I don’t have a lot of time to write about this, but thought it shouldn’t go without comment.
In the Business section of today’s Los Angeles Times, columnist Michael Hiltzik criticizes the Governator.
That’s OK, there are a fair number of things to criticize him for. But note the implicit policy tilt in this quote:
A big risk would have been to suggest that the property tax regime created under Proposition 13 requires a serious updating; Schwarzenegger silenced his one advisor who raised the issue, Warren Buffett. (To his eternal discredit, Buffett put up with the muzzling.)
A big risk would have been to acknowledge that without higher taxes, California will spend beyond its means not only this year, but also next year and into the foreseeable future. Instead, Schwarzenegger chose to balance the budget by extracting sacrifices from the poor, the medically needy, children, teachers and families supporting college students. (The Legislature eventually forced him to abandon a few of these choices.)
The idea that Schwarzenegger’s budget reflects a sustainable strategy is mystifying. Consider the consequences of his decision to cut $4 billion in state revenue by rescinding the car-tax increase and to replace the money through bond sales, bookkeeping stunts and raids on local governments and educational institutions. The whole package looks very much like the one that helped get Gov. Davis pilloried.
For the record, there are changes to Prop 13 that I believe should be made (I’ve talked about it, specifically in assuring that corporate and partnership transfers trigger reassessment, as they are in fact sales of the property), and I don’t think that Calikfornia is overtaxed, just badly taxed.
I’ll have a longer comment on the budget here in California (and the overall fiscal crisis of state and local government). But it’s interesting to note the blindness on both sides; in this case, someone who flatly cannot concieve of any solution except to raise taxes to cover whatever spending our legislators have voted in.
Should someone send Mr. Hiltzik a copy of Demosclerosis? I just might…
I voted for Arhnold, and I am confident in saying he is doing a better job than the pathetic Gray Davis did. However, in this case I agree with at least part of the article:
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the consequences of his decision to cut $4 billion in state revenue by rescinding the car-tax increase and to replace the money through bond sales, bookkeeping stunts and raids on local governments and educational institutions. The whole package looks very much like the one that helped get Gov. Davis pilloried.
There are key differences: the Governator went to the people, following the law, to get his hidden tax increase (bond measure), instead of trying to govern by fiat, whilst the media played silent complicite dups as was the case with Gray.
However, it is true that the Governator has not been able to solve the structural problems of California’s overspending. He doesn’t run the legislature, so it is hard to blame him entirely, but he hasn’t proposed a budget that get’s things straightened out financially. Given the impediments of the the Democratic leg. and other political realities (LA times), I’m willing to cut him some slack for a few years to see if he can ease California toward fiscal responsibility.
Let’s give credit where credit is due:
* Car tax eliminated
* Reformed workman’s comp insurance. Now rates
are easing, fraud is down.
* 1 budget balanced in a transparent, legal way
* No more brown outs. Only partial credit to the Gov., but this issue was the best reason to impeach Gray.
Now how do we get that constitutional ammendment going…
Here I go again…
In the most recent election, Californians approved the following bond measures (Prop #, Amount)
-61, $750 million (Children’s Hospital Grants)
-71, up to $3 billion, max of $350 million/yr (Stem Cell Research)
In March 2004*, Californians approved the following bond measures:
-55, $12.3 billion (Modernization of CA schools)
*This election also had measures to address the budget deficits, which included bond measures. I have purposefully excluded them from the above.
I could name others, but the point is this:
In seven months, Californians have approved *$16 BILLION* in bonds to be repaid from the General Fund.
Think of the “general fund” as the states general checking account, where (most of) the revenues (taxes, fees, etc) are deposited and expenses are paid (including debt servicing).
The lurking question one needs to ask is: how will the continued floating and issuing of multi-billion dollar bond issues via ballot initiatives impact the resources available to the legislature for the annual budgets?
IMO, this issue needs to be part of the conversation when discussing California’s fiscal house.
Dead on the mark:
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The lurking question one needs to ask is: how will the continued floating and issuing of multi-billion dollar bond issues via ballot initiatives impact the resources available to the legislature for the annual budgets?
.bq
IMO, this issue needs to be part of the conversation when discussing California’s fiscal house
Where was the LA times before the election on this issue? They could have pointed out the connection between this type of spending and the ongoing budget difficulties, but they did not.
I’m disapointed that the majority of California voters dont’ realize that voting for these measures ensures that their taxes will be raised in the (near) future.
For the record, I live and work in CA. I pay 7.75% state sales tax and 9.6% state income tax. I also pay local property taxes, state fuel taxes, various state telecom taxes, local business taxes, and too many other non-federal taxes to enumerate. California residents are _not_ undertaxed! We certainly are badly taxed and, I think, overly taxed.
And those are just my personal taxes. As a business owner, I can say the adverbs badly and overly also apply to business taxes, regulation and reporting.
So, tuff. The *real problem* is the stranglehold that the Democrat controlled state legislature has had on this state since well before Prop. 13 was passed (indeed the reason why it was passed). Consider the following:
— California state Senate and Assembly districts have been gerrymandered to provide a virtual lock for the Dems since Jesse Unruh ran things (in a sense he still does from the grave).
— The California constitution allows initiatives and referendums (I&Rs) to be submitted to voters by either a required number of voter signatures or _by a simple majority vote of both legislative houses!_
— The Dems in the legislature float these bond I&Rs onto the ballot because they can avoid responsibility for doing so. Such I&Rs are _not subject to any balanced budget requirements._
— The costs of passing legislature sponsored I&Rs are paid by special interest groups, be they prison guard unions, school administrator unions, or stem cell research outfits.
Obviously, California needs to amend its constitution to prohibit legislative activity within the citizen I&R process. I can’t think of a better I&R to enact!
bq. _For the record, I live and work in CA. I pay 7.75% state sales tax and 9.6% state income tax. I also pay local property taxes, state fuel taxes, various state telecom taxes, local business taxes, and too many other non-federal taxes to enumerate. California residents are not undertaxed! We certainly are badly taxed and, I think, overly taxed._
I live in Fairfax county Va. every “Bond issue”:http://www.co.fairfax.va.us/eb/upcoming.htm#bond was approved by Fairfax county residents. The county voted to borrow another 325 Million on top of a “2 Billion”:http://www.fcta.org/ dollar debt. “Why”:http://www.fcta.org/FACTS/graphs/graphs.htm#county they voted for it is beyond me.
I certainly feel the same way California residents feel about fiscal issues. Sooner or later people have to realize that a beer pocket book will not support a champagne life style regardless of good intentions. People will eventually vote with their feet leaving the higher tax debt to bear for those that elect to stay.