;-)
Posted on 07/31/2004 10:04:12 AM PDT by calif_reaganite
Mr. President:
Over the last few years, we have seen a variety of inventive ways to balance the budget on paper while racking up multi-billion deficits. So in preparation for this budget, I asked the Legislative Analyst’s Office two simple questions.
First, how much are we taking in from the revenue structure of the state – all of our taxes and fees and interest earnings?
And then I asked, how much are we actually spending for general fund programs?
In other words, how much is this family actually earning and how much is it actually spending?
And it turns out that last year, we spent $4 billion more from our general fund than we received as income.
Under this budget, according to the LAO, the revenue structure of this state will actually generate – in round numbers -- $76 billion. And it will spend $81 billion on general fund programs. We’ll “earn” $76 billion and spend $81 billion. The deficit – nearly $5 billion – will have to be borrowed.
And that assumes every budget assumption works perfectly.
In our last budget debate, one senator said, “that’s OK. Borrowed money is real money.”
If you believe that, try this one out on your spouse – “Honey, we spent $5 billion more than we earned last year, but don’t worry – I just put the difference on our charge card.” I wish you better luck with that one than I know I would have with my wife.
We’re told, “at least this is a step in the right direction.” No it’s not – it’s a $5 billion step in the wrong direction.
Let me put it another way. Over the next year, inflation and population will grow at a combined rate of 4.2 percent. Our revenues will grow 6.7 percent. So, this is still NOT a revenue problem. Revenues continue to grow faster than inflation and population combined. But here is the problem -- spending will grow 7.4 percent. That’s a faster annual growth rate than under the previous administration’s 7 percent. Our annual spending is actually growing faster now than it has over the past five years.
The widening gap between revenues and expenditures continues to be papered over with borrowed money.
Less than three months ago, on May 1st, the total amount of state general fund supported debt (this includes all the bond issues) was $33 billion. By the end of this budget year, that debt will have grown to nearly $51 billion. That is a 54 percent increase in debt in a mere 14 months. Borrowing by this state is now completely out of control.
Here is what we have:
That is the budget we are about to vote on. “Never mind that,” we’re told, “the budget doesn’t raise taxes” – or, at least, it doesn’t raise them by much.
But here’s the fine point of it: resistance to tax increases only works IF IT IS ACCOMPANIED BY RESISTANCE TO SPENDING INCREASES.
As I have repeatedly warned – YOU CANNOT PAY FOR SOCIALLY LIBERAL PROGRAMS WITH FISCALLY CONSERVATIVE POLICIES. You cannot be both things. IT DOESN’T BALANCE. Fiscal conservatism means not only restraining taxes but restraining spending.
“Never mind that,” we are told. “We’ll control spending increases sometime in the future.” This is a song we hear with every budget – like we hear “Jingle Bells” at Christmastime. Let me remind you that successful diets don’t start in the future. They ALWAYS begin in the present.
And here’s the problem with the future diet that we are promised. This budget also obligates us to make enormous balloon payments beginning in 2006. Not only are we spending more than we can afford this year, but we are agreeing to even bigger obligations just 24 months from now. We will have balloon payments due to local governments, to the pension system, to the public schools, to the universities. Some diet.
Last year when we took up the budget (a budget that we also were told was “balanced”), I warned that it was “a rotting porch just waiting to collapse.” We ended up spending $4 billion more than we took in. This year – if all goes well – we will spend $5 billion more. The porch is gone. Now the very financial structure of our house is being eaten away.
Forty years ago, in 1964, when California admirably met the needs of its people, it spent $202 per person from both general and special funds. That’s $1,160 adjusting for inflation. $1,160. You are about to vote on a budget that spends $2,878 per person. And let me ask you – where are the roads, where are the aqueducts, where are the power plants, where are the top-flight schools and universities that our parents delivered 40 years ago?
What will be our generation’s answer to history? “Sorry, it’s the best we could do?” Shakespeare’s words come to mind: “Age, thou art shamed. Rome, thou hast lost the breed of noble bloods.”
Also realize that a majority of the Senate GOP Caucus joined Tom McClintock in voting against this budget:
Aanestad, Battin, Brulte, Denham, Hollingsworth, Margett, Morrow, Oller and Poochigian voted against the budget.
