Why California is doomed in 12 figures

May 9, 2014
The new flag of California

The new flag of California

Per this KFI article, the state’s total debt –that is, our debt— is $340,000,000,000. $340 billion. Three-hundred and forty billion dollars:

California faces $340 billion in debts, or more than $8,500 for each of its 38 million residents, the nonpartisan Legislative Analyst’s Office said Wednesday in recommending that the state set priorities for paying down its key long-term liabilities.

The state should first address the $73.7 billion shortfall in the teachers’ retirement system, a debt that could cost the state, teachers and school districts a combined $5 billion a year to resolve over 30 years. Without changes, the system serving 868,000 members is projected to run out of money by 2046.

Paying down the $64.6 billion shortfall in health benefits for 277,000 retired state employees and their dependents should come next. That could cost the state $1.8 billion a year over 30 years, the analyst said, but getting started sooner would dramatically reduce costs over the long run.

The report comes a month before the state’s budget is due and feeds legislative debates over whether the state should spend or save its budget surplus and how to create a rainy day fund that would go before voters in November for their approval. It was released a week before Gov. Jerry Brown unveils his revised budget recommendations.

“I think it underscores what the governor has said for quite some time, which is that we have significant liabilities that we need to address,” said H.D. Palmer, a spokesman for the state Department of Finance.

There’s the understatement of the year. And I’ll bet dollars to donuts that doesn’t include local government debt.

This is insanity. If California were a normal family or business, we’d have been forced into bankruptcy court for liquidation, and the marshal would be holding a sale.

The article goes on to talk vaguely about Governor Brown’s plans for paying down this debt and for reestablishing a “rainy day fund,” but I would take that talk more seriously, if it weren’t coming from a man still wedded to his high-speed rail boondoggle and his plan to dig giant tunnels to move water around the Sacramento-San Joaquin delta. No one can talk fiscal responsibility and back those rolling fiascoes.

And the state’s budget surplus? Please. As the article correctly notes, this is from transient factors. Capital gains taxes are a one-time revenue source, and the Prop 30 tax increase will bring in more revenue only until the gouged high-income earners move to Florida or Texas. That surplus is as ephemeral as the state’s good credit.

Three-hundred and forty billion dollars. The mind just boggles that our so-called betters in Sacramento could have been so irresponsible. How’d we get here? I can think of a few reasons:

  • Creating a full-time legislature with professional legislators who will pander to the right donor groups to keep their cushy jobs, instead of acting in the interests of the broad public. Allowing both houses to be elected by population, thus assuring domination by the urban megalopolises at the expense of other regions.
  • Allowing public employee unions. Even FDR knew those were against the public interest. Eventually, and inevitably, they fell into a corrupt kickback arrangement with the professional legislators, an arrangement that has helped lead us to our massive debt.
  • Allowing ourselves to slip into a one-party state in which the governing spectrum ranges from liberal left to loony left. There’s no real opposition to put more than an occasional check on the worst tendencies of the Democratic majority, or its corruption.
  • And finally, We The People, ourselves. Far too few of us pay any attention to what goes on in Sacramento or on the many boards that operate (supposedly) in our name, far too many of us take at their word what the pols and their backers say without exercising the responsibilities of citizenship and examining them critically — and firing them when needed.

Until the day comes when we find ourselves stuck with a $340 billion bill.

To paraphrase Andrew Breitbart, how do you screw up paradise?

It will take decades to clean this mess up and, even if we can find the right people to do it, can we convince the voters to take the needed bitter medicine?

I just don’t know.

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Detecting life in the CA economy, state senate moves to kill it

April 26, 2014

BearFlag

Well, at least California’s legislative Democrats are consistent: if it works, regulate it, and if it makes money, tax it. In the latest example, Senator Noreen Evans (D-Santa Rosa) has authored a bill to slap a nearly ten-percent tax on oil extraction:

The Senate Education Committee voted 5-2 — the minimum number of votes needed — to advance a bill that would levy a 9.5% tax on oil pumped from the ground in California. The aim is to raise $2 billion annually to be divided among state universities and colleges, state parks, and human service programs, according to the Los Angeles Times.

The controversial SB 1017, which was authored by Sen. Noreen Evans (D-Santa Rosa), has been dubbed a “job killer” by the California Chamber of Commerce, as it would most likely decrease oil production and drive oil companies out of California, costing thousands of jobs. One such company, Occidental Petroleum, is leaving California for Houston, Texas — dubbed “the energy capital of the world” — after being in Los Angeles for nearly a century.

