Skip to comments.California Focus: Economic signals flashing yellow
Posted on 04/05/2007 8:29:04 PM PDT by NormsRevenge
Insanity, by one definition, is doing the same thing over and over and expecting different results. Although widely attributed to Albert Einstein, this observation could just as well been uttered by someone watching the Sacramento scene.
When Gray Davis was elected governor nine years ago, the state was suffering from an embarrassment of riches. Capital-gains tax proceeds from what would be known as the dot-com bubble provided consecutive annual surpluses of $6 billion, $10 billion and, finally, $12 billion.
While serving out the remaining three years of Davis' second term, Schwarzenegger made a good-faith effort to put the state back on a sound financial footing. He whittled down the deficit, and did so without raising taxes. This gave taxpayers hope that with more time in office he could eliminate the structural deficit entirely and reestablish a pay-as-you-go approach to state spending.
However, this past January the governor released his proposed $143 billion budget for 2007-08 which called for a 9.1 percent spending increase over this fiscal year. It appears to be based less on fiscal reality and more on the sunny optimism with which the governor seems to approach all his tasks and challenges.
In February, State Legislative Analyst Elizabeth Hill revealed the governor's budget plan called for spending exceeding revenue by $2.6 billion. This would leave the state with a nearly $1 billion deficit instead of the reserve of $2.1 billion the governor hoped for. Worse, this budget would result in an even larger deficit the following year.
Since then, however, more recent developments indicate even this analysis could prove overly optimistic. Indeed, Hill now warns that we won't have to wait until next fiscal year for a larger budget deficit. We will be facing an unanticipated shortfall for the current fiscal year that ends in June.
(Excerpt) Read more at ocregister.com ...
What color are the "let's raise taxes and grow our government some more" signals flashing?
California will learn (maybe) that in order to operate and expand the budget they cannot run off business with excessive regulations and taxes. Don’t bite the hand that feeds you.
And operate within your means instead of rosy projections of all those new taxes coming in that may or may not appear. An economic downturn can blast those rosy predictions like frost on a cherry tree.
Green, I’d guess. After surrounding himself with liberals, he’s made his bed and must now lie in it. Unfortunately, so will the rest of CA.
Kaleefornians are addicted to bond measures.
Yep, the stupid radio ads around election time proclaim “spend now, pay over time, no new taxes”, and the dummies fall for it, especially if it’s “for the children”
You got that right.
Typical election day in Calif, tax & bond issues:
(1) Propositions to raise everyone’s taxes: majority votes “no”.
(2) Propositions to sell billion$ in new bond issues (typical bond is say, 1 billion that will cost about 2 billion, principle and interest, by the time it is paid off): majority almost ALWAYS votes “yes”
Simple. Because the average California voter CAN figure out that a tax increase is going to increase taxes. But they can NOT figure out that a bond issue will have to be paid off, with taxes.
Not all California voters are dim bulbs and liberals though, many can not speak, write nor read English, but are faithful voters anyway.
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