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More Pain to Come

by: Brian Leubitz

Mon May 14, 2012 at 15:38:47 PM PDT


Increased budget deficit means big cuts with or without tax initiatives

by Brian Leubitz

With the recent announcement of a bigger than expected deficit, Gov. Brown has announced bigger than expected cuts are coming in his May revision of the budget.

The gap grew, the budget revision states, because Brown over-estimated tax revenues by $4.3 billion and the federal government and courts blocked $1.7 billion in cuts the state wanted to make. The remainder of the difference reflects an increase in the amount of money the state is mandated to spend on education under a complex voter-approved formula.

To close the wider gap, Brown has heightened the cuts he wants to make to Medi-Cal, to $1.2 billion, and maintained another $1.2 billion in welfare and child-care savings he proposed in January.

He also wants to slash payments to people who care for the disabled by 7% and reduce the state payroll through a shorter workweek or wage concessions. He proposed $500 million in cuts to the state's struggling court system, including a one-year freeze on all new construction projects.(LA Times)

That's just the best case scenario there. As horrendous as that may be, if the tax measure in November doesn't pass, Brown is set to do a triggered cut of $5.5 billion and $3b other cuts.  

At this point, the waste is gone. We are cutting vital services that won't just magically reappear when times get better. We are fundamentally changing how we treat each other, and we are letting social darwinism run amok. It's a tragedy of immense proportions, and no saviors are riding in from the horizon.

Brian Leubitz :: More Pain to Come
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More Pain to Come | 34 comments
What do you propose? (0.00 / 0)
I mean is there any real solution that doesn't involve drastic cuts? I'm not badgering here, I don't see any realistic revenue raising solutions, am I daft?


Am I all alone here or what... (0.00 / 0)
Is there a place on the web ( or even in the real world ) where people actually talk about these things? This budget horror show has been in repeat for most of my adult life, and certainly for all of my kid's life, and I have lost my self control tonight with cool discourse and sad sympathetic agreement. I feel anger, rage even and disgust, but  I see no anger or disgust. Another year, ho hum another slash and burn disgrace and after it's all over everyone goes through the same motions the next year. Why do people just accept this? Is it because it is  easier to cut the ground from under strangers rather than alienate your friends and allies when they shrug off yet another fiscal throw-the-poor-and-vulnerable-under-the-bus party, and say the Republicans made us do it? Really, after all these years, to think that this is what good people have come to accept.  

Once more Laura (5.00 / 1)
Let's hear some proposals.

Other than default on debt, which would destroy the entire structure of government.


[ Parent ]
Shortage of money in CA (4.67 / 3)
Not really.  How could there be with billionaires trading $50 million homes back and forth.  There is only one place we can get it.  In an odd kind of way, this new shortfall may bolster the case for the tax increase, which now may not be high enough.

Why is this happeneing? (0.00 / 0)
California has 12% of the US population and 33% of the nation's welfare recipients.

In 2011, 254 businesses left California, or an average of 5 per week.  202 left in 2010, 51 in 2009.  2500 employers ceased operations in California between 2007 and 2011.  The great majority of them simply went out of business.

California taxpayers spend north of $10.5 billion annually to educate, medically treat and incarcerate illegal immigrants.

Immigrants account for a large share of California's population growth. Between 2000 and 2009, international migration accounted for 1.8 million new residents in California, compared to 2.9 million due to natural increase (more births than deaths). In 2009, 40% of births in the state were to immigrant mothers

For immigrants in California with college degrees the wage gap is much smaller (8%) than for those with high school diplomas or less (27%). On average, immigrant workers' wages do not catch up to native-born workers' wages over time.

We have less native born residents so wages are typically lower, we have a higher percentage of welfare cases than any other state, our business climate ranking (50th) is driving companies to other states and the unemployment rate is over 11%.  Add in the promises we have made to public sector workers and you have a fiscal nite mare and a 16 billion dollar deficit.  But hey, at least the governor wants to give us high speed rail!


So, it's the fault of the "illegals"? OK, what do you do about it? (5.00 / 2)
The information you reference (but don't provide a citation for) seems to come from here:

http://www.fairus.org/site/Doc...

They provide figures that suggest that the overall impact is 8.8 billion dollars, after 1.7 billion in tax revenues. So, it seems that there are two basic ways to respond to this problem: 1) reduce the 8.8 billion figure, and/or 2) increase the 1.7 billion figure.

To pursue solution 1, what exactly do you propose the state should do? And how (in practical terms) do you propose it be done?

