Calif (World's 8th Largest Economy) is Imploding "a catastrophe of unbelievable proportions" LINK

[Blackhatjack]

Everyone needs to keep an eye on Calif .... Repubs have pushed the State to the brink of disaster.

http://www.huffingtonpost.com/2009/02/17/california-prepares-to-el_n_167504.html

"SACRAMENTO, Calif. — After a frustrating holiday weekend that failed to yield the one vote needed to end California's budget stalemate, the state is poised to begin layoff proceedings Tuesday for 20,000 government workers.

In addition to the layoffs, the state also plans to halt all remaining public works projects, potentially putting thousands of construction workers out of jobs.

"We are dealing with a catastrophe of unbelievable proportions," said state Sen. Alan Lowenthal, a Democrat from Long Beach and chairman of the Senate transportation committee.

Senate leader Darrell Steinberg announced late Monday that lawmakers had failed to find the final vote in his chamber as Republicans refused to support tax increases. He called a session for Tuesday and said he would put the tax provisions of the budget proposal up for a vote, even if they would not pass."

MORE

[Lex]

1. Republican solution no doubt: "More tax cuts!"

nt

[Baikonour]

48. Time to recall the Governator.

Let's finally get a fucking politician in California that we can actually RELY ON.

[Warpy]

2. So instead of putting people on a part time basis

and still getting at least some of the work done, they're going to pink slip all these people and pay as much out in unemployment insurance and get no work done?

Typical grandstanding GOPonomics!

I do hope the state is learning a lesson about Republican movie actors put into positions of responsibility.

[XemaSab]

61. It's the trifecta:

More people drawing on unemployment.

Fewer people paying into the tax system.

More people looking for work in an already saturated market.

x(

[RussBLib]

3. Being opposed to tax increases is so important to Repugs

...that I guess they'll allow Armageddon. How utterly selfish. I guess they have learned absolutely nothing over the last 16 years. Every single Republican opposed the Clinton tax increases and we had some record economic growth. Bush's tax cuts contributed to massive deficits, and still....

[Lex]

7. Why don't they understand that cutting revenue (taxes) = less money?

Tax cuts have *never* been shown to increase economic growth. Ever.

[underseasurveyor]

16. Even an extremely mathematically challenged person,

like myself:dunce:, understands this.

[patriotvoice]

26. They do understand that.

Cutting taxes means less money for the government, which implies a more restricted and consequently smaller or efficient body. Further, Republicans believe that less money to government means more money in the hands of consumers, and more economically liquid consumers implies more demand, more production, etc.

Many modern Republicans are more economically Libertarian, defining government spending as intrinsically wasteful and better suited to private fulfillment. They ignore, however, that competition interferes with infrastructure development and stability, so they underfund societies fundamental systems and services. Ultimately, that plan fails.

I think everyone wants the same thing: reasonable taxes, lean government, access to necessities (air, water, food, shelter, medicine), freedom to live in maximum accordance with your desires and minimum interference with others. How we get there is up for debate.

"If you know your enemy and know yourself, you need not fear the outcome of a hundred battles." -- Sun Tzu

[Lex]

34. They have said, and they think, tax cuts spur economic growth.

That is false, but they still push it.

[pampango]

45. The only situation in which tax cuts would spur economic growth is if

the current tax was 100% (no one would want to work if your pay check was all taxes and no take-home pay). If you then lowered the tax rate from 100% to 90%, you could increase growth and raise more taxes. People would start to work with taxes at 90% (giving you some wages to tax).

Since we have never had a 100% tax rate, the repubs' talk about cutting taxes causes an increase in tax revenue is bogus.

[QueenOfCalifornia]

42. We pay over $12,000 a year in property taxes.

we paid $350,000 for our house in 1999- we refinanced once.

Our taxes are gigantic in CA.

California is not bankrupt due to fictional low taxes - it is very expensive to live in S CA - and seeing what happens to a pay check here is scary. Taxing people to death is not really a great answer. I want to pay what is fair - I am not some kooky libertarian who believes all taxes are illegal - I would like tax money to go to education, schools, roads, infrastructure and social programs - but the government is not really very careful with the money they collect from us. A lot of waste.

Sales tax is 7.25% here. Not exactly a free ride when purchasing consumer goods.

