Schwarzenegger orders cuts amid fiscal crisis

22,000 federal jobs cut
200,000 jobs changed to receive minimal wage

California is the trial balloon for next year’s democratic Federal congress.

And an interesting take on the budget. LA Times Opinion Piece

No_Such_Reality - 31 July 2008 01:00 PM

California is the trial balloon for next year’s democratic Federal congress.

I’m confused.  Are you saying reduced spending is bad or good?

Since you guys weren’t talking about it (or I missed it) I read the following
on Calculated Risk:

The comptroller or somebody is refusing to obey the governator’s orders.

If everybody in the whole state was fired, there would still be a deficit.

The deficit is largely due to money being transferred to the localities due
to the fact they can’t raise property taxes because of prop 13.

Federal employees??

The hub was unemployed for a week or 2 when Clinton was fighting with
the congress.  Seems like the fed gov’t got less bad for a short while after
the fracas.  I don’t remember, but think he went to work anyway.  He
got his past salary back in a short amount of time.  Everybody was sympathetic
to his plight.

Any comments?

who knows what will happen with the wages issue.  presumably the legislators will settle before sept or maybe october.

but what is happening right now with no question:

Schwarzenegger’s executive order eliminating jobs covers 22,000 retired state employees who work under contract, temporary and part-time workers such as those who fill in at the Department of Motor Vehicles, seasonal employees and student assistants. But Schwarzenegger’s finance team said just 10,300 would receive pink slips immediately. The others might be exempted because their jobs are deemed crucial to public safety.

so 10k-20k more people out of work. that should ‘help’ the unemployment rate…

and i guess you just hope you don’t have to go to the DMV

lawyerliz - 01 August 2008 05:59 AM

Since you guys weren’t talking about it (or I missed it) I read the following
on Calculated Risk:

The comptroller or somebody is refusing to obey the governator’s orders.

If everybody in the whole state was fired, there would still be a deficit.

The deficit is largely due to money being transferred to the localities due
to the fact they can’t raise property taxes because of prop 13.

Any comments?

No, pretty much that’s it.  This is the result of 28 years of fiscal planning via the ballot box.

The LAT op/ed article was close to accurate.  The author pointed out how Californians would vote to pay for programs they thought worthy, but convenently left off how Prop 13 did exactly the opposite.  Convenent isn’t the right word.  Disingenous is.

Excuse my French, but this is a sh_t sandwich and either end winds up in the middle.

And I thought that Florida was bad off.

Nobody here wants their ox to be gored, but the money
is gonna be cut, and I guess the ones cut will be the ones who
whine the least, certainly little will be spared based on value
produced.

The op/ed piece left out prop 13 because it has very… very little influence on the budget. I have mixed opinions of prop 13, but right now I am all for it. There are many family members of mine who would be forced to sell because of specuflipping idiots. Would the removal of prop 13 remove the specuflipping idiots? I highly doubt it.

The budget was put together by a bunch of morons who drank the same Kool-Aid as CAR. Hell… it might as well have been written by CAR, because it is that optimistic. Population growth estimates were over estimated. Income taxes had projected growth that would mean for mortgage, escrow, title, homebuilding and all the other RE industries to continue to growing. Factor in the lack of spending from the job losses in these sectors and it would only take a lab monkey to figure out they overestimated by way too much.

Come on… common sense tells you that all those mortgage people, RE agents, escrow officers, title reps, title workers, homebuilders (including accountants, customer service reps, sales reps, IT staff, attorneys, land acq., entitlement, purchasing, construction, marketing, mortgage, etc.), appraisers, inspectors, notaries, architects, environmental remediation, construction, underwriters, funders, account executives, etc., let alone the IT staff, accountants/CPAs, attorneys, retail, car sales, professional services, etc. that supported them and were supported by them effected the budget.

It is about the jobs, it is called a recession, and if they read my blog post about how we are over-employed in RE, then they would have known better. But, they drank the Kool-Aid Leslie Appleton-Young gave them, and now both are eating crow. Sadly it is not that difficult to see what was about to happen.

Count me in the “Prop 13 is a good thing” camp.  It allows older homeowners to STAY in their homes and not be forced to sell because property values have inflated beyond their pension/social security monthly benefits.

Case in point.  I was just informed that my CT property taxes were going to be raised 17% because “that’s what your home’s value has increased by”.  Now, I can handle it, but what about the retirees who’s COLA only increased by 3%?  And what about when I’m retired and my COLA is only 3%?

No_Vas, if it wasn’t for Prop13 the counties could tax run-down residential areas that are filled with gangs, crime, and poor people right out of existence. And they would, given the opportunity. Come check out Bellevue, WA for a case in point.
 
