California Rejects Schwarzenegger’s Budget Measures

[jiimbergin]

US bailout of states coming soon along with increase in taxes and reduction in services:confused:

jim

[tastymannatees]

Re: California Rejects Schwarzenegger’s Budget Measures

I read a paper the other day about the 4,000 tax leagues during the Great Depression that spontaneously formed in response to taxes at the time. Tax compliance dropped from 90% to 70%, tax protesters organized, got involved at the local level and forced the government to streamline and cut spending and were quite successful at reducing the confiscatory tax rates.

With the tea parties, the California results (the bluest most liberal state) we are fast approaching the same kind tax pain tolerence level that existed during the GD. I believe that we may have a couple of years of high taxes but necessity is the mother of invention and except for essentials the gov. spending will be cut to the bone as a matter of practicality.

[ASH]

Re: California Rejects Schwarzenegger’s Budget Measures

US bailout of states coming soon along with increase in taxes and reduction in services:confused:

jim

I found this article from The Economist quite interesting:

ON MAY 19th Californians will go to the polls to vote on six ballot measures that are as important as they are confusing. If these measures fail, America’s biggest state will enter a full-blown financial crisis that will require excruciating cuts in public services. If the measures succeed, the crisis will be only a little less acute. Recent polls suggest that voters are planning to vote most of them down.

The occasion has thus become an ugly summary of all that is wrong with California’s governance, and that list is long. This special election, the sixth in 36 years, came about because the state’s elected politicians once again—for the system virtually assures as much—could not agree on a budget in time and had to cobble together a compromise in February to fill a $42 billion gap between revenue and spending. But that compromise required extending some temporary taxes, shifting spending around and borrowing against future lottery profits. These are among the steps that voters must now approve, thanks to California’s brand of direct democracy, which is unique in extent, complexity and misuse.

A good outcome is no longer possible. California now has the worst bond rating among the 50 states. Income-tax receipts are coming in far below expectations. On May 11th Arnold Schwarzenegger, the governor, sent a letter to the legislature warning it that, by his latest estimates, the state will face a budget gap of $15.4 billion if the ballot measures pass, $21.3 billion if they fail. Prisoners will have to be released, firefighters fired, and other services cut or eliminated. One way or the other, on May 20th Californians will have to begin discussing how to fix their broken state.

California has a unique combination of features which, individually, are shared by other states but collectively cause dysfunction. These begin with the requirement that any budget pass both houses of the legislature with a two-thirds majority. Two other states, Rhode Island and Arkansas, have such a law. But California, where taxation and budgets are determined separately, also requires two-thirds majorities for any tax increase. Twelve other states demand this. Only California, however, has both requirements.

If its representative democracy functioned well, that might not be so debilitating. But it does not. Only a minority of Californians bother to vote, and those voters tend to be older, whiter and richer than the state’s younger, browner and poorer population, says Steven Hill at the New America Foundation, a think-tank that is analysing the options for reform.

Those voters, moreover, have over time “self-sorted” themselves into highly partisan districts: loony left in Berkeley or Santa Monica, for instance; rabid right in Orange County or parts of the Central Valley. Politicians have done the rest by gerrymandering bizarre boundaries around their supporters. The result is that elections are won during the Republican or Democratic primaries, rather than in run-offs between the two parties. This makes for a state legislature full of mad-eyed extremists in a state that otherwise has surprising numbers of reasonable citizens.

And that is why sensible and timely budgets have become almost impossible, says Jim Wunderman, president of the Bay Area Council, an association of corporate bosses. Because the Republicans are in a minority in the legislature, they have no sway until budget time, when they suddenly hold veto power thanks to the two-thirds requirement. Because in the primaries they have run on extremist platforms against other Republicans, they have no incentive to be pragmatic or moderate, and tend simply to balk.

[lurker]

Re: California Rejects Schwarzenegger’s Budget Measures

the California results (the bluest most liberal state).

California the most liberal state !? Have you ever lived there.

California is a conservative state with a moderate coastal strip and a few hot-spots of extreme liberalism.

Californians are also accustomed to being spoiled and having their lifestyle paid for by either credit or rising house prices. They never ever pay for anything now .. they charge it. Like the Repubs spend 8 years doing in Washington.

Don't mistake the "I don't want to pay for services I voted for" with some kind of libertarian tax revolt.

[Master Shake]

Re: California Rejects Schwarzenegger’s Budget Measures

California the most liberal state !? Have you ever lived there.

California is a conservative state with a moderate coastal strip and a few hot-spots of extreme liberalism.

Californians are also accustomed to being spoiled and having their lifestyle paid for by either credit or rising house prices. They never ever pay for anything now .. they charge it. Like the Repubs spend 8 years doing in Washington.

Don't mistake the "I don't want to pay for services I voted for" with some kind of libertarian tax revolt.

Conservative state? When's the last time they went Pub in a presidential election?

[lurker]

Re: California Rejects Schwarzenegger’s Budget Measures

Conservative state? When's the last time they went Pub in a presidential election?