Please don't try and tell me that we need to pay more taxes here. It sucks enough as it is.

[Lex]

51. "Taxing people to death is not really a great answer."

Um, someone has proposed this?

[rustydad]

52. California

I was born and always have lived in California. The big problems in the State Budget are wasteful spending and a very unfair property tax system. The worst example of wasteful spending is in the prison system where the unionized guards have Sacramento in their grips. Well over half the State prisoners are in for non violent crimes, mostly drug related. Costs more to imprison them than to keep them in a university.

Second we have a crazy property tax system put in place by a citizen proposition that was orchestrated by the rental/commercial lobby. In California when you purchase real property it is appraised by the tax man at sales price. Tax is 1% of sale price, buy a 1 million dollar home and pay $10,000 a year in tax. If you have owned your home for a long time your property taxes reflect the original sales price increased by 1% of the tax a year. It is a system that is grossly unfair to new home buyers. And commercial property that seldom changes hands does great. Also California is sprawl central and the summer gas prices killed our economy. And Enron took a huge bite that still hurts. Bob

[Shakespeare]

55. Uh....about your first point...

It's not the prison guards' union that's the problem. The problem is in jailing FAR too many non-violent offenders, something welcomed with open arms by the privatized prison system.

[frebrd]

17. If they were capable of learning.......

they wouldn't be republicans.

[JerseygirlCT]

27. They hold that notion so closely and dearly that there is nothing

no fact, no evidence, that will change their minds about it. It's ludicrous.

[Divine Discontent]

4. I had a very short stay there b/c of the impending problems & other private considerations

I watched the news with very open eyes - there's over 40 million people there with a lot of high paying jobs, and if the state govt goes into default and all types of services stop along with tens of thousands of guys lose their construction jobs and such - it will be a huge mess within months... no thanks! Great leadership of the governor is all I can point to - when you get an 80's macho movies actor to be your governor you're asking for trouble - people are so taken by glitz sometimes... style over substance too often in life, far too often...

[global1]

10. Two Comments Here: .....

1. What is happening in California is a foreshadowing of what could happen on a national basis if the Repugs continue to obstruct;

given that - the people should now realize that it is Repug policies and their administrations that got us into this mess.

2. Once this realization sinks into the American people - the Repug party will have to do a complete 180 if they ever want to become a factor in American politics again.

Where is Arnold in all of this? I haven't seen nor heard of him for awhile. One would think that he would be very visible to save his ass.

[Divine Discontent]

12. yep - their obstruction is going on even in CA, & I guess Arnie is trying, but he's not well suited

to be the guy in 'charge' of the 8th largest economy in the world (if that's correct). It's almost, oh, okay, it is, laughable he's the governor.

[varun]

18. Ahnold is looking for some "Girlie Men"

to blame his state's woes upon

[csziggy]

19. The three states that the media has named as being in the most trouble financially are all GOP run

California, Florida and Texas are all in deep financial trouble. California is going down first but I am worried the other three will follow, especially Florida. The Florida GOP dominated Legislature is also obstructionist and will not do anything to stop the disintegration of our economy.

[girl gone mad]

53. Where are you getting your information on Texas?

We've got problems, but we're not even in the same league as CA, NY, KS, FL, AZ, MI, etc.

Last I read, Texas is one of the 6 states currently in the black.

[csziggy]

63. Going off memory - which is obviously wrong

But I thought I had read that Texas was having problems a while back.

Good to hear at least a few states are still in the black!

[kestrel91316]

5. Ahnuld: "Mission Accomplished!!!!"

[truedelphi]

6. California has asked many times for the Federal Government to help

It pay for the Social Services of those who come here from other nations. The state pays close to 30 Billion in assistance of some type to immigrants - and the Feds legally are supposed to reimburse for service they never reimburse for.

Secondly, you have Prop 13. People who have owned their home forever, and yet pay taxes according to what the tax rates were way back in 1978. So someone sitting on a home and lot worth 1.4 million is paying like 3 thou. a year.

And corporations were given this benefit as well. Which is hardly fair - but corporations control the media so you do not hear much discussion about that.