Among the Senate GOP caucus, the vote was 4 ayes and 10 nays.
I think you said it all when you used this word, "Rhetoric".
Look, Tom has a certain viewpoint, and if nothing changes he'll be right. I just think it's rather revealing that a state Senator in Sacramento would come out with these comments knowing full well Schwarzenegger's committee was about to go public, thereby throwing all his predictions up in the air.
His comments only made sense if it was accepted that nothing was going to change and it should, and it wouldn't change without his statements. The report from the committee makes it abundantly clear that Tom's premise was flawed.
The committee was goint to release it's data without his comments, and those recommendations were going to call for cuts.
Ronald Reagan used to say, "Some people talk of other's weaknesses, but I like to talk about the positive aspects of others." (Paraphrased) I'm pulling for Schwarzenegger. He would not normally be my first choice, but he's the guy in there and I don't want to wait several years for another new start.
If you guys want to pull for his failure, do it without me.
Excellent point. Thanks.
Fact of the matter is that if you look at this budget and the last Gray Davis budget, you will be hard-pressed to find major differences.
No one here wants California to sink any further into this fiscal abyss, but "facts are stubborn things," and these budget numbers do not bode well for our state. Remember, McClintock was not the only one to oppose the budget. A vast majority of the Senate GOP caucus was with Tom on this one.
Did you get a car tax refund like the rest of us, or were you being screwed while Schwarzenegger rewarded the rest of us? Curious minds would like to know?
You seem to think that a Governor takes office and two weeks later he completely reorganizes state government to your satisfaction, job completed. Well, sorry fella, that's not the way it works.
Schwarzenegger arranded stop gap funding to keep the state going while a plan was developed and put in place. Short term debt was coming due, and without an immediate tax increase, the state would have defaulted on debt and it's bond rating would have dropped costing the state untold millions of dollars. Of course that was only the outcome without the bond measure.
I know you folks don't like the bond measure that was passed, but I'm not convinced alternatives could have reasonably been instituted in the time allotted.
To make big change in government, you have to devise a good plan and sell that plan. Coming in and using a machete to dismember state government would have pleased you and I, but I'm not convinced we'd have kept many swing voters on board. Explaining the plan, implementing it over time with public support seems like the only rational way to do this, IMO.
The budget committee is months overdue. I believe Schwarzenegger said it would be done in the spring. Okay, that's not good, but if the plan does slice and dice state government, isn't that a good thing? I have been desiring to see state commissions abolished for twenty years. Now 118 of them have their necks on the chopping block for real. I can't tell you how great it is to know that.
What I see developing is a groundswell on the forum, which sees Schwarzenegger making cuts the democrats would never have made, but folks still carping because he didn't do other things they wanted.
If people want to carp, I'm fine with it, as long as they acknowledge the good things that are done as well.
Isn't that part of the gamesmanship of American politics? Sure it is. Look at John Kerry's speech from the other night. For a liberal, it was great rhetoric. From a conservative perspective, it was short on substance and woefully inadequate.
What Tom McClintock actually offered was an analysis of the current state of affairs of California's fiscal and economic conditions, based on his years of experience in the state government. Give the guy some credit.
>>>If you guys want to pull for his failure, do it without me.
I've never said anything about having a desire to see Arnold fail and you know it. I'm not being inflammatory. In fact, I'm being very nice. So don't look for trouble.
Here's high Reagan rhetoric from a true believer:
" As I have repeatedly warned – YOU CANNOT PAY FOR SOCIALLY LIBERAL PROGRAMS WITH FISCALLY CONSERVATIVE POLICIES. You cannot be both things. IT DOESN’T BALANCE. Fiscal conservatism means not only restraining taxes but restraining spending."
I know you know this, so it's rather odd me having to mention it. If every Republican voted for this plan, would it pass if the dems couldn't sign on? You can only do what you can do. I don't know all aspects of this budget. I do know it's next to impossible to drive anything of a conservative nature through that state house. Just about anything this governor drives through that we can get behind, that is resonable from a conservative point of view, we should be thankful for.
Agreed in principle. However this budget is not reasonable from a conservative point of view. If you call this budget reasonable (Arnold's proposed reforms notwithstanding), you would logically have to call Gray Davis' last budget reasonable as well.
