Unable to get our lame duck legislature to agree on eliminating or reducing programs, or passage of new taxes, governor Schwarzenegger called an emergency meeting of the newly elected senate and assembly to confront the huge hole in our 2008-09 state budget. To expect immediate action by the 25 freshman members of the Assembly and 10 Senate members just arriving, or changing posts, in Sacramento is putting pressure on the newcomers to get up to speed on the fast track.
As a result of the monopoly money being thrown around in the District of Columbia, our local news coverage has focused on Wall Street, $700 billion TARP, Fannie Mae, Freddie Mac, AIG and now the “big three.” They have overlooked CA and ignored the fact that unless someone can broker a deal in our state legislature we may be out of cash in the first quarter of 2009.
So, while we take a wait and see approach to the budget deficit solutions by our legislature, let me share some data which was given to me earlier this year by Lisa Kalustian, Chief Deputy Director, Office of the Governor on the proposed Jan 2008 “Budget Stabilization Act.”
Earlier this year Ms. Kalustian and I were guest speakers at a meeting of the Irvine Chamber where she discussed the challenges the governor faces in establishing budgets for our state.
The opening text of the three page Stabilizing California’s Budget report begins:
“California must reform how it budgets and spends taxpayer dollars. For a generation, the states budget has swung in and out of balance as a result of discrepancies between fluctuating tax revenues and auto-pilot spending. This system is not stable, responsible or in anyone’s best interest. Since taking office Governor Schwarzenegger has successfully spearheaded efforts to take budget-balancing ploys off the table and increase state savings. In December the governor announced that he will declare a fiscal emergency to address the current year budget shortfall.”
The article points out that “this situation is not unique. California’s budget problem is chronic, and driven by two factors:
1. The state historically spends all the money it takes in during years of high revenue growth, leading to unsustainable spending levels in the long run.
2. California has not slowed spending growth fast enough. Automatic formulas will increase spending in FY 2007-08 by 7.3 percent, unless we take action now. Each month California spends $600 million more than the state takes in. Gilbert Note: Based on the continuing state recesssion that number has surely increased since January when this report was written.
The majority of spending in the budget is set on auto-pilot. Currently about 90 percent of the budget is tied up in contracts and statutory requirements.
This “feast-or-famine” cycle and automatic spending threatens the state’s long-term fiscal stability and leaves the most vulnerable residents victim to erratic, unpredictable assistance. Californians deserve better. Since the system itself is the problem, the system must be changed.”
Let me share a quote from former CA governor and later US president Ronald Reagan who said “no government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually a government bureau is the nearest thing to eternal life we’ve ever seen on this earth!”
Juice readers. The latest number we hear is our having a two year budget deficit of $28 billion dollars. How would you close the gap and get us back into the black?
Roll back wages to 2003 levels and cancel pension payments to Ca-Pers and teachers retirement funds.
That should not only balance the budget, but also create a rainy day fund, roll back sales taxes and lower income taxes too.
And since these big pension have yet to report that most of the money they administer has been lost and they will require all of the states taxes for themselves, this is the best time to flush that system and replace it with the same systems the majority of American who foot the bill get to enjoy, Social Security.
I suggest that the years and years of cooking the books and other techniques to limp through a deficit laden budget almost every year must now come to a stop. It is time for every program to take a proportionate hit – even the “untouchables” of law enforcement and education. They have been protected as much as possible over the years, and in fact have grown significantly in terms of dollars allocated. The party must now be over, everyone takes the same proportion of hits – no favorites. Do that, with some revenue enhancements (primarily eliminating tax code favors and loopholes) and get on with governing and stop the whining.
Email response
Immediately and permanently cut back government by 5%. Adjust Salaries and retirement by a similar amount. The unions have absolutely decimated us using the prison guards as an example. The elected officials approve union demands with the thought their own benefits will be adjusted upward as well. The best government is less government. ………………….Mr BS
#1, #2 and #3 All great comments. Thanks. As I sent copies to multiple elected officials in SAC perhaps someone there will follow this post and heed your suggestions
I always find it funny that people always demand that others roll back their benefits.
How about starting in their own backyards? Would cook, for example, go back to his 2003 salary, and have his payments to his retirement fund canceled?
In other words, would cook lead by example?
It would be great if we could see the savings of the suggestions proposed. Ball Park numbers and guesstimates are self gratifying but of little use to the rest of us.
Perhaps a public employee wage rollback, with exemptions for certain hardships, implemented in an equitable, across the board, everyone contributes manner could work – IF – it was paired with tax reform guaranteed to bring in the income necessary to fund our state government in a way that can adjust to the changing market conditions without catering to the tyranny of the minority and their need to protect loopholes and pork barrels.
Ok Joe,
I work for myself, I haven’t raised my rates since 2002, and I expect to be doing a lot of pro-bono work for long time customers who no longer have a good job, or any job.