Last and not least, Californians are always into the "bubble" theory of economics. After all, that is why white Europeans first came here - for the gold back in Gold Rush times. The population seems quite set up for that Bubble or bust mentality - we got hooked on the dot com economy, and then went all out for the "housing market" which was sold as something that, like the dot com bubble, was one thing that could only go up and never come down. (Except it did, as we all know, eventually come crashing down.)

[Mr. Hyde]

9. No, No, and No. It's all Arnold's fault.

[truedelphi]

13. Well he IS the Terminator. Can't he just make bad things go away

Through his sheer bulk and ability to shape shift?

[Binka]

74. Yes Arnold Needs To Make Himself GO AWAY! n/t

[ipfilter]

20. The rethug controlled legislature here in OK is

going to pass a similar Prop 13 cap. They never learn.

[truedelphi]

22. The Prop 13 thing is fine if done right

I liked the idea back in 1978: that some older couple would not see their property go from being worth say 45K to 300K overnight, and have to move out at a loss and in a hurry in order to avoid paying suddenly increased property taxes.

But what happened in California is that no one thought to put a cap on the properties value. So granma and grampa kept their homes, and who cares if they did okay with the property value being 300K rather than 78k? But two decades later, the elderly couple had a property worth `1.5 million. The grown kids figured out how to incorporate the property, and then when they inherited THEY didn't have to pay in taxes etc.

Capping the properties at say a half million dollars with delaying a tax would have made more sense. So when your property escalates in value, you don't have to pay the increase for three or four years. This gives you time to sell it and move out (After all, if your property is worth one half million, you are not going to live in a cardboard box beneath the freeway.)

But the perpetual non-taxation of one of the only items of true wealth put the tax burden totally on the shoulders of the lower and middle incomed. We have to pay about 8% in state retail taxes - buy a $ 1.00 coffee-to-go and in most locals, you pay $ 1.08 for it.

[Cleita]

25. Your first sentence was how it was sold to the gullible like myself.

Instead it was a big windfall for the real estate industry, attracting buyers from all over the world and raising property values into the stratosphere. The fall out from Prop. 13 is what has led us to have homeless, stop having free education through university and a number of other programs that kept this state humming.

[truedelphi]

30. Me gullible too, Cleita.

I'm sure the image of granma sitting in a box beneath the freeway ensnared many of us.

But social services, education, community hospitals, roads, etc all ahve suffered from Pro0p 13.

[Cleita]

24. Tax rates are also only 1%.

I think this is okay for the single family home, but anything more ostentatious or homes that sit on acreage not used for agriculture, or second vacation homes or homes of rich people from out of state or out of the country need to be taxed at a much higher rate because those people use more of the commons, more water, more electricity, more trash pick up and more gas.

[truedelphi]

33. Very true. How it is that Disneyland and the elderly granma

Both got Prop 13 to serve their cause will forever annoy me.

[SharonAnn]

68. Well, Disneyland never raised their rates, right? If they had, it wouldn't have been fiar.

[slackmaster]

29. The majority of the state's revenue comes from personal income taxes

We have the highest personal income tax rates in the country. Also the highest sales taxes, high corporate taxes, high fuel taxes, and among the highest taxes and fees on motor vehicles.

The state's revenue from property taxes is and always has been zero.

[DBoon]

35. correction

"someone sitting on a home and lot worth 1.4 million is paying like 3 thou. a year. "

It is likely more like one thousand a year. $30,000 value in 1976, pay 2% in taxes ($600 back then), allow assessed value to go up 2% a year max

Not sure what 2% a year compounded is - I guess this would double in maybe 30 years or so, to maybe $1200.

This isn't just homes either - commercial property is covered as well. Farmland in the central valley, industrial parks, office buildings all get the same tax treatment

[truedelphi]

64. You are right. I stand so corrected.

I was thinking of someone I know who has three houses on his lot of land - and he pays about $ 3,600 a year but it is for three homes. I forgot about his rentals existing.

[Blackhatjack]

8. Repubs' classic protect those who benefitted most from Bush Tax Cuts last 8 yrs over everyone else

You know who benefitted most, who soaked up the $$$, and who is most in need today.

So Repubs want to make sure the State does not ask for any of that $$ back from them, by refusing to vote for any kind of tax increase. They would rather the entire STate Govt shut down. Nice.