Well, I'll certainly comb the archives of Free Republic to peruse the scores of articles guys like you posted about Gray Davis from 1998-2002. They are probably lost among all the anti-illegal threads on Free Republic prior to George W. Bush's tenure in January 2001.
See, I'm guessing that it was the recall, and the arousal around installing Tom McClintock into office through a special election, that brought ANY California specific economic or political issues to the daily discussion on Free Republic.
You people are wholly transparent. You tried to shoehorn Tom McClintock, a proven loser and increasingly evident phony pissant, into the Governor's office. Shortcut scheming. Y'all couldn't pull it off, so now you stew in bile.
I know that there is no hopeful prospect of an end to the anti-Arnold jihad around here, but you damn well better know that those engaged in this campaign are revealed as dwarves flailing at a more historically important, successful and righteous man. Knock yourselves out, it's the internet, we're all powerful here. The people who get things done are "out there" getting things done, and some are actually trying to get things done on your behalf despite your carping.
Simple question:
How would Senator Barlowmaker vote on a budget that projects to receive $76 billion in revenues and aims to spend $81 billion?
Isn't that part of the gamesmanship of American politics? Sure it is. Look at John Kerry's speech from the other night. For a liberal, it was great rhetoric. From a conservative perspective, it was short on substance and woefully inadequate.
What Tom McClintock actually offered was an analysis of the current state of affairs of California's fiscal and economic conditions, based on his years of experience in the state government. Give the guy some credit.
Not much happens in a vacuum in Sacramento. I think Tom knew the commission was going to release it's report. I think he knew it would most certianly include significant cuts. That leaves me with the impression that Tom wanted to get a final speach of admonission in before the commission's report became public. I know his supporters liked what he said, and taken alone I probably would too, but it's simply disengenuous to think they were uttered in a vacuum. Therefore those comments leave me thinking Tom was just grandstanding one more time.
>>>If you guys want to pull for his failure, do it without me.
I've never said anything about having a desire to see Arnold fail and you know it. I'm not being inflammatory. In fact, I'm being very nice. So don't look for trouble.
I appreciate the McClintock supporters thinking we're the children who need to be corrected, but your condescending tone here is both offensive and typical.
As for what you have personally said about Schwarzenegger, whether he is successful or not, please link me to your comments praising him for his actions, any actions. Perhaps you can and I'll reconsider my comment, otherwise I'll just let what I said stand.
Here's high Reagan rhetoric from a true believer:
First of all, true believer's of Ronald Reagan do not take every opportunity to allienate others. Reagan was elected with significant help from Reagan Democrats. He DID NOT allienate his own party members. You and other McClintock supporters on this forum throw a hissy fit on every thread that addresses him or his efforts. When folks come in to ask you to wait and see, or perhaps give the guy a little credit, you trash them. In this response you infer I was not a 'true believer" in Ronald Reagan, but also state you are not being inflammatory or looking for trouble. Sadly, you folks just don't see yourselves as you truly are.
I guess this next comment was thrown in for comic relief. It's common knowledge that Schwarzenegger's commission is going to release it's findings within a few days, and that the report will recommend significant cuts.
" As I have repeatedly warned – YOU CANNOT PAY FOR SOCIALLY LIBERAL PROGRAMS WITH FISCALLY CONSERVATIVE POLICIES. You cannot be both things. IT DOESN’T BALANCE. Fiscal conservatism means not only restraining taxes but restraining spending."
As difficult as it is for you folks, you're still going to have to wait and see what is proposed. All these comments about the need for cuts are pointless until we know.
Gray Davis' last budget was proposed during his fifth year in office. This Schwarzenegger budget is being proposed during his first. If Schwarzenegger's budget for 2006 looks anything like this one, your suspicions will have been born out. I hope they aren't, but all I can truly do now is urge Schwarzenegger to slice and dice. I hope he does.
This is the principal difference then: I would never vote for a state budget where revenues were outweighed by expenditures, regardless of the "political and legal obligations."
As I recall, one of the main points of Arnie's Angels here on FR involved Republican control of the governor's veto.
So where's the beef when it is needed?
Am I correct in interpreting your "Basically, I'd vote for the BEST BUDGET I could get," to assume that you would have voted for Gray Davis' budget last year, given that it was the *only* and thus, logically the best, budget pending before the Legislature?
