In an effort to balance their budget, California’s legislature has passed a package of bills that cut spending, and extract money from local governments.
The legislative package of about 30 bills was similar to the deal announced earlier this week by Gov. Arnold Schwarzenegger and legislative leaders from both parties.
But the Assembly rejected two of the most controversial measures: A plan to take about $1 billion in transportation funding from local governments and a measure that would have allowed new oil drilling off the California coast for the first time in 40 years. That was to have brought in $100 million this fiscal year.
The new oil drilling was a bright spot in the plan as originally proposed. The $100 million dollars would have been just the beginning, as any new, reliable oil production that occurs in the United States acts as a downward pressure on the cost of oil everywhere. A lowering of the cost of gasoline could only help our nation’s economy and effectively give every citizen a small raise.
The loss of $1.1 billion from the budget package means Schwarzenegger will use his veto authority to make even deeper cuts to close the gap.
”It’s the only way to solve the problem and to save our great state. The only way to do it is to spread the sacrifice. It saves our state from financial ruin and from drowning into the fiscal abyss,” the governor said.
The cash crisis has become so acute that California has been forced to send IOUs instead of checks to thousands of state contractors. It was also facing the prospect of being unable to fund pension contributions and or pay employees by September.
While lawmakers agreed the deficit-closing plan was distasteful, most said they had little choice.
The rapid decline in tax revenue and Republicans’ insistence on no tax increases left lawmakers with few options but to cut spending, borrow money from elsewhere and resort to various accounting tricks to balance its books.
One of those gimmicks was to defer state employee paychecks by one day, from June 30 to July 1, 2010, for a savings on paper of $1.2 billion. The state also will accelerate collection of 2010 personal income and corporate taxes to bring in revenue earlier than anticipated.
“…Republicans’ insistence on no tax increases…” Now, I’m not an expert on California politics—who would want to be?—but I seem to recall a flurry of editorials from Californian newspapers decrying all voters for rejecting tax increases a month or so ago. I could be wrong, but how could Republicans block new taxes when the legislature is dominated by Democrats?
As far as the “gimmick” goes, without knowing the details of the situation (which the article doesn’t provide) it’s hard to tell if this is merely a paper savings or not. If I have an large bill due on July 31st, and expect some extra income on August 1st, why shouldn’t I charge the bill to my credit card and then pay it off the next day? Sure, that doesn’t change the amount of the money I owe, but it saves money in late fees and on future loans because my credit rating doesn’t suffer. Couldn’t that be analogous to California’s situation?
The plan also calls for local governments to give $4 billion dollars in tax money to the state. Again, the article is unclear about whether that represents additional money, or money that is being collected earlier than usual. Of course, that’s not an ideal solution. But asking each community to decide whether they prefer further tax increases or further spending cuts strikes me as a more democratic (small “d”) solution than settling on a “one size fits all” solution in Sacramento.
Here’s the part of the article that puzzles me the most:
The spending cuts amount to roughly 60% of a budget deficit projected at $26 billion through June 2010. The size of the shortfall is unprecedented, representing nearly 30% of the state’s $88 billion general fund.
Spending hasn’t been at that level in California since 2005, underscoring the severity of the state’s economic collapse.
[Emphasis mine.] Not since 2005?! Unless you were living on the street in 2005, I would bet you’d be able to cut your spending back to that level if you were having financial difficulties. Wouldn’t you?
Belt-tightening is unpleasant, but it builds character and teaches you a thing or two about saving for a rainy day.
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The tragedy of having to rely on spending figures from say, three and a half years ago, must be a hardship. Surely the state Dems can come across one citizen who can say what a difference all that spending made in their lives, or at least one that noticed the spending. There must be witnesses somewhere.
People rag on California, but government is the same everywhere. The minute they are forced to chop, it isn’t the illegal alien health care aide and college tuition that gets the cut, or the guy who sits in his office playing solitaire all day while staring at his Lexus from his office’s corner window. They go for the schools, the roads, the police officers and the usual blackmail. Anyone that has covered a school levy fight knows what I’m talking about.
God Bless Prop 13. Where would we all be without it?
And still they persist in bending down to kiss the butts of the treehuggers by not going for the “black gold” that sits in massive quantities just off the coast. What is with all these people (not just CA) that don’t seem to recognize that oil can and most definitely would benefit the entire nation?
Ample evidence that the politicians shouldn’t be taken seriously.
Well the CA Assembly voted down the robbing of city monies and the offshore oil drilling so we’re $2B short. I will say that I’m relieved they didn’t raise taxes anymore though I’m sure they kicked the can down the road to the next Governor. I hate to say this, but we need to lengthen term limits. There’s got to be some happy medium between 40 year Senate careers and the rookies that come and go every 6 years. Oh yeah… plus Californians need to get out of the Democrat lockstep for a few years at least.
Fritz you could tell these lunatics that all day and cite real figures about what good oil drilling would do and they still would rather hug a Red Wood than do something that would benefit everyone. You know what really makes me mad…is India totally rejected emissions cut backs. I really believe people like Schwarzeneggar and the pinheaded jackasses that run the state assembly and the morons who vote for them want to live in a third world country. I hate and despise leftist democrats because of this I really do. They have no logical legs to stand on when they start spewing their bull about their love fo Gaia or whatever the hell they happen to call the planet and what it really is yet another example of self hatred being projected outwards. I really wish that blue collar and middle class white collar people, you know the ones taht get screwed over by the rich white leftwing butt nuggets would get a clue. Rise up and tell Flipper Mc Dolphin and Rainbow O’Otter Lover to take a long walk off a short pier. California could really use those oil jobs. REALLY NEEDS THE BOOST! Bastards. I love the state but the people are mostly worthless tools.