[Dollface]

11. But, but, but.... Ronald Reagan said...

[Semi_subversive]

14. We were the 6th largest economy

when I left the CA Technology, Trade and Commerce Agency in March 2003 when Davis was still in office. Nice going, Gov. Shrunken Nuts!!

[xchrom]

15. for this we got rid of grey -- or gray -- ? nt

[KansDem]

21. Can any of this be a result of Prop. 13 and Reaganism?

If I recall correctly, Prop. 13 was passed in 1979, rolling back taxes on property to 1977 levels. If you owned property, you continued to pay at 1977 levels until the property was sold.

At the same time, Reagan took office in 2001 and "Tax Cut Frenzy" was the orgy of the day!

Is what is going on in California today a result of all this?

[slackmaster]

28. Property taxes are not and have never been a source of revenue for the state of California

Here in California they are paid to counties.

The limit is 1% of the transfer value, increased by up to 2% per year.

Counties and localities can and do vote in additional charges for schools and other necessities.

[Cleita]

32. Not close. Because of Prop. 13, we started seeing homeless and people

unable to care for themselves on the streets when they were ejected from the institutions that housed them because there was no more funding to pay for their care. They overwhelmed the charitable shelters, who also had funding taken away from them. We once had free tuition in the State and University systems for all Californians that was ended by Prop. 13. Many more institutions like police and fire departments had funding cut to them. County Hospitals, who were able to take care of the uninsured had funding cut to them and many of them had to close. The ones still open are not adequate to meet the need. Prop. 13 payed for a lot of California's social structure that no longer exists any more. It's neo-con social Darwinism at its meanest and it was sold to the public as a way to keep grandma from becoming homeless. The real intent was to drown all social programs and let everyone fend for themselves jungle style.

[slackmaster]

38. The fact remains that property taxes are not paid to the state

And in spite of the 2/3 majority requirement to increase taxes, we still pay more in taxes than citizens of any other state. The problem in California is not lack of revenue. It's spending.

Proposition 13 was a well-deserved smackdown to both local governments and the state government for their chronic lack of fiscal restraint. The fact that the state has ZERO in savings in spite of multiple years of budget surpluses proves that it still has not learned its lesson.

[KansDem]

36. Reagan took office in 1981...sorry!

:blush:

[Shakespeare]

37. But don't forget who was Governor of CA before that (hint: Reagan).

You're still right. :hi:

[KansDem]

41. Thanks!

I'm a native Californian, and lived there from 1954-1979. I remember I was renting at the time of Prop. 13, but I had my doubts it would "lower my rent" as the pro-Prop. 13 folks claimed. But I was moving on (Kansas for grad school), so Prop. 13 didn't really affect me.

I do remember the hysteria of some home owners at the time. One member of my family swore up and down that if Prop. 13 didn't pass, she and her family were going to have to leave California. Claimed they couldn't afford to live there. She repeated this many, many times. Well, Prop. 13 passed and what did this family do? Bought a second home in Big Bear Lake!

Oh, well...I guess economic distress is relative...

[QueenOfCalifornia]

43. Reagan didn't

really take office in 2001... did he?

[KansDem]

49. No...I caught my error and tried to correct it in Post 36...

sorry...major mistake! :blush:

[Cleita]

23. So how did we implode from the fifth largest economy in the world BA (Before Arnold)

to the eighth? Honestly, the Terminator needs to be terminated for his incompetence. We need to demand that he resign. The Lt. Gov., John Garamendi would then be sworn in to finish his term. John, the former Insurance Commissioner, is a far more competent administrator than Arnold.

[slackmaster]

31. We have seen many years of budget surplus since 1978, when Prop. 13 was enacted

The state has managed to save ZERO DOLLARS during those years. So when we get a year like now where revenues have fallen below expectations, they really have no alternative but to cut services and raise taxes in some combination.

[tkmorris]

40. I think I must be failing to understand you

You say that Cali has had budget surpluses many times since 1978, yet they saved none of the money. Huh? If they had a budget surplus they had money left over at the end of the fiscal year. What did they do, burn it?

[slackmaster]

44. They pissed it away

There has never been any significant SAVINGS carried forward from one year to another.