The government workers have a choice coming up. Whether to take cuts in pay and benefits to save job stability or to watch as chunks of fellow employees get cut loose into a jobless world, follow by another wave of cuts and then another, spelling instability and terror.
Look at the private sector, they have been laying off work force employees by the thousands while keeping the highest paid officers and directors to the point that these big blue chip companies no longer produce a marketable product. The last ten plus years all the profits and gains have come from repackaging corporate debt to the point that they are empty shells and that is one reason so many are down to a fraction of their highbrow values.
If you have not seen the movie “The rapes of wrath” 1940, The Santa Ana library has a couple copies. (They also have the book, and book on tape)
Here is another suggestion: Has anybody of you guys who are oh so concerned about the CA budget actually paid use tax on out-of-state purchases, e.g., from online retailers like Amazon?
You know that it is required to pay use tax on out-of-state purchases, since, oh, about the 30ies, do you?
Estimates I have seen put the loss of tax revenue due to people “failing” to pay use tax at several hundred million dollars…
Joe.
While I spend a LOT of time on-line it is responding to people like yourself not buying from Amazon. In fact we just did our part for Arnold and purchased a new car. The sales tax was a killer.
And being retired feel free to roll back my wages from zero to what?
Larry,
Amazon was just an example. Cyber Monday is a big event each year, even if you don’t buy things online.
The use tax applies to all out-of-state purchases, Internet or not. Technically, you should be able to get sales taxes paid to another state back if you don’t use the item in that state, and you would have to pay use tax in California.
As far as you being retired, good for you. But what makes you think that you then know things about other people who are productive.
Contrary to your apparent belief, government employees are as hard-working as everybody else (bad apples exist everywhere.) They have mortgages and other bills to pay like everybody else. Targeting their salaries just because of your hatred of government is dishonest.
Cook, I have that book and have read and *understood* it, thank you very much.
Oh, and as always, complaining about “these big blue chip companies” is populist at best.
Sure, there are bad companies, Enron being a prime example. But there are also good “big blue chip companies.” And most employment is in smaller companies, anyway.
And good management knows that they need their rank-and-file employees to actually produce stuff.
Oh, and it is “The Grapes of Wrath” (I assume you just had a typo.)
And, btw, the novel makes a point *for* unions.
Joe. Sorry to report that you are all wet if your following remarks represent your interpretation of my beliefs.
“Contrary to your apparent belief, government employees are as hard-working as everybody else (bad apples exist everywhere.) They have mortgages and other bills to pay like everybody else. Targeting their salaries just because of your hatred of government is dishonest.”
Having been involved in supporting legislation and ballot measures for over 10 years I have established many friends in our state, county and local government who are public employees who work hard at their jobs. Are you saying that I cannot question abuse of power and waste of taxpayer funds without hating those who are in my sights?
Yes, I have met hundreds of government workers who are honest law abiding citizens with families to feed and mortgages to pay. However the same is true in the private sector where my business contacts cover the globe.
Those individuals also work hard and suffer when their companies are forced to cut back on staff or salaries.
So is it your position that government employees are to be immune to the reality of the current recession and not be asked to consider scalling back their wages and/or benefits to keep theirs and possibly their co-workers jobs?
As to being retired. Hello Joe. Ask Art. I passed 65 several years ago and had a Master Plan which enabled us to shut down our business. We started with nothing which proves that anyone can succeed in business if you work hard and put in the hours necessary to get off the ground.
Larry,
“Are you saying that I cannot question abuse of power and waste of taxpayer funds without hating those who are in my sights?”
Of course not. Point out abuse of power and waste of funds.
“Yes, I have met hundreds of government workers who are honest law abiding citizens with families to feed and mortgages to pay. However the same is true in the private sector where my business contacts cover the globe.”
Fine that we agree on something.
“So is it your position that government employees are to be immune to the reality of the current recession and not be asked to consider scalling back their wages and/or benefits to keep theirs and possibly their co-workers jobs?”
Not at all. However, you singled out government employees in your post. THAT’s what I criticized.
And I have nothing against you being retired. Having said that, I know that a lot of elderly people, my own retired parents included (>70 years) don’t necessarily understand things like Internet commerce. Your point about not having bought anything from Amazon shows that. I am sure that a large majority of people from my generation has bought from Amazon and other online retailers.
Joe.
You say you criticized me as I singled out government employees.
I posted data from the office of the governor. He is the top elected offical in our state who has the ultimate resposibility to right the ship of state.
If you wish to discuss the private sector perhaps I can tell you that one of my sons was laid off earlier this year due to the downturn in housing construction. In fact his employer had to cut several other employees across the country. PS: That employer is my son-in law.
His older brother is a doctor working for Kaiser. He was told that he would be working longer hours and taking a 10 percent cut in pay. Therefore my family has not been immune to the current recession. They have all paid a heavy price.