“Our wallet is empty. Our bank is closed. Our credit is dried up. California’s day of reckoning is here.”
That’s how Governor Schwarzenegger describes the current financial situation in California. It’s a rare instance of a politician telling the truth. California is facing a problem that is essence is pretty easy to understand. The amount of money that’s flowing into the state government is much smaller than the amount that’s flowing out. Income has declined because of the lousy economy and falling housing prices. Outflow is high because of unfunded pension programs for government employees and because the voters have supported so many huge bond issues, which now must be paid back. The three possible options are: raise taxes, cut spending, get a loan. Voters recently rejected tax hikes, so that’s out. In the current environment credit just won’t happen, so that’s out. The only remaining possibility is spending cuts.
So what’s going to get cut. The details haven’t been finalized yet, but the preliminary list contains things like eliminating most state funding for the public schools, eliminating welfare, drastically cutting health care for people in need, closing state parks, forgoing repairs on state highways, … In short, it won’t be pleasant to live in California for the next few years. Probably a fair number of people will leave the state, thus making the budget crisis worse.
So, given that the entire United States is heading into a similar situations in the next twenty years or so, is this a preview of what the entire country can expect?
Is the rest of the country as hamstrung on taxes as California with Proposition 13 ? I also have my doubts that California’s or America’s anti-tax hysteria will survive when the actual choices are rubbed in. People don’t want to give up government services. They may want the other guy to give them up, but not those services that benefit them.
I guess it would depend on whether or not people desire less taxes more than they desire said government services. This isn’t the first time California has faced budget problems, but, obviously, it is exacerbated by the current economic climate. The people of California made their bed and now they’ve got to lie in it.
Please don’t interpret that as gloating over the difficulties Californians are having.
The main trouble with California is that they never came to terms with what Proposition 13 did to financing of schools. They cut their property taxes, and restricted the rate at which the money flowed into local coffers, so they then expected the state to make up the difference. That’s finally coming home to roost and the state has no answer any more.
There are, of course, other issues that have hampered things, but the education funding part of the equation is probably the dominant issue. Now, Californians will end up with the schools they voted to have 30 years ago. Sadly.
Everyone or nearly so benefits from government services. As for money being poorly spent, an awful lot of that translates to “they aren’t spending it on ME !”.
Public school: provided education and the intellectual tools to further my education, check
Fire Department: put the fire out when my mom’s apartment caught on fire, check
Police: When I was a kid a cop saved my life, they always come when called, and are pretty helpful, check
Library, endless source of books to further learn, and enjoy, check
Roads, I can travel anywhere I want thanks to roads, check
Conservation, natural parks are set aside to enjoy and be preserved, species prevented from hunted to oblivion, check
Retirement/disability, old folks and the disabled aren’t reduced to beggars and get healthcare, check
Poverty, the poor have access to food and help with higher education to stop being poor, check
Unemployment, workers are given a time to get back on their feet thanks to unemployment benefits
City parks, kids and people are given places to enjoy, check
Do I need to keep going on?
No, it doesn’t. Everyone makes use of government services. It’s just that everyone is sure that the services that benefit them are worthwhile, while those that benefit the other guy are waste; while the other guy is sure that the services that benefit him are good, but those that benefit the first guy are waste. And so on.
Let me guess, you were intending some slam towards the poor ?
Some of the highest paid teachers and the worst public schools? Check.
Prison guards making over 150k a year due to sweetheart deal from Grey Davis? Check.
Some of the worst roads in the country? Check.
Highest state taxes and fees? Check.
Businesses and the wealthy fleeing the state? Check.
Having to feed, house, clothe, heal and educate the surplus population of Mexico? Check.
Doubling the state budget in ten years? Check.
Record bonded indebtedness? Check.
Lowered State credit rating? Check.
The Sacramento Socialists have had their way for a long time here, and this is the result. This state is run by and for the public employees and the illegals. Looking to move the hell out of here.
Using Mexicans as near-slave-labor ? Check. WE are the ones exploiting THEM. You are doing what is known as blaming the victim.
It wasn’t the “socialists” ( as if socialism even existed in America ) who have fought any attempt to pay for much of anything for decades, or passed Prop 13.
You also left out our massive gouging by the energy industry, with approval by the Bush White House, and the energy industry pushing to get rid of Grey Davis so they could put their toady Arnold in to drop all the lawsuits. Which he did. But then that doesn’t involve blaming brown people so you don’t care.
What’s important to understand, however, is that the money can go to theoretically good things, but not actually be spent to any use. I can spend $1000 if I like, but I might not get a good value for my money. Likewise, under any system, there is a maximum which can be effectyively spent.
All those services you list are nice, but may not be using their money well. You can’t just claim it’s gone for a good purpose and therefore alright. Every expenditure has to stand on iuts own merits.
In California’s case, they’ve consistently overspent. Year after year, they spend more than they can manage. And they have not proportionately gotten value out of it. In many ways, Cali’s challenges are less. They have fewer students now than a decade ago, but school quality, if anything, has gone down while more and more money has been throwing at it.
Moreover, a huge amount of the money that Cali has winds up going somehow to politically-powerful unions, which provide little value in return. Public moneys shoudl not go to prop up any private party, union or corporation. Frankly, I don’t fault Cali voters for putting limits on spending. I think their choice to float bonds and more bonds foolish, but all the “right set” in Cali, including the papers who now decry the voters for rejecting tax increases (decrying fiscal responsibility in hard economic times!) lauded bond after bond.
Well, now the bills have come due, as Californian’s great and small apparently just didn’t believe in. But even then, the money could be found. In times like these, perhaps spending billions on stem-cell research is a luxury. Well, not according to the Cali government.
So what you’re saying is it isn’t the programs goal, or even the financing but they way they’re managed; if they’re managed efficiently for their financing investment. That makes sense, and I agree.
Focusing on the schools issue I think CA needs look at it’s schools and compare them with better functioning, and cheaper, schools elsewhere. See how other places keep costs down and stressfulness up.
No, you need to start. Reciting nice things the state pays for proves nothing.
California had schools, roads, parks etc. 20 years ago when their budget was 1/3 the size it is now. If the budget had been tied to inflation and population growth, they’d be running a damn surplusnow.
Cali made their bed with wasteful spending – let them lie in it.
