As California's economic condition continues to grow worse and cash due to run out by February 2009, state legislators are scrambling to come up with a $18 billion package that would increase taxes on personal income, sales, and gasoline. The state is also looking to reduce spending on programs for the poor and education.
The clock is ticking. On January 10, 2009, the budget must be submitted by Governor Schwarzenegger. Will this go without pain to the taxpayer?
California State Deficit Deepens
The Legistative Analyst Office (LAO), California's Fiscal and Policy Advisor, discussed in their November 2008 report that California is undergoing a $28 billion deficit for fiscal 2009-2010. $9 billion is this years' deficit plus a projected $19 billion deficit in 2009-2010.
The LAO report paints two pictures. One component involves unpopular tax increases and the other reduction in government spending.
Tax Component Increases
- 2 cent sales tax increase
- 15% personal income tax increase
- 2% corporate tax increase
Reduction In Expenditures
- Eliminate UC and CSU educational funding
- Eliminate welfare payments
- Eliminate healthcare services
Now I could live with a 2 cent sales tax increase and a 2% corporate tax increase but the others are just unacceptable.
Young Adults Need To Be Educated
Young adults need to attend college to become educated citizens of this state. Without that you are going to find them in the unemployment line if not on welfare further stressing the system. This is not encouraging our future, it is taking two steps back.
Eliminating state educational funding is only going to put more stress on teachers and staff, cause more crowded classrooms and make it difficult for teaching staff to have the tools to provide proper education.
Eliminating Health Issues Is Wrong
Also unacceptable is the cutting of developmental, mental, and in-home support services. Having had taken care of my mother for 8 years with Parkinson's Disease, I know how terribly difficult it is for families to deal with the daily stresses and expenses of in home health care. By eliminating these services, many people are going to be forced to hire outside help if not give up their employment time to take care of their loved ones. With the high cost of health care, very few can afford to do that job mentally and physically day in and day out. Further, this is sending the wrong sign to society for those physically handicapped and impaired. These people are people too and they should not be judged or ignored in society.
Eliminating Welfare Will Cause More Problems
In regards to eliminating welfare payments, that is just ridiculous. Unless the people who are receiving welfare benefits are illegal citizens, just how are the unfortunate going to survive? You are virtually putting them out on the streets resulting in more crime, increasing illegal activities and generating more social unrest. That puts more pressure on local governments to solve the problem.
Government Must Be Held Accountable
Government itself is the source of its own problems. It should be held accountable for its actions and not pass the problem off to the people they serve. If the people are not receiving the benefits of government that matters to them, then there is a serious problem in this nation and proactive solutions to the problems must be addressed before it becomes a runaway train heading for disaster.
One obvious thing is that government has just grown too big and is paying itself too richly. Take a look at any local government payroll (now required by California State Law to disclose) and you will see salaries beyond belief. Some of these salaries were better than private sector compensation. Realize government staff also get healthy benefit and pension plans too.
Has government ever reduced their salary compensation in line in harsh economic times? Or do they just layoff staff? Thats a subtle question because unlike a private sector business, this is one run by the people and should be decided by the people. The problem is, the people aren't paying attention or don't voice their opinions on the matter.
California Cities and Towns On The Verge Of Bankruptcy
Signs of this is happening already. The city of Vallejo filed Chapter 9 bankruptcy earlier this year. The cause? They promised their employees high salaries and benefits which they cannot afford. If that isn't a sign of government overspending I don't know what it is. Government must avoid in the future hiring people belonging to unions. Its as simple as that.
Now I hear about small towns like Isleton and Rio Vista in California looking to head into bankruptcy proceedings. Rio Vista cites employee costs as well as declining property tax revenue.
Issue More Municipal Bonds To Fuel Growth
Whats needed here? The State of California and local governments must move quickly to offer municipal securities to revive our communities. The Fed and State should continue to not tax municipal securities. The Fed must do away with capital gains taxes on these instruments. Yes, use double tax elimination as an investment incentive.
With property valuations falling and unwillingness to cut salary expenditures, do local governments really have a choice than not to reach out for outside investment to stop the bleeding? Running to President Elect Obama and asking for a bailout is an embarrassment to this state. State government failed the people and didnt stay on top of the ball. These people are supposed to be "in-the-know" and quickly resolve problems before they manifest themselves.
About Kerry Kobashi
Kerry is the founder of KerryOnWorld. He lives in Silicon Valley and has worked as an engineer and project manager. He owns Kobashi Computing a consulting company.
