's $2.4 trillion budget projects a nearly one-third decline in the deficit.... The budget proposal increases military spending 7 percent and boosts homeland security spending by 10 percent. All other programs, subject to congressional approval, would grow by just one half of one percent." Sacramento Bee (February 3, 2004) A1.]

Budget of the United States Government, Fiscal Year 2005. Various pagings:

Analytical Perspectives, Budget of the United States Government, Fiscal Year 2005. 408 p.:

Historical Tables, Budget of the United States Government, Fiscal Year 2005. 308 p.:

Appendix. Various pagings:

[Request #S1158]

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Special Report: President's Budget Proposal for Fiscal Year 2005, California Implications. By the California Institute for Federal Policy Research. (The Institute, Washington, DC) February 2, 2004. 21 p.

Full Text at:

["The Budget makes various assumptions regarding lost revenues due to waivers and other shifts. It assumes that the federal government will forego $123 million in 2004 and $65 million in 2005 due to the a Medicaid waiver that been granted to Los Angeles County, and a Medicaid family planning waiver for California will shift $159 million for 2004 and $27 million for 2005. Likewise, an SCHIP waiver for California assumes that federal government revenues will decline by $466 million in 2004, $487 million in 2005, and $337 million in 2006."]

[Request #S1160]

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California Department of Veterans Affairs Fiscal Year 2004-05 Governor’s Budget: Major Budget Adjustments. By California Department of Veterans Affairs. (The Department, Sacramento, California) 2004. 1 p.

Full Text at:

[Includes: "Savings From Elimination of Positions;" "Savings by Redirecting General Fund Expenses;" "Savings from Outsourcing and Contract or Program Reduction;" and "Organizational Streamlining."]

[Request #S1164]

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California Local Government Finance Almanac. By the League of California Cities. (The League, Sacramento, California) 2003. Various pagings.

Full Text at:

[The almanac includes: "Data, statistics, analyses, and articles on California city and county finance. Topics include vehicle license fees, state and local fiscal relationships, legislation and property taxes. [It] provides links to government and other related sites." Librarians Index to the Internet Week (January 15, 2004) online.]

[Request #S1165]

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Schwarzenegger Viewed Positively, but Voters Expect a Tax Increase. They Support Either Hiking Sales Taxes 1/2 Cent or Increasing Income Taxes of Top Earners, But Oppose the Governor's $15 Billion Bond. By Mark Di Camillo and Mervin Field, Field Research Corporation. Release #2101. (The Corporation, San Francisco, California) 10 p.

Full Text at:

["Bond To Slash Deficit Is Trailing: The Field Poll found deep skepticism about the bond despite favorable assessments of the job Schwarzenegger has done since he took office.... A third of the voters supported Proposition 57, the proposal to use bonds to cover $15 billion of the state's accumulated debt, while 40 percent said they would vote no. Another 27 percent were undecided." Sacramento Bee (January 15, 2004) A1.]

[Request #S1123]

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Total Revenues from All Levels of Government Drop to Lowest Share of Economy Since 1968: Government Spending at Lower Share of GDP Than in All Years from 1980 1996. By Isaac Shapiro and Nicholas Johnson, Center On Budget and Policy Priorities. (The Center, Washington, DC) January 15, 2004. 10 p.

Full Text at:

["Combined federal, state, and local revenues fell in fiscal year 2003 to their lowest level, measured as a share of the economy, since 1968.... Total federal revenues fell to their lowest level since 1959, with federal income tax revenues (both individual and corporate) ... falling to their lowest level since 1942."]

[Request #S1166]

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Governor Releases Proposed 2004-05 Budget. By the California Budget Project. (The Project, Sacramento, California) January 9, 2004. 12 p.

Full Text at:

["The following update provides a 'quick and dirty' summary of key provisions of the Governor's Budget.... The project will also prepare in-depth analyses of major proposals contained in the budget.... In order to bring the budget into balance, the budget includes 'solutions' totaling $754 million in 2002-03, $2.6 billion in 2003-04, and $14.4 billion in 2004-05."]

[Request #S1167]

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Terminating the Deficit: Does the Governor's Proposed 2004-05 Budget Restore California's Fiscal Health While Protecting Public Services? By the California Budget Project. (The Project, Sacramento, California) January 2004. 64 p.

Full Text at:

["The California Budget Project's annual analysis of the budget examines the Governor's plans for bridging the state's $15 billion budget gap, the roots of the budget gap, and the social and economic context of the budget."]

[Request #S1168]

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Governor's Budget: 2004-2005. By Arnold Schwarzenegger, Governor of the State of California. (Office of the Governor, Sacramento, California) 2004. Various pagings.

Full Text at:

["Governor Spreads The Pain: Governor Arnold Schwarzenegger pitched a $99 billion budget that attacks the deficit by slashing nearly every state service -- from education and local government to social services and transportation. Some $14 billion in cuts, loans and one-time fund shifts ... would affect everyone from students of all ages, to motorists in traffic-weary regions such as the Bay Area, to the poor, elderly and disabled." Alameda Times-Star (January 10, 2004) 1.]

[Request #S1169]

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The Fiscal Survey of States. By the National Governors Association and the National Association of State Budget Officers. (The Association, Washington, DC) December 2003. 69 p.

Full Text at:

["Report: States Show Slow Signs of Recovery, Spending Remains Flat: Despite small signs of revenue growth, states will continue to struggle to balance budgets because of soaring health care costs and stagnant revenue growth.... States can expect to have to deal with tough fiscal times for the rest of the fiscal year and perhaps into fiscal year 2005." State Tax Notes (December 15, 2003) 884.]

