"Would it not be better to simplify the system of taxation rather than to spread it over such a variety of subjects and pass through so many new hands?" — Thomas Jefferson
The Los Angeles Times reports the state budget shortfall in California has increased dramatically in the last six months, forcing state officials to assemble a series of new spending cuts that are likely to mean further reductions to schools, health care and other social programs already battered by nearly five years of budget retrenchment, state officials announced on Saturday:
“Gov. Jerry Brown, disclosing the development in a video posted on YouTube, said that California’s shortfall was now projected to be $16 billion, up from $9.2 billion in January. Mr. Brown said that he would propose a revised budget on Monday to deal with it.
“We are now facing a $16 billion hole, not the $9 billion we thought in January,” Mr. Brown said. “This means we will have to go much further and make cuts far greater than I asked for at the beginning of the year.”
The Times report continues:
“State officials said Mr. Brown’s proposal would include a package of immediate cuts, as well as others that would be triggered only if voters failed to approve his tax plan. The sales tax increase would expire after four years, while the income tax surcharge would last for seven years.
State officials said the shortfall was a result of disappointing revenue collections in April as California continued to struggle to pull out of the recession. “We are still recovering from the worst recession since the 1930s,” Mr. Brown said.
Still, the state controller reported that the state had exceeded spending by $2.1 billion as well, though Mr. Brown said court rulings and other actions that restricted California from making the cuts were at least partly to blame.
At the same time, the deficit projections — which have been increasing since Mr. Brown and the Democratic-controlled Legislature approved a budget last summer — suggest that the state may have been overly optimistic in estimating what kind of revenue it would take in. That has been a repeated problem in Sacramento as officials have struggled over the past five years with the state’s worst financial crisis since the Depression. Mr. Brown, in taking office last year, pledged to end what he said were the tricks lawmakers regularly used to paper over budget shortfalls.”
What Governor Moonbeam is not telling you in the video is that of the $8 billion in new taxes he is requesting 50% will be used to cover unfunded liabilities for government workers pensions and life-long health and welfare payments. These are payments promised by California’s ruling Democrat Party over the years to insure they get the votes from these special interest groups so they can remain in power. Also, California has approximately 12% of the nation’s population yet the state pays out 30% of the nation’s welfare payments.
On May 12, Brown posted his "money or your life" extortion video online. In his Address to the People of California, he stated that the state budget is facing a $16-billion shortfall. Amid lower-than-expected tax receipts and with the Democrat-controlled legislature refusing to make necessary spending cuts, Brown insists that he has no choice but to raise taxes. That's why he is proposing a "temporary" ("ha!") sales tax increase of one-fourth of one percent and a "temporary" 7-year income tax surcharge of an additional 3% for those earning over $250,000. Those increases would make California, from a tax viewpoint, the least attractive state in the country for high earners to reside in. With a top marginal rate of 13.3%, California would drive more and more affluent residents out of the state, thus lowering receipts further. And that would necessitate more tax increases down the road. If Brown’s proposal passes the voters a Californian making $250,000 a year would pay over 50% of his income in state and federal income taxes. This does not take into account the increase in sales tax that would affect everyone.
Most thoughtful persons recognize that driving high earners out of the state is not the solution. Brown seems not to be acquainted with the Laffer Curve, since he thinks there is no limit to what rich folks are willing to pay in taxes. Maybe he is just intent on grabbing a larger share of the Facebook bonanza soon to be distributed with that company's record-setting IPO. If so, he is not aware that one of Facebook's largest shareholders has already pulled up stakes, renounced his citizenship, and moved to Singapore. What makes Brown think that affluent Californians won't move to Nevada and Texas, which are both a lot closer?
Still, Brown is intent on doing what pirates do. On May 14, he is disclosing exactly what cuts he intends to make if voters fail to approve his plan on the November ballot. He has already made clear that the bulk of those cuts will come in education, public safety, and senior and low-income spending — which is a lot like the highwayman of yore shouting "Your money or your life." Taxpayers would be well-advised to ask why there is no other choice.
Wouldn't it be possible, for example, to trim the state's $1.307-billion spending on environmental protection rather than nudge seniors off the plank? How about the $9.548 billion devoted to "general government" expenses? Perhaps some of those billions could be applied to prevent shortening the school year by three weeks, as Brown is threatening. Then there's the treasure chest of $42.893 billion for health and human services. Cutting those "services" by a third would just about cover the deficit.
A comparison of California's per capita spending with that of other, more successfully governed states demonstrates that a great deal could be cut from the state's budget. For some reason, pirates like the ones hanging out in Sacramento never seem to think of that. They just keep on doing the pirate thing. "Your money or your life."
