You’d be duplicating stuff too, though. You’d need two governors, two state houses, two cabinets, two departments for everything, so on and so forth. If a school curriculum has to be changed it gets done twice, not once. You need two state police forces, etc. etc.
It’s an interesting proposal, though. I know a lot of folks in the Bay Area who’d love to be in a different state than L.A.
(But what would you call them? North and South California’s just lame.)
San Angeles and the New California Republic!
Yeah, buddy, that’s almost the onyl thing I talk about. Hell, I’m not sure If I ever said it ebfore, at least on this board! Your response was meaningless and has no argumentative value.
Fail.
As before, this is meaningless, nonresponsive, and worthless as an argument. I posted a thesis based on known, proven economic fact, theorized and apparently correct in several ways and factually demonstrated to have occured several times in recent history. Your post on Reagan, in addition to being a non-sequitur, is pointless. You can further argue that California would not see this gain right now, but previous experiments with lowering tax rates below Cali’s level have had positive results.
(See, I can even make your own arguments better than you can! Ha!)
Well, that’s all true. Still, it’s always a relative trade-off. Most states are a lot smaller than California, and Cali has two (at least two) seperate climates, cultures, and interests. Even at the size most states are at, it can be hard to deal with all the problems which occur. And Texas and Alaska, both much larger, also have huge open wilderness or range regions.
Hmmm… How about Southern Self-Important-Asses-Who-Only-Care-About-Money-land, along with Northern Prententious-Idiots-Who-Don’t-Understand-That-Consequences-Even-Exist-istan. That way every political persuasion would be happy!
Wierd - I just tried that and cutting everything with no new taxes gave me a $1 billion surplus. What did you try?
Okay, let’s step back a second and look at the problem logically.
Here’s a link to the California state budget.
From it, we can quickly see that BY FAR the two biggest items are K-12 education, and Health and Human Services. Those two items alone make up more than half of the entire budget.
In HHS, the two biggest budget sinks are Medi-Cal, which provides health care services to low-income people, and Social Services, providing assistance to low-income people.
K-12 education is interesting. Here’s the complete budget: PDF.
From what I can tell, the state K-12 budget does not pay for teachers and schools directly - that’s up to local communities, paid with property taxes. Rather, the state education budget is a giant grab-bag of additional programs and services meant to help achieve better educational outcomes. It includes things like 1.2 billion dollars for ‘K-3 class size reduction’, 1.9 billion for ‘child development’, 546 million for after school programs, 900 million for ‘economic impact aid’, 3.1 billion for Special Ed, a billion dollars for ‘targeted instruction’, and numerous other plans and programs.
Given the fact that California scores near the bottom in standardized testing, I’d have to say that most of this money is completely wasted. I’d take a blowtorch to a large part of the K12 budget.
In general, it looks to me like California’s problem is that it has extremely generous social programs, and not enough tax revenue to pay for them. Given those incentives, over time California has probably built up a larger-than-average population of people on some form of government assistance.
A further problem California has which can’t be seen in the budget is that its’s a regulation-heavy state. The government is constantly passing new environmental and other regulations, putting additional burdens on business. Worker’s compensation is more expensive in California than most other states. As a result, a lot of business is leaving California, lowering the tax base further. Increasing taxes will only accelerate that process, because all of California’s neighbors have lower business taxes.
So… overly generous social programs, a screwed up tax system, heavy-handed government chasing away people with money. It looks to me like the only way out for California is to start cutting social programs across the board. Education funding has to be slashed. Welfare programs of various stripes have to be slashed. Not just nibbled away at the edges, but wholesale elimination of many social programs. Tuition hikes at state colleges and universities, etc.
And, there should be a serious effort to repeal Prop 13, which limits property tax increases. From what I can find, California’s property taxes are lower than the national average. This not only costs the state a fortune, but it probably helped exacerbate the housing boom.
None of this is probably politically feasible. In which case, we all get to watch as California goes bankrupt and the services just collapse under their own weight and the people won’t even get much of a choice as to what to cut.
Not so sure about that. Given the sheer size of the California economy it ought, in theory, to be able to borrow quite a lot of money.
Size of economy is not relevant. It’s the ability to pay the debt back that’s relevant.
Russia’s economy is bigger than California. Russia defaulted on its debt in 1998.
If I had $10 billion, I certainly wouldn’t lend it to California (buy its bonds). I wouldn’t expect California (with its track record if fiscal recklessness) to pay me back with interest. Why would I want to lend money to it?
Maybe if California gave me Yosemite Park as collateral… oh wait… that’s Federal property…
There will have to be new taxes and program cuts, nobody gets off easy. It is just the way this going to have to be, and anybody who is drawing a line in the sand against either one of those is idiotic.
As we speak, California is issuing IOUs in lieu of paying its bills. It has already borrowed huge sums of money. Its bond ratings have fallen. I think there’s a very hard limit to how much money California can borrow, and I think it’s very near that limit now.