California has money problems because there is a fundamental flaw in promising people that government will take care of them; if your financing depends on robbing Peter to pay Paul, the spending limit is whatever Peter has in his bank account and when he’s broke you have both Paul AND Peter clamoring for the same government services. When times are good and tax receipts are high, politicians (whose political careers depend on creating government programs to help people) vote for more spending to help those less fortunate souls who are struggling in a booming economy. When time get bad, as they always do, those same programs get flooded with new applicants who previously didn’t need those programs or services at a time when tax receipts are dropping well below the “pre-boom” levels. You can’t blame Prop 13 because politicians voted to increase government spending; they already knew what the baseline income from property taxes was going to be when they passed the budget. Removing the Prop 13 restrictions can’t help the state without forcing people to sell their homes (or worse, lose them in tax lein sales) into a depressed market, which will force still lower prices and an exodus from the state by former property owners looking for cheap rent. How much of an effect do you think that will have on the state’s tax reciepts.
 
Governments with money troubles always present two options: raise taxes or borrow in the form of deficit spending. Cutting expenditures is never the first, or even second, option for government the way it is for every one of the governed. But as California (and Britain, check this out) is now proving, it is eventually the ONLY option that really addresses the fundamental problem.
 
A few choice quotes from Alistair Darling:

“People will pay their fair share but you can’t push that,” he said. “My judgment at the moment is that there are a lot of people in this country who feel they work hard, they make their contribution and they’re feeling squeezed. Every Chancellor has to be very conscious of the fact that there’s a balance to be struck between how much you can spend and how much people will say, ‘OK, if you’ve got another pound to spend remember me as well’.”

Mr Darling said of this week’s Cabinet meeting: “I’ve been very clear with my colleagues that there is no point them writing in saying, ‘Can we have some more money?’ because the reply is already on its way and it’s a very short reply. I told them at the last meeting of Cabinet they’ve got to manage within the money they’ve got.”

He made clear that he thought that the only politically viable option was to increase borrowing, rather than to raise taxation. “There’s always been a debate in this country about the right balance between tax and spend, but I’m pretty clear that people will say, ‘Yes, we’ve got to pay for all these things but remember me too, I need to see a balance’,” he said. “People will accept that they’ve got to pay for the schools for their children and for the hospitals in case they get ill, but they want to make sure the Government is fair about taxation.”

Say what you want about Arnold, but at least he is willing to address the real issue rather than take the more popular “make the children pay” approach.

Without Prop 13, my mother would be forced to sell her condo.  Can you imagine being forced to sell your property and move from someplace that you have lived for over twenty years because the government raises your property taxes until you can not afford them?

There are alternatives to Prop 13.  One logical one I have seen elsewhere is that the yearly taxes that come out of your pocket are indexed, like prop 13, but the balance of taxes owed due to appreciation is tracked and collected when you either sell the property, or from your estate when you die.

Seeems fair, best of both worlds (ie. don’t force the elderly out, but stop people from camping in a house far away from their new jobs across town which messes up traffic & gas use, also fair eventual tax burden across all homeowners).

Anonymous - 02 August 2008 09:43 AM

There are alternatives to Prop 13.  One logical one I have seen elsewhere is that the yearly taxes that come out of your pocket are indexed, like prop 13, but the balance of taxes owed due to appreciation is tracked and collected when you either sell the property, or from your estate when you die.

Seeems fair, best of both worlds (ie. don’t force the elderly out, but stop people from camping in a house far away from their new jobs across town which messes up traffic & gas use, also fair eventual tax burden across all homeowners).

We already have that, it’s called the estate tax.

Good glory you people are heavily taxed!!

We have no income tax, effectively no estate taxes, lower sales taxes. . .

Ok, so what does awgee and his mom think should be cut?  Be specific.

What actually can be cut?  I understand you over pay your prison guards.
Gosh, there is really immense extortion potential there.

We have cut schools and the court system; I know because those
have been the loudest screamers.

The trouble is the more money you give them, the more the politicos
will spend.  It’s supposed to be counter cyclical.  Fat ‘n’ lean years you
know.  Instead, it’s countercyclical in the wrong direction.  Cuts when
it would be a good thing to be spending more.

So, ok guys, what should be cut to get to the break-even point?

i found this site last night while i was reading about the CA budget:

http://www.next10.org/budget/challenge.html

give it a try!  it is simplistic, but informative. 

what would you cut?  what taxes would you change?

I just spoke with my dad about this and he told me that people talk all about the people who will receive minimum wage but doesnt talk about the people who will not get paid.  He is at the management level for the state and he said if it were to happen he wouldn’t get paid; however, if they were unable to pay by the time suggested he would get 300% of his salary.

I heard it wont happen as the controller will not allow it.

Ok, no suggestions yet as to what should be cut.

Come on, buck it up and let’s have it: or I will thing y’all belong
in the state legislature.

