California Collapsing

reply to post by projectvxn


About Nevada, it doesn't help that a huge % of their land is owned by the federal government....hey I know, maybe NV should charge them rent!

reply to post by Spartak_FL


There are many states that don't have income taxes...they usually make it up in other taxes, such as property taxes, sales tax, alcohol/tobacco etc.

Maybe it's just because I'm young and don't make much [claim 1 on W2] but CA only takes less than 1% of my paycheck...2% if you count the CA State Disability tax...

That's compared to the 12.7% Fed income, SS/Medicare deductions...

Ok one more post for the night

Two recent headlines from a local newspaper about my county:

"Despite economy, county gives execs raises"

though this dinner was 2 years ago, the article is recent "County execs enjoy $1,600 meal on taxpayers’ dime"

Another reason we're in the hole is corruption...the legislature can refurnish their offices in the capitol on the taxpayers dime, with some costing $30,000.
Contracts give raises every year despite the economy, there are many instances of politicians giving throwbacks to their corporations and unions.

These politicians, Republicans and Democrats, have no connection to the people...Unless they are voted out the state will never change!


[edit on 7/2/2009 by AnonymousMoose]

Meltdown 101: California's budgetary troubles

SACRAMENTO, Calif.

California's budget shortfall isn't just an abstract problem involving some out-of-whack numbers. It's a serious crisis that's threatening to hurt people in the wallet -- in July alone, the state is talking about handing out $3 billion in IOUs to everyone from contractors to welfare recipients.

How exactly did California get into this mess, and what are state lawmakers and Gov. Arnold Schwarzenegger doing to try to get out of it? And what does the crisis have to do with the national recession?

Here are some questions and answers about California's fiscal troubles.

Q: How big is the state's budgetary mess?

A: California's $24.3 billion deficit is roughly a quarter of the general fund, which is the state's main bank account for paying its daily expenses. For perspective, lawmakers could eliminate all funding for state prisons and the higher education system and still not save nearly enough money to address the shortfall.

The budget gap is the biggest of any state.

Q: How did the state get into this mess?

A: California's problem is partly of its own making.

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. Because of caps on local property taxes adopted three decades ago, the state budget has come to rely heavily on revenue from capital gains and personal income taxes. Both have plunged over the past two years.

That's where the biggest culprit comes in -- the national recession, which has hammered California.

The state has its highest jobless rate (11.5 percent) in modern times, and personal income has declined statewide for the first time since the Great Depression. As a result, personal income tax revenue coming to the state plunged 34 percent for the first five months of the year.

During an unusual February session, Schwarzenegger and lawmakers thought they had solved the budget deficit through the middle of 2010. Since then, rapidly declining tax revenue put that budget package out of balance shortly after Schwarzenegger signed it, leading to the current deficit.

Q: When the federal government can't balance its budget, it just operates with a deficit. Can't California do the same thing?

A: No. Under its constitution, California must balance its budget every year. The federal government also can print money, something states cannot do. The main options available to states in lean economic times are spending cuts, tax hikes and borrowing money.

Q: What happens if California can't balance its budget?

A: If it doesn't happen by Wednesday, which is the start of the fiscal year, serious consequences kick in.

The state controller will begin issuing IOUs to college students who are expecting grants, welfare recipients, the blind and disabled, and private companies that contract with the state to provide a wide array of services. Counties that administer social services also would not get paid, nor would taxpayers who are still expecting refunds.

The IOUs are intended as a cash-saving move until lawmakers pass a balanced budget.

In normal years, California can take out short-term loans so it has enough cash to pay its bills until spring, when the bulk of its tax revenue starts flowing. This year, it expects to need $7 billion to $9 billion in such loans, but the state treasurer's office says it will not even try to sell those bonds unless lawmakers balance the budget.

Lenders are unlikely to go along with such loans if California has a $24 billion deficit and no credible plan to close the shortfall, because they will be worried that the state will not be able to meet its financial obligations. That has led to the immediate cash crisis.

Q: Are there any other ways Californians will be affected?

A: Lack of a balanced budget is likely to mean higher lending costs to pay back all sorts of bonds that already have been approved, which lead to difficult budget decisions in the future about more spending cuts or tax increases. For example, a credit rating downgrade on $53.3 billion of unsold infrastructure bonds would increase long-term borrowing costs by $7.5 billion.

Schwarzenegger also has ordered 235,000 state workers to take three days off a month without pay if there is no balanced budget by Wednesday, a move that would reduce available staff at state offices. The three furlough days will reduce the workers' pay by 14 percent.

Q: What about people outside California? Will they be affected?

