ROBERT T. MATSUI 1941- 2005

The sudden death of Congressman Robert T. Matsui came as shock to all who knew him, and all agree with the statement by President Bush that "Bob Matsui was a dedicated public servant and a good and decent man who served with distinction and integrity in the U.S. House of Representatives for more than 25 years." Within the Taxpayers League many members knew Bob Matsui personally, and he had a distinct relationship with the organization.

On the wall of the League's office, as a centerpiece, hangs a page of the Congressional Record, Proceedings and Debates of the 99th Congress, First Session, dated April 29, 1986. Under the heading: House of Representatives are the words, "CONGRESSIONAL SALUTE TO THE COUNTY TAXPAYERS LEAGUE OF SACRAMENTO" The text begins with "MR. SPEAKER" and follows with, "I would like to call my colleagues' attention to a very fine volunteer community activist organization - the Sacramento County Taxpayers League - which is celebrating its 25th year of dedicated service to the people and institutions of this fine community." The text goes on to describe our history, mission and goals, and ends with, “Mr. Speaker, on behalf of the people of Sacramento, I would like to congratulate and commend the County Taxpayers’ League of Sacramento County, Inc. for 25 years of outstanding service to our community and extend my best wishes for success in all future activities.” The document is signed by Robert T. Matsui, Member of Congress.

Bob’s tribute has been on our wall for over 18 years. From our work with Congressman Matsui we know our community has lost a gentle giant. Our thoughts and prayers go out to his wife Doris and son Brian.

THE GOVERNOR THROWS DOWN THE GAUNTLET

In his State of the State Address to the Legislature on January 5th, Governor Schwarzenegger clearly threw down the gauntlet to all, declaring that the way state money is managed and spent is completely out of control and that the methods presently used for budgeting are not workable, and must be changed. He declared that the problem is not that the state doesn't have enough revenue, but rather that it spends too much. He stated that next year's budget will contain no new taxes, and his plan calls for major changes in a number of areas. The principal ones are that spending must be reduced; the government organizational structure must be changed; educators must be paid on the basis of performance rather then tenure; political district boundaries must be determined by a panel of retired judges rather that by the Legislature; the penal system must be reworked; and the state's retirement system has to be completely overhauled. And if these things do not take place, he predicts the people will take action against the government, and that he will join them. So get ready for the Initiatives, 'cause this year is going to be a hummer!

PARCEL TAXES USED TO INCREASE PROPERTY TAXES

League Vice President Jonathan Coupal, using his position as President of the Howard Jarvis Taxpayers Association (HJTA), has released a TAXPAYER BULLETIN advising that government entities have become successful in raising property taxes above the maximum 1% cap imposed by Proposition 13, passed in 1978. The method used is to get the required two-thirds voter approval of a flat-rate parcel tax by deceptive campaigning, and playing on voter sympathy to impose these additional property taxes. They are fixed flat-rate taxes, unrelated to property taxes based on assessed evaluations, and therefore Proposition 13's one-percent cap does not apply.

The threat is that the two-thirds vote requirement to pass these taxes is to be attacked again, with the aim of reducing the vote requirement to a simple, or a 55% majority. This was attempted twice by tax-and-spenders in the last Legislative session, and was thwarted by the HJTA. But the State Legislators are at it again. Assembly Joe Nation has introduced ACA 7 as a Constitutional Amendment to change the approval of special taxes by authorizing a city, county, or special district to impose a special tax with the 55% approval vote. If this and other attempts are unsuccessful, it seems that pro-tax billionaires and assorted public unions, are waiting in the wings to introduce a statewide Initiative to change the Constitution to reduce the vote requirement. Such a move would emulate the same approach used in 2000. In the March 2000 Primary Election the HJTA, aided by many taxpayer organizations including the League, defeated the Teacher's Union's Proposition 26, an attempt to reduce approval of school bonds from a two-thirds vote requirement to a simple majority vote. However, in the November 2000 General Election two Silicon Valley Millionaires, John Doerr and Reed Hastings, using their wealth, introduced the "son" of Proposition 26 as Proposition 39, aimed at reducing the 66.6% school bond vote approval requirement to 55%, instead of the simple majority approval proposed by the Teacher's Union earlier. They were successful, and overturned the 120-year old, two-thirds Constitutional vote requirement, but for school bonds only.

Now others, with wealth and union support, in the event Legislators are unable to change the two-thirds vote requirement for parcel taxes and special taxes may go after the two-thirds vote, protecting establishment such taxes, in the same way. Jon Coupal of the HJTA has stated that that approval of ACA 7 would "throttle the life out of Proposition 13." This further erosion of Proposition 13's protections, must be opposed by all taxpayer organizations, joined by private and commercial property owners.

A SMUD RATE INCREASE

The League carefully analyzes utility rates whenever proposals are made for increases. In the late 60s and 70's there were many scraps with SMUD, and the Regional Sewer and Garbage Systems, all of whom had rates that were considered to inequitable, and many were not based on cost of service. With much work over a number of years, and help by organizations such as the Council of Sacramento Senior Organizations, and Paul Gann personally, the rate issues were resolved, almost all in the rate-payer's favor.

