It’s hard to understand why there are continual budget problems with the state of Calif. In 1999, after Gray Davis’ first year as Gov. the state had $12 billion in the bank after running a budget surplus. Apparently these budgets are cyclical, but still, it sounds like there’s little long range planning going on, to plan for saving surpluses to carry through leaner years. The same Gray Davis was recalled in ‘03 after the deficit grew to an incredible $34 billion.
It is NOT hard to understand why California is continually broke. It is due to the free-spending liberal legislature that never saw an entitlement they didn’t like.
Imagine a family living in a 2000 SQ FT home. They love their home but want to improve it. Every time Bubba gets a raise, he remodels/expands the home. More rooms, better trimmings, more opulent furnishings. He wins the lottery, he remodels and expands the home. It is never done. It sucks up every penny he earns, wins, steals, inherits.
Periodically, he finds himself broke because every penny he comes into goes into the home.
This is the California legislature. They have a backlog of giveaways that could easily consume the US national budget. Every time they get windfall revenues, they commit more money for more liberal giveaways. There is no long-term planning. They are tripping over themselves to spend every penny of tax revenues the state receives, and all the while they are complaining there is never enough money.
Like a corpulent glutton drowning in his food, it will never be enough. Never.
Davis left the state with a deficit of $6 billion, not $34. When Arnie came in office he hired Donna Arduin who came up with a bogus projection saying that the budget gap would grow to $16 billion by June 30, 2007. This was accomplished by assuming huge spending growth.
Since that time, Arnie has spent every dime she projected (and then some) in advancing new programs and growing the budget by record percentages. Arnold used every trick in the Gray Davis playbook to cook the books, deferring expenses, accelerating revenue, stealing from municipal governments, borrowing from transportation and pension funds, etc. and was also blessed with revenue growth. All these things somewhat masked his spending spree. Now, revenues are down and the chickens are coming home to roost.
It’s a revenue thing,, California is more susceptible to swings in the economy and thus the amount of money they can take in..
The dot com boom and then bust tipped the apple cart over big time,, and all the obstinate Prop 13 devotees haven’t made it any easier for the state and locally gubamint to make up the difference by jacking up property owners to make up the difference. of course dabbling in energy deregulation blew up in the state’s face as well at about the same time..
You've got that right! During the dot.com boom the state was flush. In the 2000-2001 budget year the state took in a windfall of almost $18 billion generated by collections on stock option cash outs and capital gains.
The legislature and Governor Davis responded by increasing spending on all manner of ongoing programs, new and old. When the boom went bust they were stuck with their choices and you know that no democrat would consider cutting back and reneging on promises made to favored constituencies. That would be good fiscal policy but bad politics.
The whole mess has been a slow motion train wreck since then with all manner of temporary fixes and sleight of hand delaying the day of reckoning. The days of ducking creditors appear to be over and now the nasty fight begins over who's going to pay.