A: Not directly. But California's economy is so large that any national recovery from the recession will be slowed as long as California is ailing. The state's economy accounts for 12 percent of the nation's gross domestic product -- a measure of the value of all goods and services produced -- and the state is the nation's single largest retail and auto market.

Q: What is the state doing to try to balance the budget before it's too late?

A: As of Tuesday, Gov. Arnold Schwarzenegger had proposed cutting $16 billion from state programs, borrowing $2 billion from local governments and raiding other government accounts worth about $6 billion to close the deficit.

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.

As of Tuesday afternoon, Democrats and Republicans remained at an impasse. Democrats want to moderate Schwarzenegger's cuts to welfare and health care programs for the poor, but Republicans refuse to go along with tax increases to make up the difference.

Q: Is there any chance the federal government will intervene with some sort of bailout?

A: California's treasurer asked the Obama administration earlier this year to consider a federal loan guarantee. This would allow the state to borrow at a lower cost -- roughly half the interest rate it would otherwise get -- so it can have enough cash to get through the year. California may need to borrow $7 billion to $9 billion to make it to next spring.

So far, the Obama administration has been noncommittal but has expressed concern that special assistance for California would open the door to similar requests from other states. Some members of Congress, including U.S. Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, are keeping open the possibility of some assistance for the state.

Q: Is there anything California can do to avoid this problem in the future?

A: California has had problems with balancing its budget for many years, in part because of its dependence on personal income tax and capital gains taxes, which rely on a rising stock market.

A special commission is expected to report to Schwarzenegger and the state Legislature by the end of July. It will recommend ways that California can revamp its tax structure to avoid the wild fluctuations in revenue that have contributed to massive deficits.

Some extra food for thought to fuel this discussion.

Source: Business Week

Yes, all the mansions will be without power and water, and the interstates will be lined with Bentley's as they struggle to get out of the fallen state.

Utter nonsense.

This is nothing less than a reflection of what is going on everywhere combined with POOR LEADERSHIP. California is losing more because California has more to lose.

Preach your gloom and doom. Revel in it. Enjoy your moment of "I knew it".

California is one of our greatest states, and always will be.

Have a little faith.

(I wonder why they haven't started impeachment proceedings, or no confidence proceedings, or whatever, and get somebody at the top who knows how to begin making repairs. Seems to me that would be number one on the agenda). Obviously poor decision making as been the culprit here, and maybe they need to look at who has been making those decisions. Just a thought.

Originally posted by Jim Scott
Salespersons will drive the economic recovery. If we have enough high quality salespersons, things will rapidly return to better times.

You have given me the best laugh I have had in a week!! Salespeople provide NOTHING useful - it's a service job. What are you going to sell if there is no manufacturing?

You are pointing out exactly what is wrong with the American economy right now. Manufacturing is what drove American wealth for decades - it was the core of your economy, but it has been systematically destroyed, ignored or exported.

If the govt had truly wanted to help the US economy with the bailout - this is what is would have done.

Reduce taxes.
Subsidize manufactured exports.
Create a whole bunch of infrastructure projects - upgrade some utility distribution systems, power, water, gas etc - inject cash directly into GM rather than mess with it to destroy its viability and basically hijack it.

There is almost NOTHING left to sustain the American economy. Don't make me laugh - sales people will save the economy?

reply to post by Amagnon


You can't compete in manufacturing when some third world poor person is willing to do the same job for a dollar a day.

Maybe you haven't been paying any attention to what's been going on in the last 30+ years. It's a little thing called Globalization. Get use to it.

Originally posted by Kaytagg
reply to post by Amagnon

 

You can't compete in manufacturing when some third world poor person is willing to do the same job for a dollar a day.

Maybe you haven't been paying any attention to what's been going on in the last 30+ years. It's a little thing called Globalization. Get use to it.

I agree with you - this is certainly the main issue with a rich manufacturing nation.

The problem is largely due to corporation law - they should never be allowed to operate in more than one country, but reversing that would be like reversing gravity.

When you see how limiting the original corporations laws were - you would be shocked. They weren't allowed to do anything - could not hold stock in another company, couldn't do anything that wasn't on their original founding constitution - the changes in corporation law are greatly to blame - so is lax control of illegal immigration, and poor standards applied for legal immigration.

reply to post by ladyinwaiting


That isn't what this is about. I have no idea why you're so apprehensive. This isn't about calling in credit for an accurate prediction. This is an unheeded warning, and an expression of frustration.