To pursue solution 2 seems to me more practical. Get people already here on the tax rolls. But that would require something like amnesty, and anger seems to get in the way of sheer financial calculation on that point.

So, other than simply expressing anger about the presence of "illegals," what, in practical terms, do you propose? (And rounding them all up costs $$$ too...)


[ Parent ]
Dealing with Illegal Immigration (0.00 / 0)
Since you asked what can be done.... Federal law does require that states pay for K-12 education regardless of immigration status.  However, there has already been a U.S.S.C. decision allowing states to force businesses to use E-verify.  And the U.S.S.C. will soon issue a decision on what parts of Arizona's "1070" law are constitutional.  So Sacramento has some options to legislatively discourage the presence of illegal aliens.  

And I suspect that if other states increasingly exercise their lawful options to discourage the presence of illegal aliens within their state borders, illegal aliens will tend to migrate to states where they are more welcome.... like California and our costs will increase.
 


[ Parent ]
Mixing terms (0.00 / 0)
I find it odd that illegal immigration and legal immigration statistics get mixed up when people talk about illegal immigration then they cite immigration statistics.  They aren't the same thing.

[ Parent ]
We'll get it together (0.00 / 0)
All the people who bought those bonds are mostly 1 percenters. Let's just default, write off the debt, and start over. It's that easy.

That would work.... (8.00 / 1)
.... if debt service were the size of California's deficit (it's not- paying no interest on our bonds would still leave us with a $9 billion annual deficit), we do not want to issue bonds for clean water, air, transportation, education for the next 15 years (oops, we do want to), and we want to act in an irresponsible and immoral way (even Greece is trying to figure out a way to act responsibly).

It appears that the Legislature will not take up public pension reform, education funding, commission de-commissioning (like the State Personnel Board, that Jackie Speier recommended eliminating back in 1995) and cutting other bureaucracies.  Vote 'em out I say.


[ Parent ]
Another Idea (1.00 / 1)
Well, why not just implement a total tax. We gather all the money, all the property and then equalize it among everyone. That way noone would have more, noone would have less.

[ Parent ]
good to hear (1.00 / 1)
what the radical left thinks


[ Parent ]
You'd kill local bond initiatives (0.00 / 0)
I am not a 1% but I invested in a California bond fund once. it was a mix of local bonds but its was impacted by the state's credit. I don't know why, I think it was perception.  But a default will kill al your local municipal bond intiatives so no parks, school upgrades etc. because the interest rate would be way too high and the local entites would be paying more in interest than is worth for the important stuff that needs funding.

[ Parent ]
no more waste???? (0.00 / 0)
We have thousands of public employees in CA that are retired or will be eligible to retire at 50, and take home more than they every made in a salary.  

I have done everything right in my life, I graduated high school, I worked my way through college and grad school, I have paid off my student loans, and I max out my 401K every month.  When my financial advisor tells me I can retire at 50 and take home $100,000 ever year, thats when I'll vote for new taxes.

I feel very sorry for the kids in our crappy schools, but I'm not giving another dime to the freeloaders who are robbing this state blind with their huge pensions.


A small percentage (0.00 / 0)
You're not wrong that a few top-ranking officials in every category take home obscene pensions. And we should fix that. There are a few in some systems, like UC, who make way more than they should. We should fix that too.

But I'd be interested to know exactly how much that adds to the state budget. Because I doubt it's as much as most people think.

Teachers, for example, don't get big pensions. Most rank-and-file state employees don't. They get about what I'll get on Social Security--which they don't get. Most don't get big paychecks. A neighbor of mine worked at UCSC and was trying to support 2 boys as a single mother without a raise in 4 years.

So, while agree that we should get rid of these extreme examples, tarring all public employees with such a broad brush is not only inaccurate, it won't really solve the state budget problem. Just put a lot of people out of work, stretch their finances even more, and lessen the services the state can provide.


[ Parent ]
not just a few at the top (0.00 / 0)
ALL public safery officers, cops, fire, CHP and dispatchers get 3% at 50 pensions.  Many of them will take home more in retuirement than they ever made as a salary and many of them will be retired longer than they were on the workforce.  these employees are the biggest reason so many towns and cities in CA are facing bankruptcy.

The defined benefit pension is a dinosaur and needs to go. Benefits are negotiated by unions and politicians that unions put in office. Are we really shocked we cannot afforf the benefits packages that result?


[ Parent ]
Your dinosaur, like the old dinosaurs, were not unfit. (0.00 / 0)
They were wiped out by a huge rock.  Which is not too different from what's happened to defined benefit pensions.

