In reaction to intensive fiscal challenges tied, at least in some measure to union-friendly legislation going back decades, the dominant California Democratic Party appears to be seriously rethinking its role as the advocate of the working class.
In a significant reversal, yesterday August 29, California Democrats rejected a Republican-backed bill to eliminate the state’s tax on tips for service workers, a policy previously supported by the state’s majority party.
Bipartisan support for doing away with tip tax has recently emerged nationwide.
In June, former President Donald Trump said he would, if elected this year, remove the tax “first thing in office.” His rival in the election, Vice President Kamala Harris earlier this month promised to 86 the federal tax on tips, in a rare show of agreement with her Republican opponent.
There are polls to indicate the public at large is in support of ending the tip tax, with little variance between the members of the Republican and Democrat parties.
Despite that all but two of the state’s Democratic senators, Senate President Pro Tempore Mike McGuire and State Sen. Nancy Skinner, voted in opposition. McGuire and Skinner abstained. The motion to table the amendment without debate passed 29-9-2.
The Republicans put out a joint press release that stated, “Today, California Senate Republicans advanced amendments to protect hospitality and service industry employees with a state tax exemption on tips. Legislative Democrats refused to consider the issue and summarily killed the proposal without discussion or debate.”
In her speech on the floor of the State Senate, State Senator Rosilicie Ochoa Bogh, who sponsored the bill, said, “I have this wonderful, uniting and friendly amendment that would exempt tips from state income tax, providing relief for Californians in the service and hospitality industries. Members of my family have lived in the service industry, including my mom when she was a single mom. Tips aren’t regular income, despite the fact that current tax law treats them as such. Tips are not guaranteed. They’re not consistent and they’re not enough to make ends meet. As a matter of fact, it’s a gesture of gratitude for a service that goes above and beyond what is expected. This struggle is bipartisan. We must make every effort to help our working class. Together, we have an opportunity for to make history today on this floor by coming together to provide relief for millions of Californians. Because the Senate will likely table these amendments,unless we are courageous today and want to prove that we don’t have to be partisan always, I want to make sure that it is clear what this vote means. Voting ‘Aye’ to lay these amendments – friendly, uniting – on the table means you do not support a tax exemption on tips and you won’t take much-needed action today to help Californians. Please join me in supporting California’s service and hospitality workers and reject tabling the amendments and make history today.”
Following the vote, Ochoa Bogh said, “It is deeply disappointing that the Legislature chose not to consider a proposal that could have provided much-needed relief to California’s workers.”
State Senate Minority Leader Brian W. Jones was critical of the Democrats for refusing to hold a debate on the issue. He suggested the Democrats agreed with the policy inherent in the amendment but were seeking to carve an exit for Governor Gavin Newsom out of the fiscal dilemma he has created for himself by overspending for the duration of his tenure in office.
“The negligence involved in a refusal to even debate a policy issue of this magnitude cannot be overstated,” Jones said.
California went from a project $75.7 billion surplus three years ago to being $73 billion in the hole at present, according to California’s Legislative Analyst’s Office.
Along the way, California has suffered serious setbacks, some of which Newsom’s critics say were inflicted by his policies and those of the Democrat-controlled legislature, including the raising of the minimum wage for fast food workers to $20 earlier this year, which was $4 above that for other employees. While that change was intended to lift the financial level of fast food employees, it resulted in layoffs, price increases and closures of fast food operations, which worsened the state’s economic picture.
The action by the State Senate Democrats yesterday may reflect concern about their party’s direction. The have remained silent on what the rationale for the tabling was, providing no explanation or press release pertaining to obstructing the bill to end the tip tax.
The state is reeling under fiscal challenges. The combined California Legislature has already implemented a host of austerity measures, including a temporary tax hike on certain businesses, in an effort to reduce the deficit, having so far reduced the $73 billion in red ink to a still devastating $46.8 billion shortfall.
One such move was the Democrats maneuver, unsupported by Republicans, to delay a minimum wage increase for about 426,000 health care workers that was due them on July 1 to help balance the state’s budget. That raise will come on October 15, but only if the state’s revenues between July and September prove to be 3 percent or more higher than what officials had estimated. The raise will be postponed yet further if that is not the case.
This is the second consecutive year that California is in deficit mode.