Is Obama doing the right thing? I think so. As my colleague Megan has pointed out, it's one thing to consider California in a vacuum -- one-eighth of our population and almost one-seventh of our GDP cannot be abandoned! It's another to consider the precedent of bailing one state while another 49 gaze on with hangdog eyes and tightening wallets:
But what happens if we bail California out? New York had a fifteen billion dollar budget deficit; why should the Empire State struggle to balance its budget while its citizens' federal tax dollars leak westward? Why not Texas, or Florida? Why not all the states, for that matter? And if the Federal government does bail them out, why bother with any fiscal restraint at all?Exactly. Frankly I like the fact that government is making California sweat for it. There is absolutely no reason for Obama to accept the state's overtures now without making them think seriously about budget reform, or raising taxes, or reconsidering their '70s-era relics of proprety tax straitjacketing. Never letting a crisis go to waste should mean forcing California to rethink the way it taxes property, spends scarce resources, pays government employees, etc.
But eventually, alas, the government will almost certainly provide some kind of relief. One way the Obama administration could bail out California without creating a perverse incentive for other states to fail as quickly as possible could be to redirect stimulus money to California at an expedited pace to plug up holes in the deficit while California sets about the arduous task of finding revenue sources and things to tax (marijuna, hello!). If we get more wrapped up in the business of California, such as offering federal guarantees for loans, Obama has to ask for painful concessions upfront. The business of bailing out a state must be to make the bailout both effective in the longterm and seemingly painful in the short term, so that we don't open up the country's drive-thru ATM to the rest of the country's emaciated state deficits.
I completely agree. Its nice to see the administration finally, finally, developing some backbone, learning how to say "no" and channeling Andrew Mellon. If Hoover had listend to Mellon, maybe things would have turned out better.
Has there been any speculative research done to guesstimate how much tax revenue could be generated by the legalization and control/taxation of cannibis? The sooner "they" legalize it, the sooner they can get revenue from this silent enterprise.
I whole heartedly agree. California should not be bailed out. And I'm saying this as a Californian. The fact is California has more that enough money to do what it needs to, it's just being spent on the wrong things. If you want an example just go to craigslist and take a look at the rents in the Bay Area. If Cal. has the money to pay 5-10 times the rent, or morgage, as most other places it certainly has the money to provide the state services we need. The problem is that the money is going to the wrong people. For years the Cal. legislature has been in the pockets of a greedy real estate industry while doing nothing to keep the cost of living reasonable for its residents and letting things get way out of control. Arnold said recently that the Cal. budget was back at the 1999 level. So why do we have the budget crisis now? It's not the cost of avacados thats risen so much.
Should the Fed Bail out Calif? NO.
However, the Fed should repay Calif for the net costs incurred to handle illegal alien residents. Over the last decade this cost has exceeded 50 BILLION dollars.
Am I just another nativist zealot? No: read on.
Chuck CA Resident
Solutions for California’s Budget Failure
On May 19th, California voters issued their mandate to control public spending. We want no new taxes and a balanced budget. Here are some ideas to help Sacramento get the job done.
1. Mirror other state budgets. Texas, for example, spends MUCH less per citizen than we do. Lower our spending to match Texas.
2. Immediately cease all Federally mandated programs that are not funded by Washington. When the Feds complain, fight this in court.
3. Demand Federal reimbursement for services to illegal alien residents. I believe the net cost to California is more than $6 Billion annually. This is for criminal justice. education, healthcare and other services for people who are here in violation of Federal law. Carefully audit this demand as it may be much higher. California bears this burden due to Federal dereliction of its duty to control our international borders. If the Federal government is not forthcoming on this demand, it must be sued. The reimbursement amount needs to be paid EVERY YEAR until this problem is resolved. And we should pay paid for past years, also.
Note that California may have as many illegal alien residents as the other 49 states combined. We are being unfairly burdened with this problem.
4. Roll back state employee headcount to the level before Gov. Schwarzenegger took office. During his tenure the State payroll grew by thousands while total legal residents declined.
5. Adjust compensation for those remaining state employees to match other states, such as Texas. Many are highly overpaid. For example, it recently was revealed that EMTs in Moraga, California were making over $200,000 a year!
6. Reduce teacher employment by increasing classroom size. Couple this with enforced codes of student conduct to make these larger classes easier to manage.
7. Cease programs such as global warming abatement and state attempts at healthcare reform. These need to be argued at the Federal level. Involvement at the State level is a luxury and a waste of scarce resources.
8. Mothball the high-speed train. All future work on this project is to be paid for with private funds.
9. Lease offshore petroleum extraction. This will bring in an extra Billion or so every year.
A number of other structural changes are necessary to repair California.
10. Institute a massive marketing effort to bring back business to California. Streamline permitting and regulation. Eliminate as many fees as possible. Eliminate ALL fees that are simply taxes. Eliminate corporate income tax. We must become the absolutely easiest State in the Union in which to do business.
11. Adopt a maximum annual public expenditure per each legal resident. This amount is to be no more than the average amount of the other 49 states. Sacramento can levy income taxes only up to this amount.
12. Change the California Constitution so all programs are sunsetted after five years. Nothing can be allowed to go on forever.
13. Outlaw State raids on County and local tax revenues.
14. Modify the California initiative process so that each new referendum or proposition is funded by cutting a previously implemented program. Zero new taxes would be allowed. Issuing bonds to fund programs would no longer be allowed.
15. Much of our problem is caused by career politicians indirectly paying off supporters with public funds through pet programs. Stop this with strict term limits.
16. Since the legislature will then have many more new members, institute mandatory financial training before these newly elected officials are allowed to take their seats in Sacramento. This financial training would include balancing a budget, how the economy works and an in-depth knowledge of all of the above principles. Returning legislators would be required to pass this course, also.
17. Prop 1F—which curtails legislator pay raises when the budget is not balanced--needs to go a step further. The primary job of the California legislature is construct the budget. If a balanced budget is not submitted on time for the Governor’s approval, all legislators would be permanently dismissed with no further pay. The budget would then be constructed and implemented solely by the Governor.
State employees at all levels may chaff at these solutions. Nevertheless, they are necessary to move us back to the true meaning of “public service”.
Brilliant! Where else do you write?
In 1975 New York City went belly up. President Ford refused to bail them out of their own mismanagement. That resulted in the very famous NY Daily News headline: Ford to New York - Drop Dead.
NYC had to bite the bullet big time. NYC survived.
"reconsidering their '70s-era relics of proprety tax straitjacketing."
agree 100%. Why my neighbor pays 1/10th the property taxes on his rental property that I do on my identical home that I actually live in is beyond me. There is no justification for this government subsidy to him.
Hey Mark,
In ten years, when your property taxes are reasonable, and the "other" mark is whining about the good deal your getting, you may see it differently. These political vampires dont need any more income. They have plenty . What they need, is a change in philosophy...I/E, work for their constituents, NOT their special interests....AND, enforce immigration laws. AND support citizens with revenues, NOT freeloaders from other countries! If we cant take care of them ALL, then we shouldnt take care of any! No matter what anyone says, Illegals are DESTROYING this state!