California budget woes intensify
When Jerry (Edmund) Brown took over as Governor of California last year he was taking the reigns of a state in near-bankruptcy, spent into oblivion by a legislature promising lavish retirement programs for its employees and a hapless ex-governor unable to leash in a Liberal legislature philosophy of “spend today, deal with it tomorrow;” Saturday Governor Brown found that tomorrow had come.
Brown Announces California Deficit Has Risen
Today it was revealed that the state’s budget problems are far worse than previously projected. Failing to take significant action California’s budget deficit has swelled to $16 billion, far more than predictions made just a few months ago. Now the voters in California are faced with voting for large tax increases this November or the state will be forced to make deep cuts to schools and public safety; or so they are threatening.
Brown announced Saturday that California’s budget shortfall grew from $9.2 billion because of lower tax revenue due to the still dismal national and state economies.
California’s problems were also exacerbated by lawsuits and federal regulations that ceased billions of dollars in state budget cuts.
“This means we will have to go farther and make cuts far greater than I asked for at the beginning of the year,” Brown said in an online video. “But we can’t fill this hole with cuts alone without doing severe damage to our schools. That’s why I’m bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety.”
People have been fleeing California for the last decade due to an unfriendly business environment and high taxes. While Brown did not release the specifics of the latest deficit plan, a revised budget is expected to be recommended on Monday. Brown’s new budget won’t stop the bleeding in California unless the legislature changes its free-spending ways and enacts lawsuit reform to stop the type of petty special-interest suits that has plagued the state. Federal regulations involving public services must be relaxed until California gets a handle on its deficit. As things stand California will be unable to meet commitments on its generous state retirement programs within the next few years and further tax increases will only continue to shrink tax revenues, speeding California’s slide into bankruptcy.
Brown said the tax increases up for vote in November are necessary to help lift the state out of a crippling decade shaped by the collapse of the housing market and recession. Without them, he warned, public schools and colleges, and public safety, will suffer deeper cuts.
At no time did Brown mention California state employee’s multi-million dollar pensions or the legislature’s out-of-control spending.
“What I’m proposing is not a panacea, but it goes a long way toward cleaning up the state’s budget mess,” Brown said.
While his predecessor Arnold Schwarzenegger had very little support in the Democratically controlled California State House, Brown isn’t faring better. The Democrats, who control the Legislature, have resisted Brown’s proposed cuts so far this year.
“Today’s news underscores how we must rein in spending and let our economy grow by leaving overburdened taxpayers alone,” said California Assembly Republican Leader Connie Conway in a statement.
Brown chose to go for a tax-based ballot initiative because Republican lawmakers would not provide the votes needed to reach the two-thirds legislative majority required to raise taxes.
California Assembly Speaker John Perez, D-Los Angeles, acknowledged that lawmakers have “limited and difficult choices left to solve the deficit.” Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he wasn’t surprised by the deficit spike given that state tax revenue have fallen $3.5 billion below projections in the current year.
“We will deal with it,” Steinberg said Saturday. “And we know that more cuts are inevitable but we will do our very, very best to save more than we lose, especially for those in need.”
Under Brown’s tax proposal, California would temporarily raise the state’s sales tax by a quarter-cent and increase the income tax on people who make $250,000 or more. Brown is projecting his tax initiative would raise as much as $9 billion, but a review by the nonpartisan analyst’s office estimates revenue of $6.8 billion in fiscal year 2012-13.
A second tax hike headed for the November ballot is being promoted by Los Angeles civil rights attorney Molly Munger, whose initiative would raise income taxes on a sliding scale for nearly all wage-earners to help fund schools.
Will Californians Agree to be Fleeced?
It’s clear that the governor and the legislature of the California believe that the over-taxed citizens will cave to further tax increases if sufficiently frightened by threats of school and service cuts. At the rate the state is going Nevada and New Mexico will become crowded with Californians fleeing from a tax-hungry and undisciplined government.
California’s predicament may be what the nation on the whole faces if we continue to spend in Washington as they do in Sacramento.