Most of us like being comfortable, I'm among those that do. I also care about what happens to California. But without facts and figures a little "faith" will go no where. California's government approached finance on the FAITH that the market would go no where but up, the tax code is among the worst among the states second in complexity only to the federal tax code which has roughly 73,000 pages. There are solutions to these problems but no one wants to sacrifice and politics in motion means a lot of incumbent legislators could lose their jobs, and they should for such a flagrant amount of inaction.


The Republicans in California, for ONCE have part of the right idea. it's time to run lean, lean, lean. Democrats there have part of the right idea in that diversifying revenue streams may help. But they are going after the wrong people. They want to tax everything when they have a good green source.

These guys have a golden opportunity to legalize cannabis and tax it. And use that money to stopgap their shortfall long enough to balance the budget for the long haul and streamline state services. The LAST THING anyone wants is a federal bailout, because that will cause two things to happen: Run on the dollar, and a major national credit downgrade:

Which will cause one of two things: Default or hyperinflation.

California may also need to call for a constitutional convention and rewrite their HUGE state constitution whose complexity has allowed for some of these problems to fester and spread widely. The problem in California is VERY complex. But to simply dismiss the realities we're facing as doom and gloom or some sort of personal ego stroke is doing no one a service. The last thing we need right now is emotional reactionaries.


[edit on 2-7-2009 by projectvxn]

Originally posted by Kaytagg
reply to post by Amagnon

 

You can't compete in manufacturing when some third world poor person is willing to do the same job for a dollar a day.

Maybe you haven't been paying any attention to what's been going on in the last 30+ years. It's a little thing called Globalization. Get use to it.

Yes you can easily compete with garbage manufacturing from Chinese slaves, they make absolute junk that can't compare to the quality products that could be made in the US. All that needs to happen is we need to get rid of things like NAFTA and put a tariff on imports, when people have a choice between a piece of junk made in china and something that wont break in less than a year, I know which one I would choose. It doesn't make sense we let other countries tax our imports but we don't tax theirs it is destroying our country and the only reason it is happening is because our "esteemed representatives" are taking bribes to do it.

[edit on 2-7-2009 by miraclerock]

And super-corrupt arnold says illegals are not the problem. 10 million of them running wild in the state using our schools and hospitals and welfare while they don't pay taxes and send their wages back to mexico!!!

Arnold accepts millions of $ every year in bribes from companies like walmart and mcdonalds in exchange for supporting the illegal invasion.

Originally posted by miraclerock
[ It doesn't make sense we let other countries tax our imports but we don't tax theirs it is destroying our country and the only reason it is happening is because our "esteemed representatives" are taking bribes to do it.

[edit on 2-7-2009 by miraclerock]

Everything comes down to bribery. Not a single member of congress cares about america. They ask but one question - Which side will pay me the most?

Originally posted by Make Speed Limit 45
Everything comes down to bribery. Not a single member of congress cares about america. They ask but one question - Which side will pay me the most?

It's ok though, all you need to do it call it lobbying and then no one minds. Not to mention we are a Capitalist society right, so why shouldn't we be able to buy votes just like everything else

reply to post by projectvxn


Uhhh, California has been running "lean and mean" for awhile now, at least as far as social services and education go: services and workdays have been cut repeatedly over the last two years. People get weird ideas about "lavish welfare" because they tend to look at the size of the welfare check and compare it to the cost of living where they are and think "Wow! I could live like a king on that!" Try it on our cost of living and you'd realize how little it is. Or they look at the overall number without dividing by the number of people it services while neglecting to calculate operating costs.

California IS NOT a "welfare" state. The people of California may be left-leaning, whatever that means...from the point of view of the rest of the country I guess that means we vote for parties other than the Republicrats, but our actual politicians, Dems, included, are pretty damned conservative. If you think Fienstein and boxer are liberals, you must think the House of Lords is pretty flaming liberal, too. Both of them are class-conscious conservatives when you look at their voting records.

One of the biggest holes in the budget is caused by the prison guards union who lobby heavily for various "3-strikes" laws and other extremely punitive measures that have swollen our prison population to ridiculous numbers. The state isn't safer for it, but the prison guards make tons of money, while providing zip in productivity, one in ten making more than $100K per year. They extort this much through fear tactics, threatening to tar any politician who opposes them as being "soft on crime". The prison system costs about 10% of the entire state budget, far too much. I don't want to pay a fat guard to watch non-violent prisoners at $46K per person per year. I get tired of cops playing the "we're the lowest paid cops in the city-county-state game, so we need another pay raise or we'll bail". We pay far to much to cops in this state on every level. They produce absolutely nothing. Just a huge hole in the budget.

www.thirdworldtraveler.com...
www.signonsandiego.com...
www.huffingtonpost.com...