Apparently it never occurred to Senator Evans or the Education Committee that a regime of low taxes and moderate regulation would generate more revenue through the jobs created both directly and through supporting businesses. Maybe she should visit Texas and take notes. Oh, and the heartland of that oil production would be in areas with the worst unemployment, our Central Valley. Why does she hate the jobless? (Or, perhaps more accurately, why does she hate the prospect of them not needing state aid?)

Instead, she and her fellow Democrats must think that being in California is so wonderful that no one would ever go elsewhere, regardless of how many burdens and barriers Sacramento creates. If so, this former California businesswoman has a message for her.

California has had an amazing economy and has an incredible potential future, but even it can be killed with enough mismanagement.  Senator Evans and her colleagues really need to review the fable of the goose that laid the golden eggs: its owner, not satisfied with the eggs the goose was laying at a steady rate, killed it to get all the eggs he thought were inside. Instead, he wound up with no more eggs and a dead goose.

Golden eggs, golden state.

PS: With the Democrats’ two-thirds super-majority broken in the Senate for now, thanks to three corrupt Democrat senators getting caught, there’s no chance this bill will make it to the governor’s desk. For now. But expect them to have it ready, if and when they regain that majority.

(Crossposted at Sister Toldjah)


California Screamin’: cartoon version

April 22, 2011

California’s history and California’s present:

via Ed Driscoll, who provides some depressing context for the future.


“The Venezuela of North America”

December 28, 2010

Okay, now that hurts!

Sadly, at least in terms of economics, it’s also not far off the mark. In the following video from Americans For Prosperity California, Business Relocation Coach Joe Vranich gives ten top reasons why California companies are calling the moving company:

via Vox

(Crossposted at Sister Toldjah)


Oligarchy has its privileges

September 10, 2010

Such as turning a tiny town’s treasury into your personal bank account:

Top managers for the city of Vernon, Calif., enjoyed pay and perks that outpaced some of the nation’s top leaders.

It is one of a growing number of California municipalities confronting questionable practices by municipal employees.

Vernon has only 90 residents, but top city managers were earning an astounding $1.6 million per year with some fancy perks, including first-class air travel around the world and $800-a-night hotel rooms.

“For these city officials to be receiving salaries larger than the governor, larger than the president of the United States is absolutely unjustifiable,” said Bob Stern of the Center for Governmental Studies.

The city’s small homeowners association is outraged that their city leaders were living the high life, particularly in a town that recently laid off workers and cut health insurance because of budget problems.

At one angry council meeting, residents shouted, “Shame on you!”

Read the rest for other small California towns whose “leaders” live the high life while unemployment skyrockets and the state faces financial insolvency.

Maybe those pitchforks-and-torches mobs in the old movies had the right idea.

(via Gabriel Malor)


Jerry Brown is either a fool or a swine

August 21, 2010

I’m old enough to remember when Jerry Brown was last governor of California. I can’t say much about his term of office, though, because I was in college and not paying much attention to state politics at the time. My impression, though, was that, his personal eccentricities aside, he was mostly a standard issue California liberal: support for government solutions in preference to the private sector, a strong alliance with labor unions, and a willingness to hike taxes. On the plus side, though he opposed Proposition 13, which limited property taxes, once it passed, he worked within its limits and actually cut state spending. So, a generally center-left record, albeit pragmatic.

As Mayor of Oakland he continued to chart a pragmatic course, seeking to lure businesses to the city and trying to revitalize the downtown area. He even invited the Marines to hold wargames at the closed US Army base in Oakland. You can imagine how that was greeted by the local Lefties.

Leaving Oakland, he ran for and won election as Attorney General, though everyone knew this was just a stepping stone back to the governor’s office. And, indeed, his policies drifted more and more back toward those that would please the Left. For example, he tried desperately to ignore the scandals surrounding ACORN. When that was impossible, his investigation found they had broken no laws. On the other hand, he was eager to investigate Sarah Palin’s appearance at Cal State Stanislaus. That, too, turned up no law-breaking. Overall, the Competitive Enterprise Institute rated Brown as one of the worst state attorney generals in the nation (PDF)

Now it appears that transformation from the pragmatic Center-Left to full-blown tool is complete. Fearful that he hasn’t the money to compete with Republican nominee Meg Whitman, Brown has sunk to prostituting and prostrating himself before the most vile hard-Left, anti-American groups in the state. Tonight, just a couple of miles from Public Secrets Global HQ, Jerry is the guest of honor at a fundraiser at the home of Jodie Evans, one of the heads of Code Pink:

Brown fan Jodie Evans between Cindy Sheehan and Hugo Chavez

Many of the Los Angeles glitterati will be there, too, at the home of a Hamas supporter. Evans and her crew even once told a mother whose Navy son was killed in Iraq that her boy deserved to die “for being stupid enough to go there.”

