Meaning the repurcussions are beginning to be seen!!
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Posted on 04/06/2002 2:30:06 PM PST by dewaste
Remember Whimpy from the “Popeye” cartoons? He was always mooching food, promising to “gladly pay you tomorrow for a hamburger today.” Whimpy’s philosophy has spread throughout California government, as bureaucrats seek out ways to avoid necessary reductions in their departments while under the duress of a $17 billion deficit. One frequent trick is to borrow against the future in hopes that more revenue (i.e. taxes) flows into state coffers.
Well, the piper is no longer allowing Whimpy to eat those free burgers. One state agency in particular is in serious financial trouble.
Statistics released this week show the Unemployment Compensation Fund is on the verge of bankruptcy following a massive increase in benefits. Employers pay about 2.7% on the first $7,000 of an employee’s wages. Even though the fund has accumulated a $6.4 billion reserve, an independent nationwide watchdog warned lawmakers that the agency was “barely solvent.” That was before the Legislature proposed, then the Governor signed into law, legislation granting a significant increase in benefits. The maximum weekly payout jumped from $230 to $330 this year, and skyrockets to $450 in 2005. The Governor told the Legislature the increase was “affordable,” with only a “modest” tax hike projected for 2004 at the earliest.
Analysts now predict a tax increase in 2003, followed by another a year later. In effect, this expansion of benefits will end up costing employers at least $1.2 billion, which means higher prices for products and services, cutbacks in staffing, and reductions in work hours. This dire scenario is predicated on an unrealistically low employment rate of 4.5%; based on today’s 6% rate, it means employers must pay an additional 15% into the fund just to keep it solvent, further impacting jobs and the economy.
Frankly, it is time “Whimpy” – in this case, state government - learns to live within its means. Unless real-world business practices are adopted, including realistic and sensible budgeting, many good people are going to lose their jobs as business after business cuts staff or closes its doors. The Legislature must take action now to stabilize the fund, or suffer the consequences of unemployed constituents creating a new recession.
It ain't just California government.
"I'll gladly pay you Tuesday
for a hamburger today!
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If this went through, it is also unconstitutional to grant one group of workers preferential tax treatment like this.
Is there a teacher out there who can tell us if this is true?
Which means Davis is going to have to resort to extraordinary means to blame this on the mean-spirited Republicans (of which there are none holding office in California) and Bill Simon.
I wonder what happens when all the achievers jump ship for other states and Davis and his socialist buddies have no one to suck dry and/or blame for all the evil, injustice and oppression in the world.
Well, there's always George W. Bush and those greedy Enron executives.
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