In California, actually, it's more like "your money and your life." Despite bloated spending on education, students in California scored near the bottom in a recent national ranking of standardized achievement test scores. For 2010, Education Week ranked California students at 46th in the nation in academic achievement. And that despite the fact that California spent $39.215 billion on K-12 education:
In the coming months the people of the Golden State will be deluged with TV ads promoting Governor Moonbeam’s request for “just a little increase in taxes on the wealthy.” The proponents of the tax increase will be claiming that without the increase our children will suffer and we will be without police and fire protection. Please remember that school funding is the responsibility of the local district as are police and fire the responsibility of the city or county and are paid from your property taxes.
Over the years the Democrat Party, the creation of Andrew Jackson, which was once the party for the little guy has become the party of special interests —the party of “Client Group Liberalism.” Today their base consists of labor, government employees, teachers, environmentalist, and welfare recipients. They are living of the backs of the “little guy” to feed the needs of their client group.
In reading the L.A. Times report I was drawn to the reader comments, comments that I believe hit the target:
"Honest, we promise that if we raise your taxes just ONE more time, we'll never do it again---and we absolutely, pinky-swear that we'll reduce expenditures. Somewhere. Eventually. Now, just sign here..."
I've lived in California which has high property taxes (though thankfully controlled through Prop 13), the highest income taxes, and the highest sales taxes in the country. I live in Illinois which has sky-high property taxes, high income taxes, and among the highest sales tax rates in the country. What do California and Illinois both have in common. They're both in dire straits fiscally with billions in budget shortfalls. They're also both tightly controlled by Democrats.”
“Meanwhile, states like Florida and Texas, that have NO income taxes, Montana and Oregon, no sales tax, North Dakota, Utah, etc. all seem to be doing fine financially. They have better schools, better economies, and accomplish this WITHOUT taxing every activity they can think of.
Pretty interesting case study contrasting states run by Democrats and those that aren't.”
“California is clearly composed of the most gullible human beings on God's earth. Have all of you learned NOTHING in that past 30 years? Vote NO. Force them to make substantive cuts, for once, and stand up to your coddled, irresponsible teaching and government sector employees.
Or, better still: don't. Take your income and your freedoms to AZ, or elsewhere, and let California shrivel up on its own. Illinois is little better: that's why we left after 50 years. You don't give more booze to an alcoholic, and you most assuredly should not give more cash to a politician. Save yourselves: RUN.”
“This is beginning to sound like a broken record. Raise taxes, cut some spending, make overtly optimistic if not downright dishonest budge predictions. Repeat. California and its government seemed to have learned nothing from the last five years.”
“Interesting to see all the comments regarding more taxes to solve California's problems. It seems what brought down California is the fact that taxing an economy to death while providing free social services for illegals, and engaging in host of wasteful spending like huge salaries for government parasites and multimillion dollar pensions doesn't work. So, lets tax even more and provide more freebies. Yeah, right! If California would adopt a more business friendly attitude, lower taxes and stop putting raw food providers out of business or in prison, maybe revenue would increase beyond anyone's wildest dreams, but freedom in California is just a dream, like in the rest of America that was lost a while ago.”
I believe these comments are indicative of the feelings of the majority of California voters, especially those outside of the Los Angeles- San Francisco region. Governor Moonbeam and his captive Democrat legislature are totally out of touch with the people of the state. They may be able to pass tax increases and spending bills in the dead of night in Sacramento, but when they put it to the vote of the people through the initiative process they will be defeated. They need the initiative process to cover their behinds.
Already, Californians are moving to no-income-tax states in droves. In 2009-2010 alone, nearly 70,000 Californians moved to Texas. Maybe they like the fact that they won't have to hand over 13.3% of their income in return for underperforming schools and dismal public services. Or maybe they are just tired of the whole highwayman routine.
Update: In September of 2011 I posted a blog on the corruption in the Obama Administration related to the LightSquared — The Growing Corruption of the Obama Administration. According to Forbes Magazine it’s lights out for LightSquared:
“On Monday May 14, 2012, beleaguered LightSquared finally filed for its long anticipated bankruptcy protection. It’s quite amazing that a year ago investors actually thought this pipedream would ever be able to overcome technical difficulties of interfering with Global Positioning Systems not only in the United States but in other countries as well. For reasons that were never entirely clear, the Obama FCC granted frequency to LightSquared that had originally been designated for satellite use but only if they could overcome the technical issues of interference and if they could bring their network offering on line within a stipulated time frame. Neither transpired. Military, aerospace, airlines, and a whole host of companies that sell products dependent on effective reliance on GPS rose up in opposition. The list included companies as diverse as Garmin and John Deere and any company that sells products that utilize global positioning for airline or sea navigation, for planting seeds in a field, for locating lost climbers or hikers in the wilderness and so forth.”