Proposition 25 made passing spending bills easier. Proposition 26 made passing revenue bills - fees- AKA taxes harder.
Proposition 25 made passing spending bills easier. Proposition 26 made passing revenue bills - fees- AKA taxes harder.
If spending is going to be easier and taxing is going to be harder, how is California going to raise their revenue if :
* The budget INCREASES (as it usually does and surely will under Gov. Moonbeam )?
* They don’t get the super majority they need to increase taxes ?
I can only think of the following possible scenarios :
1) Revenue grows as a result of a prosperous business climate where new companies are formed, and unemployment is very low ( which increases the tax base ).
2) Go into debt ( sell more of their state junk bonds ).
3) Ask Washington (AKA as the rest of the other states ) for help.
4) Print their own money ( OK this one was facetious, but their printing IOUs is very close to similar ).
With the regulatory burden increasing in California (they just voted down Proposition 25 ) and the strength of their unions, good luck with achieving #1.
#2 will probably be the only other card they have left to play with. But the interest they’ll pay on their debt is going to be HIGH.
#3 Will happen only if the new Congress caves, and if they do, I’ll keep track of every single one of the Congressmen who votes yes to the California bailout and target them for defeat in 2012.