You say


The defined benefit pension is a dinosaur and needs to go.

But given what's happened to the middle classes in the US over the last 40 years, why exactly do think that 401K and similar arrangements are any better?  Given the instability of the economy since 2007, arrangements for retirement based on the market -- which you seem to think are "more evolved" alternatives to defined benefit pensions -- will leave us with larger and larger populations who retire too poor to live on their savings alone.

And that's assuming that the same jerks that are fighting to kill defined benefit pensions don't destroy Social Security as well, and turn Medicare into an underfunded voucher program.

How do you recommend dealing with the shortfall in savings we've seen?  Do you have any advice other than "tough luck"?


[ Parent ]
union thug (0.00 / 0)
So now you are a "jerk" if you point out that our defined benefit pension plans are unsustainable.  You are a "jerk" if you understand basic math...people are living longer, and paying less into their pension funds, and the taxpayers are picking up the tab.

Everyone needs to save more for their retirement.  I am saving more and I'm not planning on retiring at 50...so why are public employees so special? why do they get to retire so early, and why do I have to pay for it?


[ Parent ]
Pension isnt part of the budget (0.00 / 0)
As I understand it, The pension problem isnt the pay out to the retirees that is not part of the budget. CALPERS pays that.  I may be wrong, but thats how its been explained. CALPERS pays the pensions. Its not like military retirement where the fdereal govt actuals pays it.

Now how much CA govt is paying into the fund for current employees might be anissue but I don't have a figure on that.


[ Parent ]
Sorry, you're wrong. (0.00 / 0)
Of course its part of the budget.  When CalPERS investments can't keep pace with retiree expectations (which is every year)the taxpayer has to make up the shortfall.  the current unfunded mandate for CalPERS alone, not counting all the other funds, or health benefits, is almost three times the annual state budget.

ITS A HUGE HOLE.


[ Parent ]
really (0.00 / 0)
So how much is the hole? how much of the budget is filling the gap? not doubting but I like to see numbers and data

[ Parent ]
Furthermore... (0.00 / 0)
How much of this shortfall is systemic vs caused by the ongoing economic issues?  Over the last 12 years, the stock market has risen an average of 1.3% per year.  The investments in these funds tend to track those markets -- the better solution would be economic stimulus, while interest rates are historically low, to get the economy growing again.

[ Parent ]
Lots of data here (0.00 / 0)
Lots of big numbers and pie charts.

http://www.lhc.ca.gov/studies/...


[ Parent ]
2/3rd rule (5.00 / 3)
Common Cause is taking the filibuster rule in the Senate to court as Unconstitutional.  We could unlock the CA legislature and allow them to act by majority.  A number of taxes like oil depletion, closing the Prop 13 commercial tax loophole, ending the Arnie corporate tax adjustments might be possible in the Legislature.  Redefine the initiatives that have been responsible for so many bonds.  Review bonds.  Ask for renegotiation on them if they seem out-of-line.  Ca has been in a straight-jacket of Norquist proportions since 1978.  

As noted earlier (0.00 / 0)
illegal immigrants cost the state somewhere up to 10 billion.

We can encourage self-deportation through measures like e-verify and cutting all benefits like welfare and health care that are not required by federal law.

We can also grow the economy, by expanding offshore oil drilling and loosening economic regulations that inhibit development and expansion.

We need to ban bond issues that don't have corresponding tax increases associated with them. Think of the stem cell research bond, or children's hospital bonds. They advertise the no-new taxes on those bond issues, as if servicing bonds will come from the magic money tree.

Eliminate all defined-benefit pension plans and instead make state and local government employees contribute to social security, which we've been told is an excellent program.  Immediately rescind all pension benefits that exceed $3,000 a month and prohibit retiree health care. Medicare is good enough for everyone else. For anyone grandfathered into defined-pension benefits, push the age to collect benefits up to 65.

Give the death penalty to all redevelopment agencies.

Pay teachers based on the merit of their work, not their seniority.


Boards and Commissions (0.00 / 0)
These really need to get cut. They are basically follow-up careers for termed out legislators of both parties.

I'd like to go further but the biggest thing I've noticed in all these stories is that no one has really looked at te budget. what are we spending it on.

I saw one person in another website said tey did look at it and a lot of money goes to buying up land for environmental groups.  I'm not going to argue the worthiness of the cause but I can say that having the govt spend on an interest groups concern instead of having them hold fundraisers with the wealthy hollywood elite etc isn't the best way to go.

Anyone willing to DL the budget and see where it all goes. It would be a nice project to debate the cuts here.


