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California Governor Vetoes Transparency Bill

Last month, California Gov. Arnold Schwarzenegger vetoed AB 2666, a strong bill sponsored by Asm. Nancy Skinner that would have required the state's Franchise Tax Board to compile information on corporate tax expenditures and publish the information on California's Reporting Transparency in Government website.  The Governor had previously spearheaded accountability reforms and repeatedly emphasized the right of California taxpayers to know where the state directs public funds, especially during an economic downturn. However, in defense of the veto, the Governor contends that the state already publishes annual reports on certain expenditures and claims the legislation would place an undue burden on business.

Contrary to the Governor's comments, Emily Rusch, the State Director of CALPIRG, a leading organization in the fight for stronger state spending disclosure and accountability, finds, "if this [bill] had passed, taxpayers would have known which specific corporations received tax breaks and how much they received. That information isn’t disclosed now, and doing so would have been step one in making sure companies deliver on the public benefits that justify the cost of the corporate subsidies."

California, dealing with a $17.9 billion shortfall and a budget that is 17 weeks overdue, would have undoubtedly benefited from this bill. Transparency efforts to augment disclosure of subsidies, contracts, corporate tax breaks, and tax expenditures safeguard taxpayers, foster better budgeting practices, promote good jobs, identify spending inefficiencies, reduce potential corruption, and garner savings.  As part of our 2010 Shared Multi-State Agenda, the Progressive States Network has been working with lawmakers nationwide to promote Corporate Transparency in State Budget policies.

Interestingly, one of Gov. Schwarzenegger's original recommendations for alleviating the budget gap was to end spending on welfare programs and dramatically reduce social services, such as child care and assitance for the mentally disabled and elderly, while continuing to provide large businesses with lavish and unaccountable tax breaks. In 2009 alone, the state spent $14.5 billion on corporate tax expenditures with no oversight or accountability mechanisms. 

Gov. Schwarzenegger's priorities reflect right-wing policy: siding with corporations at the expense of sound fiscal policy, middle class interests, and taxpayer protections.