calgov2002:
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Posted on 12/12/2002 11:32:53 AM PST by John Jorsett
There could scarcely be a more ridiculous farce than the “budget battle” playing itself out in Sacramento. Coverage of the preposterous situation cries out for a master satirist: Twain, Waugh, or Moliere.
To recap: State deficits have exploded in the past year. Governor Gray Davis’s initial projections for the 2002-03 fiscal year were $12 billion, a mammoth number, but it turned out to be nothing compared to what came next. Soon the estimate doubled to nearly $24 million. Then, a few days after Davis was safely reelected, the Legislative Budget Office added another $6 billion. Now, the Davis administration is hinting the real deficit may be more than $35 billion.
How big is a $35 billion deficit? Well, to quote Assembly Speaker Herb Wesson, “Even if we fired every single person on the state payroll [not a bad idea, that!] — every park ranger, every college professor, and every Highway Patrol officer — we would still be more than $6 billion short.” Now that’s a deficit!
What changes this not-so-little production from tragedy to farce requires a short trip down memory lane. Just two years ago, the state was fat and happy, sitting on a $15 billion surplus fueled in large part by a healthy economy and a soaring stock market. In 2000 alone, the state received $17 billion from taxes on stock capital gains. But only a fool — or a Democrat — would think stock market-propelled boom times would continue forever.
And, in fact, Gray Davis himself repeatedly pointed out, during the fat years, that an end must come at some point. Specifically, he pointed it out whenever Republicans talked about giving some of the surplus back to taxpayers — what, Davis wanted to know, will happen when hard times return? How will we “pay” for the tax cut then? Better be safe and keep it all in state hands. I merely report a Democrat mind at work.
Rhetoric aside, what the Democrat-controlled Assembly, Senate, and executive did was to launch — surprise! — an unprecedented spending spree, buying political IOUs for themselves with the people’s money. They lavished raises on state employees and pumped billions into government education, health, and transportation bureaucracies. State employees grew from 282,000 when Davis took office to 326,000 today, nearly a 16 percent increase. General fund spending soared from $57 billion to $79 billion in Davis’s first term.
So a government controlled by liberals spent itself into a crisis. What else is new? Socialist by nature, Democrats believe money is always better off in the state’s hands than in yours. Far from giving them pause, this vast transfer of billions from productive businesses and individuals to government is seen as “progressive” — that is, it increases their power. What could be more progressive than that?
Of course, as even the governor indicated, no one really expected the gravy train to go on forever. But a deficit, to a Democrat, is just one more occasion for progressive thinking: if a surplus argues for keeping taxes high, naturally a deficit argues for higher taxes still. So now the fun begins. The true Democrat knows precisely who will wind up paying the piper when government’s eyes are bigger than its wallet: you, the taxpayer.
Why not cut spending? As Senator Ray Haynes has pointed out, were we simply to restore state spending to the hardly draconian levels in effect Davis took office, the deficit would shortly disappear. I recall no outcry that essential services were not being funded in 1998. This seems a perfectly logical target. But such a sensible solution is about as likely to be enacted as Michael Jackson is to win “Father of the Year” honors.
To be blunt: Democrats manufactured a “budget crisis” that plays right into their hands by giving them an excuse — under the guise of “hard choices” — to continue their ideological drive to transfer always more wealth and power to themselves from you.
So long as California voters continue electing Democrat legislatures and administrations, we can count on our state government lurching from crisis to crisis, financially insatiable, and ever-expanding to even more grotesquely bloated size. Virtually every large American city governed by liberals exhibits the same dreary characteristics: budget shortfalls, oppressive taxes, nanny state. In honest English, this is the opposite of progressive; it is a throwback idea of the state as a preserve for unfettered pillaging with the people as victim.
Despite rhetoric to the contrary, Sacramento legislators are not spending their time figuring out how to cut spending, but to raise taxes. Assembly speaker Wesson inadvertently told the truth when he blurted to his colleagues, “everything you care about is on the line.” That includes, I presume, our wallets.
Doesn't matter. Soon California will be a part of Mexico anyway, as all the productive taxpayers and businesses will flee.
Stay well - Stay safe - Stay armed - Yorktown
BWAHAHAHAHA!...good one!
FMCDH
calgov2002:
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I like that !
Ernesto... has this been posted yet? Looks like the bondage bamboozle is about to bust!!! BOHICA!!!