To SMUD's credit, for 10 years after 1990, they operated without a rate increase. In mid 2001 they finally were forced to raise rates to cover rapidly increasing costs for spot purchases of electric power, and to cover increases in the price of natural gas to power some of their gas-fired electrical generating plants. In addition they approved a 6 percent surcharge on their rates in 2001 to rebuild the SMUD savings account, then drop it to 3 percent for two additional years. They did so, and canceled the surcharge this past year.

Now they are faced with the possibility that they may have to raise rates again by 6 percent due to increasing gas prices. Their General Manager has advanced four alternatives, for the increase, and SMUD is asking for customer input. We intend to evaluate the need for the increase and make a recommendation as to method in the event we agree with the need.

THE FLAT TAX

The January 2005 Sacramento Republican Women, Federated monthly publication The Capitol City Bulletin contained an article titled, "A FLATEY SIMPLE PLAN" by Anthony P. Archie of the Pacific Research Institute. The PLAN described the attributes of a flat tax when compared to the federal tax system of today. He related that the U.S. could derive a lesson from Russia's 13-percent flat tax which "reduced tax evasion and increased revenue28 percent the first year." He wrote: "A flat income tax would scrap our current tax structure with its escalating brackets for a single tax rate charged to all taxpayers uniformly."

He pointed out that under a flat tax gone are the endless tabulations and confusing deductions. A taxpayer would be allowed one personal deduction, or a joint deduction if married, plus one additional deduction per dependent. That tax base would be multiplied by the flat tax rate to determine the tax burden. The simplicity would save Americans time and money.

The White House Budget Office estimates that we waste $183 billion a year complying with the tax code. - an appalling number when you consider it equals 8.7 percent of total tax revenues. With a new system, tax collecting would be cheaper as well.

Archie wrote, "The IRS would no longer have to rely on its 50,000-plus pages of code to decipher a tax return, for a taxpayer's calculation could be written on a single form. In fact, the IRS itself could be greatly reduced or even eliminated, saving billions more. A flat tax system would also virtually eliminate the distortions in the economy brought on by our current monstrous code.

Our current system has the top five percent of earners paying nearly half the nation's revenues. A flat tax system insures that the richest Americans pay more without being unfairly targeted by the majority."

Archie goes on to say a flat tax would tax cheaters will no longer have loophole to avoid taxes, and points out that five former Soviet republics have implemented a flat tax system. Russian President Vladimir Putin instituted a 13-percent flat tax in 2001, which resulted in a declination in tax evasion, and tax revenues increased 28 percent the first year.

President Bush wants to simplify the tax system and Governor Schwarzenegger once considered implementing a flat tax in California, a state with the third most punitive taxes in the country. Archie ends with, "While most Americans applaud the presidents willingness to tackle our dreaded tax code, if he is truly serious about fixing it, a flat tax is the answer." The League's comment is that we believe both the president and the governor should take a good look at this solution.

COMPUTER WIZZ - JAY O'BRIEN

Carlos Alcala, of the Sacramento Bee, on December 16th wrote a vignette covering an event in the life of League Secretary Jay O'Brien, which needs repeating. That Jay is computer literate is well known by those who work with him. Alcala told of Jay that, "On his desk at home are no fewer than a half dozen computer displays, some hooked up in tandem to make oversized computer desktops. He uses another computer to teach himself some UNIX application so he can start running his Rio Linda-Elverta Web site on his own server. His involvement with personal computers goes way back "To show how far, Alcala relates that, "In the 1970s, working on his 'Thinker toys' kit computer, he found a bug in a BASIC-language program stored (in those early days) on a punched paper tape. He called the software company and was switched to the programmer, who sounded like a kid, he said. He told the programmer about the bug and suggested a fix. The young guy thanked him and later sent a new paper tape (which O'Brien still has). The programmer's name: Bill Gates. Yep, that Bill Gates."

LETTERS TO THE LEAGUE

We seek “Letters to the League” from Members concerning projects and issues on which we are working, along with recommendations on those we should look at. Letters may be edited and republished in any format, primarily in the interest of available space. Send letters, faxes, or e-mail to the Sacramento County Taxpayers League. Our e-mail is sactaxleague@prodigy.net; our telephone number is (916) 921-5991. Our fax number is (916) 567-1279. And our address is:
Sacramento County Taxpayers League
1804 Tribute Road, Suite 207
Sacramento, CA 95815.

EXECUTIVE DIRECTOR'S MESSAGE

2004 was a busy year, but 2004 will pale in comparison to the pace of 2005. Governor Arnold Schwarzenegger has started the year with an aggressive agenda which should have a big, positive impact for taxpayers. Likewise, our 2005 is shaping up to be equally as active as we stay ahead of the local and state legislative agendas. Our public relations campaign is well under way and we have new people asking about membership.

The League has served taxpayers in Sacramento County with distinction in the past decades and we have a bright future ahead of us. Building upon on strengths and tremendous track record, our administrative and issue management systems are improving at the same time. Providing excellent customer service to our members and providing excellent legislative representation is on local matters will be our hallmarks.

Thank you for your membership and participation in the League. We’re here to help make you successful in your business and personal endeavors as taxpayers! As your new Executive Director, I’m looking forward to meeting each of you personally. Have a wonderful 2005.

Bruce Lee

Executive Director

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