When I first moved here, California was aprogressive state that limited corporate power, thanks to the efforts of Pat Brown. Then a succession of "fiscal conservatives" like Reagan came to power and dismantled what was once a thriving economy by "privatizing" to "save money". They didn't save squat, they diverted it away from social spending that actually turned a profit by keeping the workforce healthy, educated, and employed; they put the "savings" into corporate profits while increasing the hidden tax burden on the middle and lower classes through increased fees and reduced services. Now it's a poster child for failed conservative policies. Outsourcing and privatization have increased our costs while reducing quality and quantity of services.

What exactly do you think the average taxpayer pays their taxes for? I pay mine to support education, healthcare (not mine, unfortunately...I have zero coverage), firefighting: productive things. When people need something back for their taxes, though, suddenly they're utopian freeloaders.

What has ruined this state is not liberal policies, but conservative ones.

Originally posted by apacheman
reply to post by projectvxn

 

Uhhh, California has been running "lean and mean" for awhile now, at least as far as social services and education go: services and workdays have been cut repeatedly over the last two years.

You mean those teachers that get paid more than any other teachers in the nation (and do a lousy job at that)?

Or do you mean the state workers that receive wages far in excess of their private counterparts and essentially have the potential of retiring as millionaires?

Go to a DMV office, look at the manuals in 19 languages, and ask yourself if that is lean.

See how the state government raises taxes consistently to a point where California is one of the highest taxed states and ask yourself if that is lean.

Just look at the size of the California government, is that lean to you?

Its time for the union political classes to start feeling the pinch of a recession and feel the suffering that the entire private sector is going through. They have no right in raping the taxpayer in order to avoid lean times.

reply to post by wutone


Overpaid teachers?

Are you aware that about 70% of college and university level teachers are part-time temp workers with no bennies? Try looking up "freeway flyers". It refers to teachers who have to drive from one campus to another because they have one class at each of maybe two or three different campuses. And they have zero job security: you are a temp hired for one semester at a time. And if you fail to have sufficient enrollment, you lose the class and your investment in it. It takes many hours of work to prepare for a class, many hours outside the classroom. But you only get paid for classroom hours. Depending on the class and your teaching style, it takes three to five hours outside for every hour inside the classroom, every week. So a $100.00 an hour wage might sound like a lot (most only make about $50 or so an hour) when you count prep, grading, counselling, knowledge maintenance it turns out to be $12 to $25 an hour, hardly a princely sum. Then factor in the excessive transportation costs which must be borne, and your statement becomes an insult.

Have you ever taught?

Try teaching in California, then claim teachers are overpaid.



[edit on 2-7-2009 by apacheman]

Originally posted by wutone

Originally posted by apacheman
reply to post by projectvxn

 

Uhhh, California has been running "lean and mean" for awhile now, at least as far as social services and education go: services and workdays have been cut repeatedly over the last two years.

Or do you mean the state workers that receive wages far in excess of their private counterparts and essentially have the potential of retiring as millionaires?

Please provide some proof of your assertion. I know of no "state workers" who retire as millionaires based on their state salary, unless you count the heads of various departments who use their office for personal gain. Name me a few workers who are paid "far in excess" of private counterparts. Show me the wage comparison table that proves this.

While you're doing that, justify the 1,600 to one ratio of corporate pay to worker pay in the private sector. Why aren't they considered overpaid?

reply to post by projectvxn


Actually I agree with some of what you said. Some things I don't.

But I don't think I am an emotional reactionary.
I think you are.

Do you have a plan other than legalizing marijuana? Can you offer something positive, or are you just hell-bent on the state being
irreparably damaged?


I agree the problems are complex, but I believe they can be fixed.

I stand by my previous comments.

[edit on 2-7-2009 by ladyinwaiting]

reply to post by ladyinwaiting


Really? How so? What makes you assume this? What in my posts seems like a reactionary to you? I have been looking into this for over a year now. There are numerous posts and threads I've authored on ATS and elsewhere about this. I've put work into this. If anything the lack of foresight these people suffer from is simply depressing, other than that I fail to see how I'm an emotional reactionary when I have done little in the way of that. I've only opined on what I believe the next steps will be.

reply to post by projectvxn


While I agree with most of what you said, You left out a very sturring point,
The fact that people with big money were hearding our sheep, ( us) with control over our news media. ie. Geo. Sorios and co. who have spent millions of his own money influencing the out come of our election. Then there is ( Acorn and all it's off shoots) I think we are past the -People better wake up stage- It is now up to the individual to make ready his/hers own survival arrangments and do it "NOW" not next week or next month!........................................Good luck to all.............KMG