I didn't say it was a conservative state. On average it's centrist IMO. The reason they didn't go repub in recent elections is because the republicans have moved to the far-right.

[lurker]

Re: California Rejects Schwarzenegger’s Budget Measures

And I maintain that most of these tax "revolts" are not principled stands against government overreach so much as they are people simply trying to avoid paying for the obligations that THEY HAVE ALLOWED their government to accrue on their behalf.

It's easy to do the easy thing "on principle".

[jiimbergin]

Re: California Rejects Schwarzenegger’s Budget Measures

I didn't say it was a conservative state. On average it's centrist IMO. The reason they didn't go repub in recent elections is because the republicans have moved to the far-right.

Neither Bush (either one) or McCain could possibly be caled far right.

[vinoveri]

Re: California Rejects Schwarzenegger’s Budget Measures

I read a paper the other day about the 4,000 tax leagues during the Great Depression that spontaneously formed in response to taxes at the time. Tax compliance dropped from 90% to 70%, tax protesters organized, got involved at the local level and forced the government to streamline and cut spending and were quite successful at reducing the confiscatory tax rates.

With the tea parties, the California results (the bluest most liberal state) we are fast approaching the same kind tax pain tolerence level that existed during the GD. I believe that we may have a couple of years of high taxes but necessity is the mother of invention and except for essentials the gov. spending will be cut to the bone as a matter of practicality.

Californians are obviously smart enough (as if the last 9 months destruction of the concept of "moral hazard" didn't help educate them) to know that all that rhetoric about cutting services is BS. I vote yourself a tax increase when Uncle Sam is ready to help? Sure, some services will be scaled back at the margins as window dressing, but I wager the Feds step in and bail them out with loans as far as the eye can see; and then all the profligate states will get in line, and pretty soon the fiat money system is running on a state level (effectively). The concepts of independent states is only an illusion , and the 10th amendment is "dead letter". Another giant step toward power centralization:eek:.

The sad fact is, that CA could be the poster child/model for the woes and ruin of profligacy, and could be the leader for showing the rest of the country how to cut spending and live within their means...AND maintain state sovereignty.

[coolhand]

Re: California Rejects Schwarzenegger’s Budget Measures

So if Citigroup is too big to fail, wouldn't California also be too big to fail?

Print up a little more $ for California, please!!

[hayekvindicated]

Re: California Rejects Schwarzenegger’s Budget Measures

Neither Bush (either one) or McCain could possibly be caled far right.

To the loony left, anyone to the right of Kucinich is "Far Right". Bush (who is actually a Christian socialist) is supposed to be "Extreme Right" by this definition.

[ThePythonicCow]

Re: California Rejects Schwarzenegger’s Budget Measures

My sense is that the fundamental problem with Kalifornia is too much success, too much money from great success in computer and defense industries, and too rapid immigration of people of diverse backgrounds and cultures. The immigrants were attracted by the great climate and booming economy and incredible opportunities. The immigrants included high paid computer geeks (such as myself, years ago) coming to the center of the computer revolution, as well as illegal immigrants coming to mow the lawns in front of the McMansions of those geeks.

Too much money in an overwhelmed melting pot.

The money led early on to one of the finest, best funded higher education systems in the world. The University of California at Berkeley was one of the centers of the radical anti-Vietnam war effort in the late 1960's, and of Unix development in the 1970's.

Human communities, like individuals, can be spoiled by too much easy wealth, and can be destroyed by a lack of a sufficiently strong cultural and moral bond.

[audrey_girl]

Re: California Rejects Schwarzenegger’s Budget Measures

actually -

this is the real reason CA is now bankrupt:

http://www.latimes.com/news/local/la...,6444372.story

Meet Ms. Ana Puente

[hayekvindicated]

Re: California Rejects Schwarzenegger’s Budget Measures

actually -

this is the real reason CA is now bankrupt:

http://www.latimes.com/news/local/la...,6444372.story

Meet Ms. Ana Puente

Glad to see someone has the guts to state the obvious.

The importation of low wage Mexican labour brings hidden costs to the welfare state that never come up in any discussion on immigration in the MSM. California has paid the price for the Federal Government's insane immigration policies.

France and Britain have similar problems with low wage Muslim immigration that has created ghettoes that live off the state and where the law is hard or impossible to enforce (and Islamic radicalism breeds rather well).

[lurker]

Re: California Rejects Schwarzenegger’s Budget Measures

Nice scapegoat, but the real real reason they're bankrupt is that they have financed too much through debt, and not enough through taxation.

http://www.dof.ca.gov/budgeting/budg...ts/CHART-K.pdf

Notice the massive interest cost of funding education ... all thanks to prop 13 (passed in 1978, after which K-12 state spending went on an exponential rise) which was a huge tax break for existing homeowners, destroyed the schools, and nailed new homeowners with some of the highest taxes in the nation.

This has been building for decades and is due to one reason: they charge everything and hope to pay for it later. (aka deficits don't matter)