Hay, Gray... Standard & Poors think yer purdy poor!!!
Even if the State assessed each of us men, women and children an extra $1/day, it would take almost 2 years to retire this deficit! The magnitude is awsome!!!
The $10.2 billion of proposed mid-year budget cuts that California Gov. Gray Davis has placed before a special session of the state Legislature are "only a start toward solving the state's massive structural budget deficit," Standard & Poor's said Thursday.
In its report, the financial rating service noted some sticking points:
Credit analyst David Hitchcock said "Making mid-year cuts while they are still available to be made appears prudent. However, the magnitude of the cuts needed indicate that a substantial operating deficit would still remain in fiscal 2003."
It is incredibly telling to me that S&P is being quoted as critiquing the proposed budget. That means two things.
People (investors) want to know what is happening to the risk associated with their investments. Remember news services write stories for folks to read and only run stories they think that people will read.
Second, S&P has been willing to speak out in such a way that they feel is important to try to influence state budget decisions. This means that S&P is getting pro-active and saying what they think is acceptable state fiscal policy and what is not.
I am reminded of when Chile under a communist government repudiated all their foreign loans. It was just a couple of years later that this communist country renegotiated the loans and started making payments under them again. They realized that they were dependent upon the international money markets for the country's economic survival. Even communists do what Wall Street says is important.
California Democrats will also have to tow the mark in putting together the emergency budget and next years budget. Tough Love for Democrats.
Yes, that is what is needed!
ROFL!!
Yeah but... CA doesn't have Communists, it has Commonists!!! There is hardly any distinction, just as the spelling is only changed by one letter.
They are so obsessed with their subjective version of "fairness," that they insist we all suffer to the lowest common denominator... OR ELSE!!! Nothing else will be tolerated, not even a difference from their opinion!!!
You always write the most insightful opinions, Robert.
I don't see it as "tough love". The dems are going to get everything they want, and will be able to blame it on somebody else. It's a perfect world for them.
The size of the California govt. will remain essentially the same as it is now - only token cuts will be made will be made here and there. Those fat pension increases granted two years ago will never be rolled back, that would be "mean-spirited". Taxes will be increased (on the "rich", of course) - there is no other possibility. (I still predict a huge estate tax increase, since that will be a way of getting back at the feds since state death taxes are deductible from federal death taxes.)
Also look for huge shifting of costs from the state to cities and counties. That's a way to get back at the rural "red zones" - make them suffer or raise local taxes to make up for the cutoff in state funds.
And the dems will not get the blame, wall street will, although this scenario was entirely predictible 18 months ago. They've got to be secretly pleased over this outcome, regardless of all the public hand-wringing.
Interesting predictions. It could happen that way, but if it does, I think that will harm the California economic recovery and hence the tax revenue projections. Also, I would suspect that the wealthy would retire to another state to avoid estate taxes. If what you say comes to pass, I think that real estate investment in Nevada will be very attractive short term.
As a result, my local (rural, Republican) county had to raise the sales tax by 1/2 cent just to stay solvent. And we're not talking extravagence here. Our District Courthouse, for instance, is over 100 years old. No oak panelling and padded seats and all that...
As for the death taxes, people want their elderly parents close to them. Many will have to stay in CA nursing homes, rather than move to FL or NV.
Just my prediction...
We have an initiative process that has repeatedly cut taxes and refused to increase taxes for pet projects. As such the legislature and governor know that if they try a tax increase, an initiative will just be passed by the people that roles the intiative back.
Our Democratic Governor has tried something different. He has come up with Priorities for state spending and effectively asked each state agency to put their budget requests into a 1/3 for low priority, 1/3 for sustaining, and 1/3 for high priority and new important things. Some agencies has returned documents that show 1/3 for high priority, 1/3 for very high priority, and 1/3 for super high priority.
With this input the Gov has asked politicians and business leaders to help him come up with a budget that requires no new major taxes and slashes some department budgets, but in line with realistic spending priorities.
For a Democrat, this seems a strange approach, but one that I look forward to seening presented to the public next week. It is an approach that I might be able to get behind. Special interests have already vowed to require the legislature to put back any cuts in their pet projects. So the legislative process will be under pressure to add back old programs and add taxes. They will have to think long and hard as to whether those taxes will be permanent or immediately rolled back by an initiative. Hard chioices for democrats.
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