Big stuff too, ‘cause that’s what’s needed.  Or, if you think you
should be taxed more to pay for stuff you are reluctant to cut,
where should the increases be?

The arguments users have made in regard to Prop 13 are valid.  The biggest problems with Proposition 13 are two fold:

First, it capped maximum property tax increases at 2%, below the rate of inflation.  Prop 13 was intended to keep retireees in thier homes, but rather than allow folks to ‘homestead’ thier tax base when they reached retirement age (like Georgia does) it capped everything.  Thus, it creates a subsidy for older property owners, laying an unfair burden on the backs newer owners, and laying all of it off on renters.  But wait, that’s a local problem…..

Second, property taxes were local taxes used for local uses.  When they capped them, the state backfilled the local governenments by coming up with new and creative ways to transfer cost (tax) somebody else and reship the funds back to the local economy.  And that worked.  Sort of.  For 31 years.  Now, it’s a local problem again becasue the state is busto.

Freedom’s cite is awesome.  I encourage everyone to try it.  Pay particular attention to Prop 98’s effects on tax increases.

Like much, the devil is in the details.  In particular, the chronic refrain about ranking low on per pupil spending.  The detail is what is or is not included and whether or not they are making apples to apples comparisons which they often are not.

If we continue to look at the budget at the macro level, which next10 is doing, the options are pathetic.  The problem is only partial macro and larger micro: efficiency, abuse, largess.

Frankly No_Vase, it’s a pathetic site with an agenda that paints the challengee into the corner of raising taxes by limiting their options and biased viewpoints.  Overall due to legislative inaction, we’ve ballot boxed ourselves a shit sandwich.

NSR,

it sounds like you are describing the old “waste-fraud-abuse” argument so often heard from ‘tax reformers’.  and yet, i’ve never seen any article identify more than a percent or two of such potential cost savings.

what would you cut to get us to 10% or 15%?

freedomCM - 03 August 2008 10:52 AM

NSR,

it sounds like you are describing the old “waste-fraud-abuse” argument so often heard from ‘tax reformers’.  and yet, i’ve never seen any article identify more than a percent or two of such potential cost savings.

what would you cut to get us to 10% or 15%?

Let’s start with focusing on the $3 Billion fraud in the Medi-Cal system. http://ag.ca.gov/bmfea/medical.php

Anybody placing bets on what the real rate of fraud is given it is another self reported number like the drop out statistics?

Overall, I’m highly annoyed with the three card monte game of financing and more importantly, trying to determine where the money really goes.

The site, IMHO, is an agenda pusher. 

But, I’ve said my piece on other forums too.  If we need more taxes, the taxes need to come from the bottom 60% in an order to bring parity and damping demand.  Property taxesa are good, the vehicle tax, etc.  People hate them.  Frankly we have a problem, we want services, we want the other guy to pay for them.

I played with that site and I came up with a $700M surplus, while increasing education funding and minimal cuts to services. I agree that the “options” presented were skewed to one end, because there were few options for across the board cuts. I voted against Prop 98 in 1988 because it seemed like a dangerous idea to give an open pipeline of funds to the education lobby and it’s proven to have hamstrung the fiscal abilities of the state. In the end, raising taxes was the only option in their little web game that covered the shortfall. In reality, raising taxes in a recession is counter-productive to ending the recession. For now, California citizens are screwed unless 2/3 of the state legislature are willing to vote against automatic increases in public education funding and suspend Prop 98 for one year. Failing to accomplish that means there is going to be a lot less of everything else the state provides.

No_Such_Reality - 03 August 2008 10:35 AM

The problem is only partial macro and larger micro: efficiency, abuse, largess.

<snip>

Overall due to legislative inaction, we’ve ballot boxed ourselves a shit sandwich.

Where is my line by line audit?  Where is my piles of government waste?

http://www.cnn.com/2003/ALLPOLITICS/10/08/recall.main/index.html

He said he will order a complete audit of California’s budget to “go line-by-line” looking for waste.

I would argue due to voter meddling via the ballot box, we’ve created an unempowered legeslative shit sandwich.

For years I’ve heard the Republicans rant and rave about all the government waste.  The voters of California recalled Gray Davis for being a dolt.  Yet it continues.  The Republicans either:

1.  Have no spine, because I don’t care WHAT they cut so long as they balance the budget or
2.  Use the “look!  look! Governement waste!“ as a soundbite distraction because everything has waste, and Republicans have no solutions, but they can make the Dems look bad in meantime.

At least with Dems you know they are going to raise taxes and they aren’t demogoging to the voters, around the issue the voters caused.

We cap taxes and then mandate spending.  No kidding we are running deficits.  Eventually this will stop and we will have radically reduced spending and radically increased taxes to cover the difference.

Or for those of you in Rio Linda, you can only drive a train down a dirt road so far.