California will be broke in 2 months:
California’s chief financial officer warned Monday that the state would run out of money in about two months as hopes of a Christmas budget compromise melted into political finger-pointing by the end of the day.
The best estimates place the shortfall over the next 3 budget years to be $42 billion – about $14 billion / year.
The Democrats, naturally, wanted to raise taxes. But they passed a tax increase by only a majority, not the constitutionally required 2/3rds support needed for tax raises.
Republican proposals have avoided tax increases but cut billions from education spending, infrastructure projects and state labor.
Here is how California spent money in 2008-9:
]
Where California spends money
Looking at the chart above, if you need to cut $12 billion / year where would it come from. The entire budget is about 100.3 billion. So 14% cuts across the board would get you in the ball park. But given the times you would probably have to increase HHS (welfare, food stamps).
If it were me, I’d but K-12 education heavily, and do 15% across the board everywhere else. I would focus on reducing salaries rather than laying off, figuring a lower paying job is better than none.
But that is me. I’m sure that California will dither and then do the wrong thing. Finally, they will beg for, and get, a TARP handout.
December 23rd, 2008 at 2:21 pm
Way too much on higher education, cut it in half.
Cut jail down to five percent.
Cut housing down so B,T&H is seven percent.
Cut K-12 to 30 percent.
Take four percent out of the rest.
December 23rd, 2008 at 2:25 pm
That plan works for me too.
December 23rd, 2008 at 3:44 pm
If only the author of such a simple scheme were dictator; CA would be in even worse straits. In principle, the two-thirds rule forces each side to compromise until a balance is reached that will not be easily unraveled by a shift in power of a slight majority, It is a formula for making laws that will stay made. The downside is the regular game of budget chicken. The finger-pointing is the equivalent of “he started the fight, ma; he hit me back.”
TR’s scheme is one of a gazillion equal value schemes but not one likely to be adopted. TR has his set of values as does everyone else with a voice. His problem is that we settle these question by democratic means, which means messy battles over means and ends. If it doesn’t l;ook like anarchy, it’s not democracy.
December 23rd, 2008 at 3:45 pm
I’m open to any plan that doesn’t increase taxes or spending.
December 24th, 2008 at 9:19 am
The 2/3 rule came with Prop 13 to stop the legislature, both sides, from putting people out of their homes by agreeing not to cut anything. Then term limits tried to stop the new tax schemes. There’s no slight majority here to shift, it’s a socialist state! The few Republicans agreed to redistricting to have anything. The last “democrat” election also killed a referendum to put non-pols in charge of that. The courts are political, the city councils are corrupt, and the debts rise. No hope for the future. DC would be the same if not for federal bailout every year.
December 24th, 2008 at 9:46 am
Only decent weather and other states water saves them.
I’d had high hopes for a San Diego retirement, but I fear that is out the window now.