How much are we talking about in boards and commissions? (0.00 / 0)
Does anyone have a number?

[ Parent ]
commisions (0.00 / 0)
I think this is commissions etc

here's the link:

http://www.ebudget.ca.gov/Revi...

Cant paste the table but here are some I have doubts about:

*Arts Council - $4M
The California Arts Council consists of eleven members, nine appointed by the Governor and one appointed by the President pro Tempore of the Senate and the Speaker of the Assembly. The Council establishes general policy and approves program allocations

*Department of Food & Agriculture $215M
Not sure how this works if its in parallel with FDA or a sub to it etc. I prefer food safety regulations just not sure how they tie in

*Tax Relief - $433M"California homeowners are provided assistance through a $7,000 exemption from property tax. Tax relief also is provided to individuals who agreed to hold their land as open space under the Williamson Act of 1965."
This is worded wrong. I saw this on my tax bill and its $7K deducted from the value of your property. Saving you $70.00.  Talk about out of date. They can yank this IMO. Of course they cant so they should of put a sunset on it. silly legislators.

*Economic Recovery Financing Committee 1.4B
Oddly no link to a description but I can definetely say they aren't doing their job!

*Health & Dental Benefits for Annuitants $1.6B
This program provides funding for health and dental benefit services for retired state employees and their dependents.
The 2012 monthly contribution maximums are $566 for a single enrollee, $1,074 for an enrollee and one dependent, and $1,382 for an enrollee and two or more dependents. Dental care premiums vary by plan and number of dependents.

*CA Commission on Disability Access $400M
A good cause, something America in general does better than Europeans without a doubt. But what does the $400M do. Isnt this something that can be done by a design checklist or something?
*Milton Marks Little Hoover Commission $889M"state's only independent and citizen-based oversight mechanism. It conducts four to five comprehensive reviews of executive branch programs, departments, and agencies each year and recommends ways to improve performance by increasing efficiency and effectiveness with existing resources."
The Commission is composed of two members of the Senate, two members of the Assembly, and nine unpaid citizen members - five appointed by the Governor and four appointed by the Legislature.
I find this one real iffy.



[ Parent ]
State Budget is Easy to Find (0.00 / 0)
There's a web site, www.google.com, that allows you to enter search terms.  I entered "California Budget" and came to www.ebudget.ca.gov, where the state budget is available.

Environmental Spending from the general fund in the 2012-13 budget is $46,000,000 -- out of $91,387,000,000 -- about 0.05% of the state budget.  About $73bn of that budget goes to education (k12 and higher are broken down separately) and "health & human services."  The three areas with significant increases in spending are local tax relief (Up 336%), and k12 education (13.2%)  Higher education and HHS both get cuts while prison spending goes up 10%


[ Parent ]
Prison Spending is Prison Guards (0.00 / 0)
Talk about powerful unions.

[ Parent ]
That should be frozen as should most. N/T (0.00 / 0)


[ Parent ]
School Budget stuff (0.00 / 0)
I'm seeing different figures

http://www.ebudget.ca.gov/Revi...

*Commission on Teacher Credentialing - $45M"The purpose of the Commission on Teacher Credentialing (Commission) is to ensure integrity and high quality in the preparation, conduct, and professional growth of the educators who serve California's public schools. Its work reflects statutory mandates that govern the Commission and research on professional practices."
What does this entail. Administering tests?

*I do see we pay 1.35B to Teacher Reitrement"The state General Fund makes annual payments to the California State Teachers' Retirement System (CalSTRS) in order to reduce the retirement contribution burden on members and school districts.

Effective July 1, 2003, the annual General Fund contribution to the CalSTRS Defined Benefit Program is based on 2.017 percent of the members' creditable earnings of the fiscal year ending in the immediately preceding calendar year. Current law also provides for an additional state contribution when the State Teachers' Retirement Fund has a normal cost deficit or unfunded obligation for benefits in place on July 1, 1990."
http://www.ebudget.ca.gov/Revi...

*We pay $900M to school facilities (I guess excluding bonds)

*Summer School for the arts gets $2M (never heard of that and everyone I know looks at private programs like that)

*State LIbrary - $19M"The California State Library is the state's information hub, preserving California's cultural heritage and connecting people, libraries and government to the resources and tools they need to succeed and to build a strong California."  What is that and howis it better than the internet?

 


[ Parent ]
Environment Protection is 1.3B (0.00 / 0)
Don't know where you got $46M  this link shows its way more than that

http://www.ebudget.ca.gov/Revi...


[ Parent ]
More Pain to Come | 34 comments
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