[Request #S1171]

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Tax and Budget Review: 2003. By Nicholas W. Jenny, Nelson A. Rockefeller Institute of Government. State Fiscal Brief. No. 69. (The Institute, Albany, New York) 2004. 7 p.

["In 2003 legislative sessions, 18 states made significant tax increases totaling almost $6.2 billion for fiscal year 2003.... Sales tax increases amounted to over $2.4 billion.... Personal income tax increases were almost $1.9 billion.... States are again facing budget gaps as they prepare their fiscal year 2005 budgets."]

[Request #S1172]

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"Sick State Budgets, Sick Kids." By Bob Herbert. IN: The New York Times (January 9, 2004) p. A19.

["While headlines continue to tell us how great the economy is doing, states across the U.S. are pulling the plug on desperately needed health coverage for low-income Americans, including about a half-million children. Even as the Bush administration continues its bizarre quest for ever more tax cuts, the states, which by law have to balance their budgets, are cutting vital social programs so deeply that tragic consequences are inevitable."]

[Request #S1173]

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"Tax Increases Shore Up State Revenue." By Nicholas W. Jenny. IN: State Tax Notes, vol. 30, no. 4 (October 27, 2003) pp. 291-301.

["State tax revenue grew by 3.1 percent in the April-June quarter of 2003. This was the strongest quarter of growth since January-March 2001; however, almost all of the growth in the quarter resulted from net enacted tax increases. Without them, state tax revenue would have risen by only 0.4 percent."]

[Request #S1174]

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The Internet Tax Solution: Tax Competition, Not Tax Collusion. By Adam D. Thierer and Veronique de Rugy, Cato Institute. Policy Analysis No. 494. (The Institute Washington, DC) October 23, 2003. 40 p.

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["Tax competition, not collusion, for the Internet: States should not force Internet sales to collect taxes.... Special interest loopholes and complex product classifications complicate current sales tax codes. Imposing the codes of multiple states on remote vendors would be excessively costly and unconstitutional, argue the authors." Cato Institute News Release (October 23, 2003) 1.]

[Request #S1126]

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Economic Issues in Taxing Internet and Mail-Order Sales. By Dennis Zimmerman, Congressional Budget Office, U.S. Congress. (The Office, Washington, DC) October 2003. 36 p.

Full Text at:

["This ... paper uses an economic framework to evaluate the various arguments that have been advanced by proponents and opponents of remote collection of sales taxes.... The report makes no recommendations."]

[Request #S1127]

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"Trends in California Corporation Tax Revenues." By Allen Prohofsky. IN: State Tax Notes, vol. 30, no. 8 (November 17, 2003) pp. 627-637.

["Corporation tax revenues are the third largest source of revenue for the state of California. In recent years, however, corporate income tax revenues have not kept pace with either the growth of other major sources of revenue or with the growth of the economy in general.... After adjusting for inflation, real corporation tax revenues actually decreased by 10 percent from fiscal 1989 to fiscal 2001 and by 31 percent from fiscal 1989 to fiscal 2002."]

[Request #S1128]

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Reforming California's Tax System. By the Legislative Analyst's Office. Presented to the Little Hoover Commission. (The Office, Sacramento, California) January 22, 2004. 8 p.

Full Text at:

["In 1999-00, California’s own-source state and local taxes were $10.98 per $100 of personal income, versus $10.44 for all states combined. The comparable figures for selected states were: $13.23 for New York, $10.08 for Washington, and $8.98 for Texas.... Spending on services has increasingly become more important for both individuals and businesses. Methods of handling transactions have also been changing, with increasing use of 'remote sales' through such mediums as the Internet and catalog sales."]

[Request #S1175]

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[This section links to items in Studies in the News since the last Revenue, Taxation and Budgeting Supplement.]

"General Government." IN: Studies in the News 03-71 (October 27, 2003)

[Includes: "Federal policies and state fiscal crisis;" "Local sales tax;" "Twenty-five years after Proposition 13;" "State and local business taxes;" "Freedom from tax on the Internet;" and others.]

[Request #S1176]

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"General Government." IN: Studies in the News 03-74 - 03-78 (November 6-21, 2003)

[Includes: "Federal income taxes drop as share of GDP;" "State and local business taxes;" "Budget analysis;" "Addressing the budget shortfall;" "California's fiscal outlook 2003-2009;" "Budget balancing adjustments in the states;" "Internet taxes;" "Streamlined Sales Tax Project: supported;" "Streamlined Sales Tax Project: opposed;" and others.]

[Request #S1177]

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Studies in the News 03-80 - 03-83 December 3-30, 2003

[Includes: "State Budget proposition analysis;" "LAO comments on spending cap;" "Fiscal storm signs subsiding;" "State fiscal crises;" "Proposed enrollment caps for health and human services;" "State's cash flow;" "Federal policies and states' fiscal woes;" and others.]

[Request #S1178]

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"General Government." IN: Studies in the News 04-03 - 04-07 (January 12 - 31, 2004)

[Includes: "Privatization in state government;" "Terminating tax shelters;" "Proposed changes in California tax policy;" "New state-reimbursable mandates;" "State and federal finances;" "LAO overview of budget;" "Special survey of California's fiscal system;" "Governor sued for cutting taxes;" and others.]

[Request #S1179]

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