Calif. budget accord: Deep spending cuts; broad tax increases(latimes.com)
latimes.com
Calif. budget accord: Deep spending cuts; broad tax increases
http://www.latimes.com/news/local/la-me-budget21-2009jul21,0,5521044.story
13 comments
Cutting services is really the only play.
It's OK to cut government services benefiting the poor as long as the millionaires don't have to become nine-hundred-thousandaires. They earned that money, and I'll be damned if they have to share it with the society that helped them get that far!
It's OK to cut government services benefiting the poor as long as the millionaires don't have to become nine-hundred-thousandaires. They earned that money, and I'll be damned if they have to share it with the society that helped them get that far!
Just doesnt work. The millionaire will move and then the state wont get a dime from him.
This is an often quoted argument, but in reality it doesn't happen as much as you would think. Millionaires are people too, and they care about their friends and family living close by, the city they live in, etc.
If this were true we would have no millionaires in Denmark where we have a personal top tax rate of 65%. And we have quite a few. Even a few billionaires.
If this were true we would have no millionaires in Denmark where we have a personal top tax rate of 65%. And we have quite a few. Even a few billionaires.
Maybe? But housing prices are already way higher in California (SF/LA) than they are in, say, Illinois (Chicago). If people are so concerned about money, why doesn't everyone move to rural Kansas?
(Because California has nicer weather and better infrastructure, among other things.)
(Because California has nicer weather and better infrastructure, among other things.)
The LA Times sounds really pissed off about the cuts.
Look at how they chose to frame the story:
Tens of thousands of seniors and children would lose access to healthcare, local governments would sacrifice several billion dollars in state assistance this year and thousands of convicted criminals could serve less time in state prison. Welfare checks would go to fewer residents, state workers would be forced to continue to take unpaid days off and new drilling for oil would be permitted off the Santa Barbara coast.
"We've accomplished a lot in this budget," said Gov. Arnold Schwarzenegger
It's almost as if they're trying to tell us something. ;)
Look at how they chose to frame the story:
Tens of thousands of seniors and children would lose access to healthcare, local governments would sacrifice several billion dollars in state assistance this year and thousands of convicted criminals could serve less time in state prison. Welfare checks would go to fewer residents, state workers would be forced to continue to take unpaid days off and new drilling for oil would be permitted off the Santa Barbara coast.
"We've accomplished a lot in this budget," said Gov. Arnold Schwarzenegger
It's almost as if they're trying to tell us something. ;)
I'm skeptical of this. Here's the paragraph that concerns me.
"Democrats, who initially sought tax increases, said they had managed to ward off cuts proposed earlier by Republicans that would have been catastrophic to the state's social safety net."
Here's the problem. The only way they could both cut spending and "preserve the safety net" is to cut rates. Because the "safety net" is a series of programs and if they aren't cutting the programs they have to be cutting what they pay for the programs. Meaning they're planning to pay less to the agencies that service the children, elderly and mentally ill who survive because of the state's safety net.
But a look at any non-profit angency's books will tell you they barely get by as it is. So suddenly these agencies are on the verge of collapse which is something that simply can't happen. You can't have children, the elderly or the mentally unbalanced thrown out onto the street en masse.
So what happens? The state is forced to go over budget to keep these agencies alive. So they increase the rates, and we're back to the same problem. I'm as against tax hikes as the next guy but I suspect this resolution will be next to meaningless.
"Democrats, who initially sought tax increases, said they had managed to ward off cuts proposed earlier by Republicans that would have been catastrophic to the state's social safety net."
Here's the problem. The only way they could both cut spending and "preserve the safety net" is to cut rates. Because the "safety net" is a series of programs and if they aren't cutting the programs they have to be cutting what they pay for the programs. Meaning they're planning to pay less to the agencies that service the children, elderly and mentally ill who survive because of the state's safety net.
But a look at any non-profit angency's books will tell you they barely get by as it is. So suddenly these agencies are on the verge of collapse which is something that simply can't happen. You can't have children, the elderly or the mentally unbalanced thrown out onto the street en masse.
So what happens? The state is forced to go over budget to keep these agencies alive. So they increase the rates, and we're back to the same problem. I'm as against tax hikes as the next guy but I suspect this resolution will be next to meaningless.
But a look at any non-profit angency's books will tell you they barely get by as it is. So suddenly these agencies are on the verge of collapse which is something that simply can't happen. You can't have children, the elderly or the mentally unbalanced thrown out onto the street en masse.
On the surface, your argument makes sense, but why is CA in such a bad position relative to other states? Other states tax at much lower rates and have managed to avoid the kind of catastrophic collapse that you're predicting here. Why?
On the surface, your argument makes sense, but why is CA in such a bad position relative to other states? Other states tax at much lower rates and have managed to avoid the kind of catastrophic collapse that you're predicting here. Why?
B/c probably bus cleaners and toll collectors don't make sig figures in other states.
And pensions are not that generous. In CA, often people make in retirement about 90% of the salary of their last year of service. It is common practice to have people "promoted up" their last year of service, so they can enjoy their retirement at a higher rate.
CA has been eroded with slow but systemic erosion from the inside.
CA has been eroded with slow but systemic erosion from the inside.
The figure that always bothers me is California ranks 47th in school spending (http://edjustice.blogspot.com/2009/01/california-drops-to-47...) yet we rank 1st in highest average salary for teachers (http://teacherportal.com/teacher-salaries-by-state). So basically our teachers live like kings while our schools crumble.
Because we have too many government programs that pay out too much money.
To give one example, if your old car won't pass it's smog test in California you're eligible for $500 of "repair assistance" from the government. So the state is basically paying to fix these people's car. It's these types of programs that need to be cut.
That's really my point. The Legislature is so in love with all their little programs that they can't stand to cut any of them outright. So instead they're pursuing a scheme that will put vital social services in jeopardy and eventually end up forcing the state to go over budget (and hence not solve the problem)
To give one example, if your old car won't pass it's smog test in California you're eligible for $500 of "repair assistance" from the government. So the state is basically paying to fix these people's car. It's these types of programs that need to be cut.
That's really my point. The Legislature is so in love with all their little programs that they can't stand to cut any of them outright. So instead they're pursuing a scheme that will put vital social services in jeopardy and eventually end up forcing the state to go over budget (and hence not solve the problem)
Well, the legislature also doesn't have much power to tax and is obligated to continue providing programs passed by ballot measures. So it's not entirely their fault.
I've found the way California does its voting and budgets completely crazy. The people vote for popular programs and leave it to someone else to finance it. Now they find out they are out of finance options. Can't tax cigarettes, people aren't smoking enough. Can't tax gas, it's already too high. Can't tax property, don't even bother touching my paycheck. The easiest place to gain money are either too small in number (realistically, how much would you gain by taxing he rich and additional 1%, not) or too vulnerable to sales tax increase (the poor).
Also since the state is the largest employer (lots of voters there) they can't touch pensions.
Also since the state is the largest employer (lots of voters there) they can't touch pensions.
FTA: "Their agreement, which could go before the full Legislature within days, does not include any broad-based tax increases, relying instead on deep cuts in government services, borrowing and accounting maneuvers to wipe out the deficit."
I'll be interested to see how this pans out. Cutting services is really the only play. Increased taxes would just lead to decreased consumption, and with unemployment continuing to rise, expect to see income tax receipts to come up way short.