California government is again beset with red ink, facing a nearly $21-billion deficit over the next year and half, according to a report released today by the state’s chief budget analyst.
Nonpartisan Legislative Analyst Mac Taylor projected state spending severely out of line with tax collections not just amid the current recession but for years to come. Solving the fiscal mess will require “painful choices” in both cutting services and raising revenue, Taylor warned.
The gloomy forecast, which comes after Sacramento officials have already raised taxes and slashed programs this year, portends a fierce budget battle again in 2010.
The talk of raising revenue coming from Sacramento is one reason why the unemployment situation is so dismal in the Central Valley. Municipalities like Los Banos, for instance, have raised taxes so high that it deters potential employers from coming to town and building there. Big box stores do provide jobs, and we have them here, but none of them pay more than minimum wage in most cases. No jobs means no taxpayers, and no taxpayers translates into no taxes……which in turn means a shortfall for Sacramento. More taxes isn’t the answer.
More spending is the answer, Cennyd. Until banks start loaning to businesses, there are no new jobs to be had. Job making businesses do not feel comfortable in this climate, and aren’t just going to suddenly make jobs.
And if the banks and corporations aren’t spending, someone has to.
Who will it be?
Regulation is a big factor in California – why start a business here when you can just go to Nevada or another southwestern state and have significantly fewer costs, regulations, and taxes? It’s called competition, and one reason why we will be moving out of California next year.
We have a trace of the same disease in Oregon as well. The State keeps creating programs that benefit folks who don’t pay taxes. Those folks (and the liberals who feel the “undeserving rich” should pay the “deserving poor”) vote for more taxes – which they don’t pay. It’s “free” to soak the rich, after all!
Around and around it goes until you have an entitlement class and an entrepreneur class. The latter is mobile and can vote with its feet; the former isn’t and remains in the state leaving a high level of program spending – now accompanied with a high deficit.
As someone whose marginal rate (fed+state+FICA) totals 43% (increasing to 46%+ depending on which “fees” are added by the feds and state), I’m not too happy about being soaked. If I kept more, I’d give more and invest more – and do a damn site better at job creation than the bureaucrats.
Remember that the goal of politicians is to maintain power by bribing a lot of citizens with money forcibly extracted from other citizens. Both the Republicans and Democrats do it – all that differs is who pays whom.
Oops – that’s “darn sight better”.
Also, I do believe in giving to the widows and orphans and the crippled – but I believe in giving freely. I also understand that I’m to “render unto Caesar that which is Caesar’s”; it’s just annoying when Caesar tries to set himself up as a God dispensing (financial) blessings and curses!
Doug
2. John Wilkins, you can’t spend it if you haven’t got it! Sure, the banks need to start lending again, but can you force them to do something they don’t feel they can do? Or don’t their stockholders feel that they owe it to the country to stimulate business growth by lending money?
RE: “And if the banks and corporations aren’t spending, someone has to.”
No someone doesn’t.
California is hopeless. The US should consider selling California to China in exchange for Tibet, one future draft choice, and cancellation of all our debt to China. It is a win-win proposal. The US still has 50 states, we are debt (to China) free, California gets whipped into shape, and TEC gets it own Dalai Lama. If China thinks California is not worth that much, we can either throw in Oregon or give up the future draft choice. Tibet, however is not negotiable.
#2, JW, why would a bank spend (or loan) in an environment in which interest rates are so low (and being kept that way), they can’t make any money, and in an environment created by our Congress in which they must lend to non-credit worthy persons, or face even more regulation from Congress. And why would any of them lend, when they are being told their balance sheets have to be cleaned up to a point that many of them can’t loan without going below the regulation requirement for loan/reserve ratio, and they are not allowed to value their credit swaps as having any value at all. Banks are withholding money from the economy, so naturally it’s logical (NOT) that the government is going to take more money from the economy with much higher taxes, while sending that money (and more) to the sector of the economy that is not going to create any new jobs or business from which more taxes can be raised. So in the future, just like CA, more taxes will have to be raised to support this sector of the economy that does not do anything to add money to the economy or taxes, so more taxes will have to be obtained. Nice cycle of economic thought, huh. I’m sure there is a pony behind one of these piles of hay (or whatever else you want to call it), but I’m just not sure we are going to find it.
The way to create jobs is as follows:
1. Slash all regulatory hurdles toward starting a new business (no taxes, licenses etc)
2. Immunity from lawsuits that do not involve criminal conduct
3. Suspend taxes, minimum wage/worker claims laws for businesses making a profit of less than 20,000, with phase in of these laws as profits rise, so that all laws apply at 100,000 profit.
That way, if I wish to start a business cutting hair or shining shoes, or selling my poems attached to home made brownies I can do so. If my brownie making emporium is successful, then as I get wealthier I will start paying taxes and hiring other folk to make and hawk my brownies.
Right now your choices for revenue generation are 1. Strike gold by getting hired by a wealthy solvent corporation (or the Federal government).
2. Be so brilliant that you can afford to take a 50,000 loan to launch your small business and still pay for all the regulation, licensures, taxes etc that entails.
3. Work on the black market building fences, putting in floors etc.
4) Claim disability