Mike, Calfornia’s budget runs on the “crack dealer” system. Get everyone hooked and then you, the politician, are set for life.
And now reality has struck and it wants to cut off the crack supply. So they act like adicts that have been cut off. They yell, they scream, they spit out numbers that make sense, plans that won’t work, and they look for scapegoats. . . Republicans.
Interestingly, you would have thought the IOU phase, when the rubber met the road, would have been the moment of sanity. But apparently they chose instead to believe that the crack fairy would help them out.
This professor should be running California.
I address this to every leftwing troll who lurks here. And if you can’t understand this little lesson, you should be institutionalized and kept away from the voting booth.
If somebody is unable to understand THIS explanation, I have serious doubts about their ability to even function in society, much less run our country!
As the late Adrian Rogers said, “you cannot multiply wealth by dividing it.”
Professor is a Genius
An economics professor at a local college made a statement that he had never failed a single student before,
but had once failed an entire class.
——————————————–
That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, “OK,
we will have an experiment in this class on Obama’s plan”.
All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.
After the first test, the grades were averaged and everyone got a B.
The students who studied hard were upset and the students who studied little were happy.
As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.
The second test average was a D!
No one was happy.
When the 3rd test rolled around, the average was an F.
The scores never increased as bickering,
blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.
Could not be any simpler than that
Just a couple of quick points:
The Republicans can block any tax increase because under the California Constitution, which the Dems want to change, it requires a two-thirds vote for any tax increase.
The only cuts in this budget are to high profile programs. The cuts are designed to piss people off. If you doubt this, simply download http://cssrc.us/pubs/090723_ABxxxx1.pdf and read. My personal favorite is Section 172, which calls for increasing the budget of the “Energy Resources Conservation and Development Commission” from $19 million to in excess of $182 million.
My job requires me to read this stuff and it’s more depressing than the furloughs I’m forced to take. Yes, I adjusted MY spending to account for a 14% pay cut. No, the state can’t do likewise. Strange, that.
And, a quick shot at the troll: Yes, thank God for Prop 13. If you had any notion of what property taxes in this state were like pre-Prop 13 you would probably stfu.
Couple points…
1st… Malagate is not a troll, but a somewhat regular commenter
2d… What do you see as the long term outcome of all this? Will we slide into the Pacific or will cold-hard reality force the slashing of programs since there will be no taxpayers left to squeeze? I also find it odd that we continue to fund “the green machine” while CA burns to the ground.
1st: My apologies to Malagate for the troll remark. My defense is that whenever someone wants to blame, or imply blame, California’s budget woes on Prop 13, it triggers an immediate gut response. Given that it was passed into law in 1978, I think it’s time for us to move on. In any event, I am sorry for my presumptuousness.
As for 2nd and beyond…I’ll be stunned if the budget remains balanced through October. I agree with Sac Bee columnist Dan Waters, who years ago identified the structural deficit that’s built into California’s budget. Wilson turned over to Davis a balanced budget and an $8 billion surplus. Davis and the Democrat legislature promptly built an additional, on-going $8 billion worth of spending the budget. The problem was, and remains, that the surplus was from one-time sources. The budget’s been a growing mess ever since, and will remain so until every program enacted since Davis was in office is cut.
Since we’re burning to the ground, sliding into the sea might bring some relief….
bob… I’m in SoCal, but I can gas up the car and bring my pitchfork and torch toot-sweet.
No worries, bob. Believe me, we are EXACTLY on the same side.
When I say, God Bless Prop. 13, that’s exactly what I mean. I wouldn’t be in my house, or my house before that. None of my neighbors could afford their property taxes. My parents, in their old house in Newport, would have been out years ago. And why? So career politicians can fund ANY GODDAMN THING their little leftist hearts desire, all for the common good. How is this money supposed to be theirs? I took the risk and bought and fixed up the house, not State Govt. To hear a soulless wretch like Karen Bass, (a couple of weeks ago in the Times) moaning that some politicians are being threatened with recall because they voted for “Revenue” and how unfair it is, makes me crazy. “Revenue” to you is more taxes for me, lady. It’s my money, honey, and you need a lot better reasons than the ones I’m seeing for me to give you more. Thank God you need to have a 2/3 majority to raise our taxes, or you’d raise them every two weeks. With so many people still voting Democrat (unions and illegal enablers) the 2/3 requirement, and God Blessed Prop. 13, are that keeps ANYONE who owns a business, has two bucks, or in any other way can pay their taxes, in California.
Thanks, I feel better now. For a few minutes.
Amen to that! Your story about your parents applies exactly to mine, which is why I voted for Prop 13 even though it provided minimal direct benefit to me. What too many Californians are forgetting is that the two-thirds vote requirements for taxes is a part of Prop 13; it was much more than just a restriction on property tax revenue.
Karen Bass demonstrated incredible, er, tone deafness when in the midst of state worker furloughs and a crashing budget, she opted to give all legislative workers a raise. And didn’t rescind that directive until the uproar became deafening, even to her. The scariest part is that she’s not an exception, but the rule. God help us.
Karen Bass was whining about some politicians being recalled? Poor baby. Boo frickety HOO!
I wish we could recall this President that was shoved down our throats. And the MSM for that matter. Do your jobs and leave us the hell alone. We can dear Politicians take care of ourselves pretty well without YOUR INPUT!
[...] California buckles down [...]
Awesome! I’ve been referenced!