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California Attacks Budget Crisis With Make-Believe

Posted on Jun 22, 2009
Flickr / denn

Unable to agree whether to raise taxes or cut spending, California Gov. Arnold Schwarzenegger and the state’s lawmakers will instead rely on time travel. Sacramento hopes to “save” somewhere around $10 billion by shifting costs to next year’s budget and resorting to other accounting tricks.

They’ll have to do better to close the $24 billion budget gap.

San Jose Mercury News:

Need an extra $2.3 billion? Easy—just make people pay more of next year’s taxes this year, by increasing paycheck withholdings and estimated tax payments.

How about selling a chunk of a state insurance fund? That’s good for a cool $1 billion on paper, even if experts say it’s highly uncertain the sale would fetch that much, if it can be executed at all.

Expenses still too high? Here’s a really creative one: Push back state employees’ monthly paychecks in June 2010 by a single day—from June 30 to July 1—and thus onto the next fiscal year’s books. Just like that, $1.2 billion “saved.”

Those are just some of the maneuvers—or, to use a less charitable term, gimmicks—that the governor and lawmakers have suggested to help fill a $24 billion shortfall through June 2010. The proposals add up to about $10 billion, depending on what one defines as a gimmick.

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By The Gay Species, June 23, 2009 at 12:02 pm Link to this comment
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This “dance” that has repeated itself for thirty years, in which the Democratic legislature cannot put the brakes on spending, finds no tax too high, and no constituency unworthy, vis-a-vis a governor who is fiscally conservative and socially liberal and arguably the most libertarian politician elected, demonstrates the chasm that lead to Proposition 13 in 1978 and a repudiation of the “tax increase” on the June ballot.

For this reason, in the times of economic distress, we find the legislature unable to control spending, companies bailing from California’s extreme regulatory requirements, and billionaires with high-priced attorney and accountants avoiding a reckoning.

I think Oprah was call this “denial.” I call it “suicidal.”

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By RAE, June 22, 2009 at 9:44 am Link to this comment

There are few financial problems that creative bookkeeping can’t solve.

But… you can only use VISA to pay MASTERCARD for so long before the deck of cards crashes down on your stupid neck.

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By G.Anderson, June 22, 2009 at 8:29 am Link to this comment

California RIP…...time to pack up and leave, before next years tax bill, if you can….

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By Leefeller, June 22, 2009 at 8:11 am Link to this comment

How about taxing the oil companies for oil they pump out of California’s ground, even Palin in Alaska, charges 15% to the oil clowns and Texas also taxes oil companies?  In fact California should tax the oil companies retroactively.

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