Its only other hope is a federal bailout. And if that happens, watch as about two dozen other states pony up to the trough.
One thing that struck me was the pernicious nature of federal matching funds. A lot of these programs are unkillable because if they kill them, they lose federal money. So even if the program is doing no good, it persists forever to keep the money coming in. Perverse unintended consequences.
I’ve said many times before that governments are magnifications of human failures. The typical American is in debt, spends more than he earns with multiple credit-cards, and will not face reality until the eviction notice comes and his car is repossessed.
If the typical American does not have the discipline to manage debt and income, then we must expect government to exhibit the exact same behavior.
Governments are run by the very same financially reckless humans. California has bought more social programs and borrowed more money than they earn.
Issuing IOUs doesn’t solve anything. If you’re a vendor selling services and supplies to the state of California, you can’t take an IOU and fund your payroll with it. Your employees need to be paid on Friday – with real money – today – not an IOU. Entities everywhere will simply stop doing business with the state once the faith in the IOU runs out.
Maybe they could just tax the shit out of all the rich people and evil corporations in the state? This seems to be the default answer, so why couldn’t it work in this case too? Say the state set the upper tax limit for anyone making over $200k a year (well, since it’s California, maybe $500k a year) to 60% and increase the taxes on all (non-Green, non-organic, evil type) corporations really really high (or something equally vague but righteous sounding)?
Then sit back and watch the money roll in and the deficits go down. Bob’s your uncle! No more deficit AND you get to keep all your social programs, special interest programs (Federal dollahs) and everything else!
What are they waiting for??
-XT
…because even if they taxed the rich at 99%, the legislature would STILL outspend that tax revenue – which would then lead to more borrowing to make up the shortfall — and more tax revenue diverted to pay the interest on the debt, etc, etc.
It’s the fundamental “brains” of lawmakers that are broken, not the distribution of the tax burden.
You’d be wrong. California has the third lowest number of state workers per capita in the country. Cite
California has 105 state workers per 10,000 residents. Illinois, the lowest, has 103. Texas has 120.
I haven’t looked up wages, but they are no doubt relatively high - but so it the cost of living.
To put some numbers behind this, California has 215,069 state workers (excluding CSU and of course teachers). Cite. I confirmed that this is about the right value from an independent ABC News story. If they average $100,000 per employee (obviously high) firing them all saves $21 billion, and doesn’t even fix the problem. As I noted in my reply to Sam, California is actually very frugal in the number of state workers we have. Sure it looks a lot as an absolute number, but that is because we are so populous.
The root cause of the problem is the sensitivity on the revenue side to the economy, thanks to Prop. 13. The spending side is not so sensitive, and actually should increase to handle the increased burdens of higher unemployment. This is especially true considering how the spending side has gotten micromanaged by Proposition.
I think the only solution is to nuke the Constitution from orbit.
How are they supposed to play nice with a group who refuses to consider any tax increase as part of a compromise? The Dems have played plenty nice with the Governor - he’s had more problems with his own party than he has had with the Dems.
The short answer would be the Republican reply of ‘How are we supposed to play nice with a group who refuses to consider any serious budget cuts of some of their sacred cow programs?’.
The long answer has to do with the complex nature of California politics, and how different regions (and cities) in the state are controlled by really powerful local groups who pretty much refuse to work and play well with each other, coupled with the states own constitution and the perverse nature of the California voter. California politics isn’t about Democrat vs Republican…it’s a Byzantine maze of factions and groups who want to keep what they have while being perfectly willing to have some other group give up THEIR goodies. For the common good of course.
-XT
Nope. Rescinding Prop 13 for commercial properties isn’t indicative of any inherent selfishness on the part of California homeowners; it’s a way to fix a huge, pro-business tax loophole.
Under Prop 13, properties are only reassessed when they are sold. Fine and dandy when it’s a home. But when it’s a commercial property, those can be owned by corporations. And the tax dodge comes in when these properties are “sold”–it’s actually the corporate entity that owns these properties that is sold; the properties themselves stay with the same owner, and avoid reassessment.
The fact is the California tax code has tons of loopholes. We’re the only state that doesn’t assess an extraction fee for the oil taken from under our lands. How else could a state with a 9.25% sales tax and high income taxes still have only the 20th-highest tax burden?
The only way out of this mess is to raise taxes. I say this as a California homeowner and former small business owner.
That hasn’t been true since Prop 13 passed 30 years ago. Property taxes go to Sacramento; education (salaries and facilities) money comes from Sacramento.
Soak the rich, lose the rich. This happens to be under moderate trends, but a sudden hike would of course cause a greater effect.
So has no one noticed that the projected deficit is $8 billion? It’s only when you add in $16B in projected increase that the budget deficit looks insurmountable.
Also, in February the legislature passed the biggest tax increase in history and the deficit has only gotten bigger.