[Hannah Bell]

47. you didn't answer the question. if there was a surplus at the end of each fy,

where did it go? was it spent overnight between fy a & b?

also, how does a state "save"? in a money market account or a safety deposit box or what?

[slackmaster]

50. States that do save casy usually keep the money in certificates of deposit

No more than the FDIC insured limit in any given institution.

Another way some states have handled budget surpluses is paying them back to the taxpayers.

It's pretty hard to say where the money went during surplus years, because there is no Web site or other transparent mechanism to view spending. The only thing that's clear is that spending has out-paced where it would be if it followed population increase and inflation, and the Schwarzenegger years are considerably worse in that regard than the Davis years.

...The immediate source of the short-term problem is that state revenues declined by more than 8 percent from September 2008-December 2008.

California's state spending has ballooned in the last decade at a rate that is much higher than the rate of inflation and rate of population growth in the state. According to Tom Campbell, who served as California's finance director in 2004-2005, if the 1999-2000 budget of former California governor Gray Davis had been increased over the next decade by a factor representing the inflation rate and California's population growth in that time, California would now be experiencing a budget surplus, rather than a deficit even with the recent revenue decline due to the state's economic recession.<1> Instead, California has had a 50% spending increase over the past five years.<1>

For Fiscal Year 2007-2008, state spending from state sources was $144.8 billion (federal money added another $59.5 billion). In FY 2003-2004 the figures were $104.2 billion and $52.5 billion, respectively. In FY 1997-98 they were $68.5 billion and $31.6 billion. In other words, over the past 10 years state spending from state sources has more than doubled in nominal terms (not adjusted for inflation), and during the current governor's tenure state spending from state sources has risen almost 40 percent.<1><1>...

http://sunshinereview.org/index.php/California_state_budget

[Hannah Bell]

57. I put the figures into an inflation calculator to compare:

California's state spending has ballooned in the last decade at a rate that is much higher than the rate of inflation and rate of population growth in the state. According to Tom Campbell, who served as California's finance director in 2004-2005, if the 1999-2000 budget of former California governor Gray Davis had been increased over the next decade by a factor representing the inflation rate and California's population growth in that time, California would now be experiencing a budget surplus, rather than a deficit even with the recent revenue decline due to the state's economic recession.<1> Instead, California has had a 50% spending increase over the past five years.<1>



FY 2007-2008:

$144.8 billion (state $) + $59.5 billion (federal $) = $204.3



FY 2003-2004:

$104.2 billion + $52.5 billion = $156.7


Inflation-adjusted (2004 to 2007 dollars)

$113.53 bill + $57.20 = $170.73



FY 1997-98:

$68.5 billion + $31.6 billion = $100.1 billion


Inflation-adjusted (1998 to 2007 dollars)

$126.83 + 40.04 = $166.87


http://www.westegg.com/inflation/infl.cgi



In other words, most of the increase happened between 2004-2007. Wow, ah-nuld sworn in 10/03.

Looks like '98-2004 inflation-adjusted state funding actually went down, with the difference made up by increased federal $$.





I think the fdic limit was $100K until 2007, when it became $250K.

You're telling me states put millions & billions of dollars into multiple $100k CD accounts?

why do i doubt that?

you still didn't answer the question about the vanishing surpluses.

[slackmaster]

58. I cannot answer your question about where the state spent its surpluses

There is no visibility into expenditures by the state of California. That's part of the problem. If they had KEPT the surpluses from years where revenue exceeded expectations, that money would have shown up on the asset side of subsequent years' budgets.

You're telling me states put millions & billions of dollars into multiple $100k CD accounts?

Yes. I worked for a bank from 1983-1990. My job gave me access to detailed information about deposit accounts. Many millions were deposited there, vested in the names of agencies of various state governments (including California) and the federal government. Quite a substantial amount at that particular bank, millions of dollars, belonged to the United States Navy.

Governments are business entities just like corporations or individuals. They have checking accounts and savings accounts in banks, just like everyone else does.

[Hannah Bell]

60. the us dept of navy holds millions in $100k reserves in banks?

let's see, how do they decide which banks to favor with the millions & billions in deposits?

[slackmaster]

66. No, the Navy's deposits were not all insured.

I remember one checking account, a regular business-type checking account, with a balance of about $3.9 million.