If your answer to that is no, point out a single significant difference between Davis' and Arnold's budgets.
May 23, 2004 :A leading Wall Street ratings agency on Friday raised California’s credit rating, citing an improving economy, the first such upgrade in four years and a move that promised to bring down the state’s borrowing costs on $44 billion in debt.
Analysts saw the unexpected credit upgrade by Moody’s Investors Service as an endorsement of the steps Gov. Arnold Schwarzenegger has taken to bring California back from the brink of a fiscal crisis that drove its credit ratings near junk levels and had threatened to effectively shut the state out of the bond market for new borrowing.
Citing an “established trend of recovery,” Moody’s raised California’s rating to A3 from Baa1, reversing a downgrade it made in December out of concern over continued political deadlock and a move by Schwarzenegger to cut car license fees.
You are now free to continue your bitching and mewling.
Did you get a car tax refund like the rest of us, or were you being screwed while Schwarzenegger rewarded the rest of us? Curious minds would like to know?
No one person, including you and I, received a reduction in our in lieu of vehicle fees. We pay the same rate we did in 1950. Our obligation is being subsidized from the General Fund which we support through a broad range of taxes and fees and Schwarzenegger is borrowing billions to support this subsidy and keep the General Fund solvent. You and I and our children and grandchildren will pay for this borrowing through tax rate increase or reductions in services.
Schwarzenegger arranded stop gap funding to keep the state going while a plan was developed and put in place. Short term debt was coming due, and without an immediate tax increase, the state would have defaulted on debt and it's bond rating would have dropped costing the state untold millions of dollars. Of course that was only the outcome without the bond measure
California's bond rating can't get much worse than it already is. In fact, had the governor made the moderate cuts suggested last summer when he took office in November, California's bond rating would already be out of the toilet. Instead Schwarzenegger borrowed even more and the bond rating continues to languish at the bottom, the worst of all fifty states. The legislative analyst is also suggesting that darker times are ahead for the state as a result of Schwarzenegger's proposals which "fail to come to grips with reality" (her words not mine).
Coming in and using a machete to dismember state government would have pleased you and I, but I'm not convinced we'd have kept many swing voters on board.
I'm absolutely confident that the Republican Party would have suffered but therein lies the agenda behind your comments. What's good for California is not in the best interest of either political party as far as maintaining their political control. That's the beauty of supporting a conservative rather than Republican stance on these financial issues. Loyal Republicans would prefer to maintain control of the ship of state as it sinks in deep water and conservatives sleep at night knowing they steered the right course.
The budget committee is months overdue. I believe Schwarzenegger said it would be done in the spring. Okay, that's not good, but if the plan does slice and dice state government, isn't that a good thing? I have been desiring to see state commissions abolished for twenty years. Now 118 of them have their necks on the chopping block for real. I can't tell you how great it is to know that
How disingenuous. You read the analysis of what limited information is avalable yesterday just like I did. The proposal essentially shifts rather than reduces spending. What savings are accomplished (estimated at 6%) are not enough to offset the spending increases (factually at 7%+). So why is it being proposed. Three reasons. It has popular, grass roots appeal regardless of party affiliation. It shifts state spending to Arnie's big donors. It facilitates the continuation of increases in "our programs" A win-win deal. Arnie improves his approval ratings, liberal programs keep increasing and Arnie's big donor's get a cut of the action.
What I see developing is a groundswell on the forum, which sees Schwarzenegger making cuts the democrats would never have made, but folks still carping because he didn't do other things they wanted
What you see doesn't matter. What is happening is that conservatives are becoming increasingly upset with those who would try to continue to rationalize his obvious actions to protect the Republican party from humiliation and defeat in two years.
The irony is that there is an emerging set of facts that strongly suggest that from a fiscal standpoint the state may have well been better off under Davis, as bad as he was, than Schwarzenegger.To date the Schwarzenegger administration is racing revenue rates (taxes and fees), increasing spending and the state's indebtedness at a greater rate than ever occured under the Davis administration.
All Schwarzenegger had to do was say NO but he didn't because his core values and his commitments to his donor's wouldn't let him and here we are suffering the consequences of his actions and the obnoxious intrusion of Republican Party loyalists handing out the Coolaid.
;-)
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