A serious candidate for Governor of the State of California is taking money from these pigs? Bear in mind that the “once and future” Governor Brown would be commander in chief of California’s National Guard and that, to date, 599 Californians, Guardsmen and regulars, have lost their lives in Iraq and Afghanistan.

And you’re letting a group that admires dictators and terrorists and spits on grieving mothers host a party for you, Mr. Attorney General?

So, which is it, Jerry? Fool or swine? Or is it that we know what you are and, after tonight, we’ll know the price?

RELATED: If you’re as appalled as I am, how about making a small contribution to Jerry’s opponent, Meg Whitman?

LINKS: More from Power Line, which reminds us of Jerry’s double-dipping scandal. Moe Lane has several questions for Jerry.

UPDATE: Code Pink got a taste of its own medicine last night. Hah!

(Crossposted at Sister Toldjah)


California dreaming: “Let’s tax the internet!”

August 17, 2010

I want what these guys are smoking.

Desperate for revenue and unwilling to cut spending for fear of alienating their union donors, the progressives who control my beloved state’s legislature have revived a dumb idea thought dead: taxing Internet commerce. In this case, by requiring Internet merchants who advertise through California-based businesses to collect sales tax on all transactions made within the state.

It takes a special kind of dumb to come up with this, friends:

Nonetheless, those tracking the debate say that Democrats in the legislature could attempt to push it through in the coming weeks and months, playing off of widespread concern about the state’s fiscal mess and inability to cover its financial obligations.

Just this month, Americans for Tax Reform (ATR) issued a letter to California legislators noting that a vote in favor of the plan, which was rejected by Gov. Schwarzenegger last year, would be scored by the organization “as a tax increase.”

Other opponents meanwhile are speaking out against the proposal, noting that California is unlikely to in fact collect additional tax revenue, should the plan move forward.  In North Carolina, where such legislation was recently instituted, opponents say online retailers stopped advertising with in-state marketing affiliates, such as blogs and websites, rather than collecting and remitting the tax.  That example has marketing affiliates themselves arguing that were this tax increase pushed through, not only would it damage their businesses, but it would actually have a negative, as opposed to neutral or positive, impact on the state budget.

Mattias Larsson of Marina Del Rey, California, who runs the website DefinitiveDeals.com, opposes the plan, arguing that his business “will be devastated by the sales/use tax nexus bill,” and adding that he paid “well over $50,000 in California personal income tax last year”—a tax bill that could be lower in future were retailers to yank ads from his site, as has occurred in North Carolina.

Ryan Owen of Santa Monica and Savings.com meanwhile believes that in addition to threatening California’s existing revenue stream from him business, were the proposal to move forward, it would threaten jobs.  “Not only will the major merchants not collect the use tax for California, but 25,000 small businesses will suffer, hire less people and pay less income tax,” he said in a statement.

There’s also a constitutional question based on a court decision holding that a business has to have a physical presence in the state, which is the reason Dell, for example, collects tax on its Internet sales – they’re also available at the local Best Buy.

But, constitutional questions aside, this is just bad policy that will make a bad situation worse. As the examples above make clear, e-merchants who advertise through California companies will have a great incentive to switch their businesses to states that don’t force them to collect sales tax (which, don’t forget, is an added expense for the business). I’m sure low-tax Nevada, for example, which is suffering from some of the highest unemployment in the nation, would love to have the jobs.

And, back here in the Golden State, how much sense does it make to give businesses further incentives to flee the state? It’s not as if we’re flush with jobs as it is.

Californians and California businesses are taxed enough already, and there are only three real solutions to the state’s budget crisis:

  • Raise revenue by exploiting the vast resources we have. Assemblyman Chuck Devore has proposed renewed licensing for offshore drilling using safe slant-drilling technology. With over $120 billion in proven resources off the coast, royalty fees could generate tens of billions in new revenue without raising taxes.
  • Cut taxes on businesses and cut back on the bureaucratic impediments to business expansion in the permitting and environmental review processes. This would give businesses an incentive to come here, instead of leave, and to hire more people.
  • Cut spending. I know, with our legislature, it’s like asking a wino to put down the bottle. But it has to be done, absent new revenues. And, thanks to the profligate ways of the legislature and, yes, the People, who approved bond issue after bond issue, the necessary cuts will be painful. But they’re also very much needed, if this problem is ever to be fixed.

But, I don’t hold my breath in hope that Assembly and Senate Democrats will come to their senses; they’re professional legislators who see the enactment of patronage programs and the donations they get in return as their whole reason for being. Recovery will be a long, slow process of legislative and fiscal reform, unless a crash forces their hands.

Until then, California keeps doing it’s best impression of Thelma and Louise:

(Crossposted at Sister Toldjah)