[Hannah Bell]

62. you know they were there, you know they were pissed away, but you don't know how?

& you say there's "no visibility" into the state's spending?

dude, go down to the public library. it's a legal requirement to publish the spending & make it available to the public. i've used the copies at the public library to look stuff up. it's probably on the web these days.

[slackmaster]

67. They didn't save it, therefore they must have spent it

Show me a California state budget that started the year with a substantial amount of money on deposit and didn't treat it simply as something to be spent, and I'll concede whatever point you are trying to make other than being obtuse and vaguely insulting.

http://www.dof.ca.gov/budget/

For one good example check out the 2000-2001 budget. It's typical of how they handled a multi-billion-dollar surplus from the previous year. They simply included it as something to be spent.

[Hannah Bell]

70. you said they ended every year in surplus. when did they spend it?

i'm trying to get you to support your claim. it seems nonsensical to me.

[slackmaster]

71. I updated my reply while you were typing - 2000-2001 is a perfect example

Check out the 2000-2001 budget. They had a substantial surplus (about $3.7 billion) remaining from the previous year, and simply budgeted to spend it.

They went on a shopping spree with the "windfall". It's very clear in the summary in the first several pages.

And that turned out to be a year in which lots of Californians lost jobs in the early stages of the dot com bust. Revenues fell, and IIRC there was a shortage the very next year.

[Hannah Bell]

73. here's what i'm getting at. FY 1 = 4 billion surplus. Spend it FY 2 & end with 4 bill surplus.

Spend that FY 3 & end with yet another 4 billion in surplus.

It's the same 4 billion.


The spending/taxing in-go & out-go is continuous. There's no unit of $4 billion of gov't $ to put into 40,000 $100K CDs at private banks.

And it doesn't happen.

[slackmaster]

78. The problem with that is that it assumes steady income

If you have a long-term contract or a steady job and can reasonably predict your earnings from one year to the next, you can get away with spending windfalls.

Spend that FY 3 & end with yet another 4 billion in surplus.

That is certainly NOT what happened in California between the 200-2001 budget and the 2001-2002 budget.

Tax revenues are not predictable, other than that they rise and fall with the economy. Government revenues work more like consulting income, where you have good years and bad ones.

If someone handed me the equivalent of five percent of a year's earnings, I'd pay off any high-interest debt and put any remainder in the bank. The legislature failed to do that. They saw that residual money as a freebie, to be plowed into whatever they wanted, some of which no doubt required additional spending in subsequent years.

There's no unit of $4 billion of gov't $ to put into 40,000 $100K CDs at private banks.

You're missing the big picture. It makes no difference whether the money is in CDs or Treasury securities or foreign government bonds or US currency. In reality it's probably a mix of those and more. There are government programs that require money to be kept in FDIC insured instruments. I know that's the case because I have seen the accounts myself. But that's really not important. It's all the same in terms of budgeting - Liquid assets, essentially cash.

We're caught between a rock and a hard place now. Because our state government failed to exercise some fiscal restraint and hold on to some rainy day funds when they had surpluses AND the economy has tanked, it can't meet its obligations and will have to resort to its favorite strategy for raising money:

RAISING TAXES ON THE WORKING MIDDLE CLASS.

As a member of that class, I'm pissed. We are already the most heavily taxed middle-class in the USA. The use of working-class tax-paying homeowners as a cash cow is exactly what led to the Proposition 13 revolt in the late '70s.

I haven't seen a real pay raise in five years.

The company I work for has seen revenues fall for the last two years.

Our CEO has recently exhibited some very poor judgement in his relations with some of the women at work. They're pissed, one may be preparing to file a sexual harassment suit. It's the kind of situation that could sink the company. I have lost faith in his ability to lead, and jobs are pretty scarce. My job is at risk.

I need new eyeglasses, a clutch for my truck, some clothes, a bunch of other basic necessities, and I am already struggling to budget for that thanks to higher food and energy costs. Fortunately my housing costs are fixed, but there are always expenses for upkeep. With retirement savings slashed and being forced to reduce the rate at which I am saving at precisely the time I should be saving more, a tax increase is the last thing I need; and there are a whole lot more people in similar situations. It's been over 10 years since I've had a kid in school. I'm one of those people who pay for pretty much everything the state does but does not benefit directly from most of it. Pardon me if I am averse to a tax hike.

