Opinion Forum

California: What a Mess!

July 1st, 2009

The California legislature has not found a way to balance the state’s budget by today (July 1st, the beginning of a new fiscal year), so everyone who receives money from the state — state employees, contractors, welfare recipients, etc. — will receive IOUs in their pay envelopes instead of money. Why? Because the California Constitution requires (demands) a balanced budget.

Why the state budget got out of whack is explained very well by Associated Press Writer Eric Carvin in an article published in the Southern Ledger titled: Meltdown 101: California’s budgetary troubles.

Mr. Carvin explains that one thing that got California in trouble in the first place was:

Lawmakers and voters have agreed to higher levels of spending over the years without identifying a dedicated funding source. Over time, that means the state’s general fund has had more obligations than it can afford to pay.

Requiring a balanced budget, as the California constitution does, is a great thing, but electing irresponsible lawmakers, as California apparently has done, is the worst way to meet that constitutional requirement.

Gov. Arnold Schwarzenegger wants to solve the problem by cutting spending. Say what you want about the “Governator” but he is a very logical thinker. According to Mr. Carvin’s article, the Governor wants to cut $16 billion from state programs, borrow $2 billion from local governments, and borrow about $6 billion from other government accounts. It’s not a solution but a stop-gap measure.

The Democratic majority in California’s legislature, however, have a typical Democratic resolution to the problem in mind. From the article:

Democrats have countered with $11 billion in cuts and nearly $2.5 billion in higher taxes, primarily on tobacco products and companies that drill for oil in California. They also want a $15 increase in the vehicle registration fee, which already was raised earlier this year, to ensure that state parks remain open.

Schwarzenegger and Republican lawmakers have steadfastly refused to raise taxes after the state legislature approved nearly $13 billion in higher sales, personal income and vehicle taxes earlier this year.

Kudos to the Governor and the Republicans who refuse to raise taxes any more than they have.

Shift focus for a second to Washington, DC and think about what the President is doing with the federal budget. Rather than proposing massive budget cuts like Governor Schwarzenegger has done, or any responsible president would have done, President Obama is on a spending spree. He’s putting the country trillions of dollars in debt, and why not — he can do something that no governor can do — he can print money. Of course that makes our money worth much less, and by the time he’s through — unless the Congress or us voters give him a swift kick in the rear and bring him to his senses — our money may be completely worthless. I guess the President plans to worry about that later.

Since January I’ve been wondering if an individual can secede from the union.

(This article was also posted at My View from the Center.)

Articles written by Harvey Grund
Tags: budget, California, Obama, Schwarzenegger
Categories: Economics, News, Politics | Comments (4) | Home

4 Responses to “California: What a Mess!”

Tom | July 1st, 2009 at 10:42 am

California isn’t the only state with a constitution that requires a balanced budget. Frankly, I don’t think it’s a good idea. There should be an option to run a deficit when necessary to avoid the kinds of problems California is having now. Maybe the deficit could be limited to a percentage or a period of time or something of that sort.

It’s also not valid to compare state budgeting to federal budgeting. National budgets have to account for trade balances, international monetary conditions, national and international economic performance, etc that states don’t have to deal with.

Harvey | July 1st, 2009 at 11:10 pm

“It’s also not valid to compare state budgeting to federal budgeting.”

I really must disagree with you there — a budget simply balances income against outgo, no matter what the scale. There is no excuse for Federal spending to exceed income by as much as it has — it may happen for a short period if, due to some circumstance, income becomes less than it was, and if that happens you reduce spending you don’t go on a spending spree and increase the deficit.

That’s just common sense but then Washington has proved itself over and over again to be a ‘no-common-sense zone’.

Larry | July 3rd, 2009 at 6:59 am

The thought that California is at the end of it’s financial rope bothers me a great deal. Having spent some of my youth on Catalina Island, off the L.A. coast, I became a real lover of the nation within a nation. The state is now a prime example of Liberalism run-a-muck.
For many years California politicians used the states property owners as a steady supply of revenue. The passage of proposition 13 was supposed to force the legislature to balance the budget before raising property taxes. The politicians chose to try and by-pass prop 13 by borrowing from other government departments. I guess you can say “the practice speaks for itself”.

Harvey | July 3rd, 2009 at 9:30 pm

Larry,

“Liberalism run-a-muck” is a great description.

I wonder if those IOUs that they are using for money are going to be paid off — at least at sometime in the not too distant future.