And we haven't even begun to hear about the federal tax increases that will be needed to pay for President Obama's stimulus plan.

[Shakespeare]

75. That was also the year of the phony "energy crisis," which cost the state billions.

I have a pretty good idea where the money went, and it's not the state who pissed it away (try Ken Lay...).

[Hannah Bell]

77. ohhh, now things click. & perhaps some of ah-nuld's ramped up spending

was enron fallout, too?

[slackmaster]

79. Some of that ramped-up spending was to cover the fixed-rate contracts that Gov. Davis signed

He was concerned that energy costs would continue to increase, so he locked us in to some multi-year contracts at rates that are higher we would have paid had he listened to Senator Feinstein and allowed the market to adjust itself.

[SharonAnn]

69. Of course not. Like Clinton's surplus, the GOP has to spend it, refund it, and reduce taxes.

On the other hand, if the budget is in deficit, the GOP wants to spend, refund, and reduce taxes.

[Johonny]

46. States in general

have no mechanism to deal with tax surpluses or deficits. Unlike the US government the state can not print money and run deficits. Which is why many states use sounder tax bases to deal with financing their government. California Tax base is very boom/bust due to the way the citizens have chosen the tax base to be. Arnolds economic advisers told him like the previous Governors before him that he had to change the tax base. This would go against several popular but bad policy props voted in by the people. Arnold took the populous route and now faces a dramatic bust cycle. On top of that the very props he had the popularity to fight when he came into office are now allowing his own party despite being in the minority by a lot to completely hamstring the state budget process.

[Raksha]

54. I seem to recall that Repuke governors sent out tax rebates,

instead of saving the surplus for a rainy day...like right now.

[slackmaster]

59. I must have missed out

I've never gotten a tax rebate from the state of California.

[truedelphi]

65. There was money to spare during one or two (Or maybe more) of the

Dot com years. And yet the state has this mentality of never saving anything. The state totally bought into the notion that every penny that got taken into the system should be spent immediately.

One of the notions that came about was that the kids should have reduced classroom size. So immediately kids were thrown into trailers while schools were overhauled. The formaldehyde fumes pretty much zapped kids ability to learn for that year, but the idea was that eventually you'd have only fifteen kids or so in a classroom. Then the "unthinkable" happened and the dot com bubble burst. So the money wasn't there to even keep teacher's aides, and the schools went back into struggle mode.

Why states are not forced to put money aside in good years for the inevitable downturn is something I cannot understand. I guess when times are good, everyone believes it will be that way forever.

[Blackhatjack]

39. This reminds me of Grover Norquist's dream "reduce govt to size it can be drowned in a bathtub"...

In times like these the social safety net is the first to go, and essential government services are turned into 'fee based' services. Refusing to raise taxes and fund these services is all in keeping with the Norquist model.

[Greyhound]

56. Less than 10 years ago it was the 5th largest, then the 6th, 7th, now 8th.

Does anyone else see a pattern here?

[Politicalboi]

72. Tax cuts are a pay off

So they think they can do what they want. I was here when Ca was the 5th largest economy in the world. The energy crisis was the begining of the end.

[Liberal_in_LA]

76. Hey! I live here! The weather is still nice.

[slackmaster]

80. Yes, that is true

Looks like the first fully sunny day in a while down here in 'Diego.

:hi:

[Liberal_in_LA]

81. Can't beat these sunny So. Cal days!

[slackmaster]

82. Thanks for reminding me of that, Liberal_in_LA, I mean it very sincerely

I had a lot of trouble getting to sleep last night. I was tossing and turning, fretting about the economy and the state budget, my job, and personal financial situation.

I finally did get some good sleep, non-scary dreams and everything.

My job sucks ass, but at least I have one.

My house is a construction zone, but it's mostly MY construction zone and I have been making the payments on time.

I have enough money to pay off my credit card in full for another month.

My kittehs love me, and so does my mom.

I've got lots of good friends, and my health is OK.

I should be counting blessings right now. Stressing about things I can't control is hurting me.

:grouphug: