How long until California goes under?

NEW -> Contingent Buyer Assistance Program
[quote author="freedomCM" date=1230184023]good one!



others?</blockquote>


Here are some statistics comparing Texas & California, 2 of the largest states in the union that share a border with Mexico (thus having the same issues with illegal immigration):



A Tale of Two States (Texas and California):



California State Budget 2007 - $131 billion

California State Expenditures per Capita 2007 - $3468



Texas State Budget - 2007 - $35 billion

Texas State Expenditures per capita - 2007 - $1524



California per capita spending is 2.27 times more than Texas. I lived in Texas for more than 10 years and I can tell you that the state ran OK when I was there.



I don't have specifics on where it's bloated but from the per capita spending data, it shouldn't cost more than double on a per person basis to run the state. Early on, Arnold commissioned a report that showed billion of dollars in wasteful spending including hundred of boards in Sacramento with little to do. Nothing ever was done to put a dent into it. For bloated entities, the Prison system, CalTran, LA Unified (supported by the state) come to mind.
 
well, the texas schools run more on local money, iirc, with great funding variations between districts. overall, the quality of their schools is pretty bad. they also pay 4x the property taxes that CA does, with more local function.



it would be more relevant to compare total gov't outlays (state/county/city) for the two places.
 
[quote author="freedomCM" date=1230194248]well, the texas schools run more on local money, iirc, with great funding variations between districts. overall, the quality of their schools is pretty bad. they also pay 4x the property taxes that CA does, with more local function.



it would be more relevant to compare total gov't outlays (state/county/city) for the two places.</blockquote>


So their property tax is roughly equal on a nominal basis, I would guess?



Schools account for 60% of our budget. Until we figure out how to get the Fed to stop the unfunded or underfunded mandates and find a way to address the exploding 'special ed' population, we're doomed. The bureaucracy is out of control. School voucher will help as it frees the parents that care to move their children to a school that cares.
 
[quote author="usctrojanman29" date=1230025507][quote author="Oscar" date=1230023164][quote author="biscuitninja" date=1230006491][quote author="no_vaseline" date=1230004556]The third rail is MediCal. It cannot be contained and cannot be managed. Everything else is a distraction.</blockquote>


Why is it so hard to manage govt. operations. I bet you one good busienssman and a charter to get it done, would work wonders.



It would be interesting to find out what the metrics of operations were.



-bix</blockquote>
It's not hard to manage them, it's hard to finance them. You have no idea what your outlays will be, only a vague idea of what your budget will be, and your source of revenue is entirely dependent on tax revenues. So, in times of need, when your expenditures will be their greatest, your income will be at it's lowest. Add in a guarantee of service for specific ages and income levels and the cost of labor (either union wages or outsourcing to contractors) and you have a ticking time bomb. California has further limited it's options by creating tax laws that turn the whole process into a Gordian knot. What's worse is that everyone in the government is fighting for their piece of the pie, whether for political power reasons or financial viabitity or just plain self-interest. As long as protecting those things is more important than getting the budget under control, nothing will get changed.



Short of massive changes to both tax laws and spending requirements, California's bonds are worth less than the paper on which they are printed, and that includes every city and county in the state.</blockquote>
That doesn't sound good for muni-bond holders.</blockquote>


It isn't, and even worse for the CDS writers.
 
[quote author="waiting2buylater" date=1230129935]California has such a bloated government workforce and its inefficiency is legendary. Arnold is talking about taking away 2 of the 14 paid holidays plus some unpaid leaves and the union hacks are already screaming. How about everyone in state government takes a 10% salary cut. Wouldn't that go a long way in reducing the deficit?



I am so disappointed with Arnold. Instead of "blowing up the boxes", he added more of the same boxes and increased the size of the government probably more that Grey Davis. We just have a bunch of losers running our state.</blockquote>


Arni is furloughing all rank and file state workers two days per month, the equivalent of about 9%.
 
[quote author="awgee" date=1230209690][quote author="usctrojanman29" date=1230025507][quote author="Oscar" date=1230023164][quote author="biscuitninja" date=1230006491][quote author="no_vaseline" date=1230004556]The third rail is MediCal. It cannot be contained and cannot be managed. Everything else is a distraction.</blockquote>


Why is it so hard to manage govt. operations. I bet you one good busienssman and a charter to get it done, would work wonders.



It would be interesting to find out what the metrics of operations were.



-bix</blockquote>
It's not hard to manage them, it's hard to finance them. You have no idea what your outlays will be, only a vague idea of what your budget will be, and your source of revenue is entirely dependent on tax revenues. So, in times of need, when your expenditures will be their greatest, your income will be at it's lowest. Add in a guarantee of service for specific ages and income levels and the cost of labor (either union wages or outsourcing to contractors) and you have a ticking time bomb. California has further limited it's options by creating tax laws that turn the whole process into a Gordian knot. What's worse is that everyone in the government is fighting for their piece of the pie, whether for political power reasons or financial viabitity or just plain self-interest. As long as protecting those things is more important than getting the budget under control, nothing will get changed.



Short of massive changes to both tax laws and spending requirements, California's bonds are worth less than the paper on which they are printed, and that includes every city and county in the state.</blockquote>
That doesn't sound good for muni-bond holders.</blockquote>


It isn't, and even worse for the CDS writers.</blockquote>
That's just dandy, bad enough that all those CDSs were written on I-banks and alike but now we'll have to deal with the fallout from these time bombs when these cities/counties/states default on their debt?
 
[quote author="freedomCM" date=1230194248]well, the texas schools run more on local money, iirc, with great funding variations between districts. overall, the quality of their schools is pretty bad. they also pay 4x the property taxes that CA does, with more local function.



it would be more relevant to compare total gov't outlays (state/county/city) for the two places.</blockquote>


I went to high school in Houston in a middle class neighborhood and the education was fine. Recent SAT scores didn't show much of a difference between the 2 states so I don't agree with your assessment about the quality between the 2, on average. The TX schools are funded by the state, local property taxes and federal fund, pretty similar to CA.



The TX property tax rate is between 3% to 3.5% depending on where you live. Home price is about 1/4 to 1/3 of California price so Texans as a whole probably pay less or the same property tax in actual dollars per household.



The biggest difference is that Texas does not have a state income tax (compares to 9.3% top rate for CA). Californians endure one of the highest tax burden in the nation

and what do we have to show for it?



No matter how you look at it, if it takes CA 2.27 times more money to provide basic services than TX, the system is <strong>bloated </strong>and being run by incredibly incompetence politicians and people.
 
[quote author="waiting2buylater" date=1230272213][quote author="freedomCM" date=1230194248]well, the texas schools run more on local money, iirc, with great funding variations between districts. overall, the quality of their schools is pretty bad. they also pay 4x the property taxes that CA does, with more local function.



it would be more relevant to compare total gov't outlays (state/county/city) for the two places.</blockquote>


I went to high school in Houston in a middle class neighborhood and the education was fine. Recent SAT scores didn't show much of a difference between the 2 states so I don't agree with your assessment about the quality between the 2, on average. The TX schools are funded by the state, local property taxes and federal fund, pretty similar to CA.



The TX property tax rate is between 3% to 3.5% depending on where you live. Home price is about 1/4 to 1/3 of California price so Texans as a whole probably pay less or the same property tax in actual dollars per household.



The biggest difference is that Texas does not have a state income tax (compares to 9.3% top rate for CA). Californians endure one of the highest tax burden in the nation

and what do we have to show for it?



No matter how you look at it, if it takes CA 2.27 times more money to provide basic services than TX, the system is <strong>bloated </strong>and being run by incredibly incompetence politicians and people.</blockquote>




Prisions... Texas actually executes people, how much is death row costing CA, and for what? Another comparison I read is that 2/3 prisoners entering prison are parole violaters in CA, vs 15% for Florida. No state sends as many parole violaters back to prision as CA. Apparently, the prison guards have some sway over parole agents in CA and more prisoners = more work. Not to mention it costs $45k/yr to house and feed a prisoner in CA vs $25k in TX. The contract Gray Davis stuck the State with in return for payola to his campain by the guards union is criminal. Arnold at least refuses to renew the contract and the guards are currently working without a contract.
 
[quote author="freedomCM" date=1230347103]... he broke out the biggest increases in the CA budget in the arnold times... </blockquote>
Considering that it was a budget crisis that gave Arnold the governor's job, perhaps limiting the argument to only those increases occuring under his watch isn't going to be very helpful. Attempting to reframe the converstion to fit your own ideals on the proper role of government, taxes, and social justice does absolutely nothing to shed more light on the budget problems facing California; it is, in fact, the exact sort of behavior that caused the problems in the first place. Your comments, both in their content and their leading questions, do nothing to address the problem that California is spending more than it is collecting. Rather, you are attempting to redefine the issues rather than stepping back and looking at the problem as a whole.



There can be no sacred cows, just as there can be no villians or heroes. The amount being spent must be cut or the amount being collected must be increased or both. Considering that California already has some of the highest tax rates, some of the strictest and expensive regulations, and employs both sales and income taxes... I don't really see how it's possible to do anything other than across the board cuts in every section of the budget. Attempting to raise taxes in the current economic climate will only result in less taxes being collected, capital flight, and another exodus by the same businesses and individuals paying a large portion of the taxes now. It seems to me that the only "fair" thing to do is ensure that all sectors suffer equally until the budget reaches equilibrium with revenue.
 
Its nice and all that you frame your criticism in such a pleasant manner, but the whole "only fair thing" suggestion of accross the board cuts is pretty weak.



prisons? release 10% of the population?



CHIPs? cut them 20%?



aid to local gov't? cut the police and fire 20%?



k-12? increase class size by 20%? decrease higher ed enrollment 20%?



medical care? cut by 20% vaccinations? in home aids that keep seniors out of nursing homes? throw 20% of the people in nursing homes out?
 
[quote author="freedomCM" date=1230362923]Its nice and all that you frame your criticism in such a pleasant manner, but the whole "only fair thing" suggestion of accross the board cuts is pretty weak.



prisons? release 10% of the population?



CHIPs? cut them 20%?



aid to local gov't? cut the police and fire 20%?



k-12? increase class size by 20%? decrease higher ed enrollment 20%?



medical care? cut by 20% vaccinations? in home aids that keep seniors out of nursing homes? throw 20% of the people in nursing homes out?</blockquote>
That would be the effect of "across the board" cuts, no? What's the alternative? Shall we release 40% of the prisoners so we can keep people in nursing homes from having to move in with their kids or cut the payments to nursing home staff by 25%? Shall we cut fire and police by 40% so we can keep class sizes at current levels? Shall we continue to fund AQMD to the detriment of the next class of college students? Shall we just confiscate enough private wealth from California citizens to bridge the gap each year until the economy recovers?



Your approach implies that there is one "A-ha!" moment coming in which the culprit responsible for the current budget problems is exposed, dealth with, and Caliornia will suddenly find itself in the black. The reality is that there are numerous culprits, from homeowners paying 1980's level property taxes to schools automatically getting a set percent of any budget and mandatory increases to boot, from an ever-expanding network of social services to an ever-increasing pool of unionized government workers, highly paid specialists, and outsourced contractors.



My approach forces everyone to eat the same amount of excrement in order to keep some level of government services functional and California solvent. As much as I would like to believe that the world's 8th largest economy could fund everything it promises to it's inhabitants (legal or otherwise), the FACTS have shown that this is not really possible in almost ideal situations, much less the economic Armageddon now unfolding.



Rather than just take potshots at the positions of others, why not venture forth with your own solution?
 
As an alternative to an across-the-board cut, I suggest that you take a look at a directory of state agencies, and ask the question, "Do we REALLY need this?" for each agency or board. Do we need both an "Apprenticeship Council" and a "Division of Apprenticeship Standards" or could they be combined? Do we need to spend money on a "Center for Analytical Chemistry" and a "Professional Fiduciary Board" and a "Bureau of Electronic and Applicance Repair" or are these things that could be left undone in an era of fiscal responsibility? It is true that the elimination of one or two of these councils, boards, and agencies will not have a dramatic impact on the budget deficit, but their creation (and eternal life) in the thousands is how we got into this mess. When people talk about budget cuts, they only think about the big-ticket items that really are essential to civilized living, and therefore are resistant to budget reduction. But we are just as certainly being bled to death by a thousand mosquitoes, one drop at a time. Also, some of these bodies simply duplicate work done at the federal level, and we end up with slightly different regulations than other states. That makes doing business in California that much more difficult.
 
GI,



That's a wonderful idea. Unfortunately, the state legislature has to pass a budget for the Governor to sign or veto. That means that those same legislators responsible for funding (and in some cases, creating) those state agencies would have to be the ones to disband and/or defund them. I'm not saying it's not possible, just unlikely; if the current legislature was inclined to be fiscally responsible, this crisis would have been resolved weeks ago. Either way, the mosquitoes have their own lobbyists and would be sure to do their level best to portray any cut to their employers budget as akin to forcing school kids to be taught by prison inmates while the homeless are euthanized and welfare recipients are required to donate organs to Medical patients. As I said in a previous post, everyone is fighting for their piece of the pie.
 
Oscar continues to be my favorite new IHB member for bringing solid, fact based posts.



Previous to Proposition 13, I'm not aware of the last deficit the state had, but it has been in deficit more years than not since 1977. I continue to contend that we need to readdress Prop 13. All the stuff the anti Howard Jarvis folks claimed would happen indeed came true. Property taxes are too low and the state is too heavily funded by the less stable income tax and sales tax cash flows.



And to those who say "Just do a line by line audit and cut out the waste", <a href="http://www.cnn.com/2003/ALLPOLITICS/10/08/recall.main/index.html">I'm still waiting for Arnold to make good on his #1 2003 campaign promise. I'm not waiting up.</a>
 
[quote author="GoIllini" date=1230181270][quote author="freedomCM" date=1230170517]I remember we had a thread about this before, but am still curious:



For all of you who say that the state payroll is "bloated", tell us what/who exactly you would cut?</blockquote>


Water agencies... Here in Irvine, we get our water from Irvine Ranch Water District. IRWD is one of about 28 members of the Municipal Water District of Orange County. MWDOC is one of 24 members of the Metropolitan Water District of Southern California. MWDSC is one of the member agencies (others are located in the desert areas to the east of the Los Angeles basin) that allocates California's share of water from the Colorado River. Each of the other states in the river's basin has it's own set of agencies that administer its own share of water. Each agency identified above has it's own Board of Directors (5 to 42 members of each board, depending on which agency), General Manager, General Counsel, Board Secretary, Public Information Officer, lobbyists, and web site. Without reducing the quality of service, or laying off any worker who designs or constructs or maintains the water system, or sends out the bills, or answers the phone when you have a question -- can't we do without all the "Directors" and their minions? </blockquote>


Considering it is a local based group that isn't funded by the state (it's funded by assessment paid by the end users), I don't see how this will reduce 'bloating'.



My dad was a member of two water boards in two different irrigation districts. He was not paid.



Once again, another example of how the general public (armed with a pretty idea but 1/10 of the facts and a ballot) is a dangerous thing. The voters get exactly what they deserve every election.
 
[quote author="no_vaseline" date=1230429304]that we need to readdress Prop 13. </blockquote>


maybe we could roll it back on units which are not primary residences. but I doubt it. wealthy old people vote, and corporations buy political influence. the younger generations who don't benefit directly from it are outnumbered and generally oblivious to the issues involved.
 
[quote author="usctrojanman29" date=1230223275][quote author="awgee" date=1230209690][quote author="usctrojanman29" date=1230025507][quote author="Oscar" date=1230023164][quote author="biscuitninja" date=1230006491][quote author="no_vaseline" date=1230004556]The third rail is MediCal. It cannot be contained and cannot be managed. Everything else is a distraction.</blockquote>


Why is it so hard to manage govt. operations. I bet you one good busienssman and a charter to get it done, would work wonders.



It would be interesting to find out what the metrics of operations were.



-bix</blockquote>
It's not hard to manage them, it's hard to finance them. You have no idea what your outlays will be, only a vague idea of what your budget will be, and your source of revenue is entirely dependent on tax revenues. So, in times of need, when your expenditures will be their greatest, your income will be at it's lowest. Add in a guarantee of service for specific ages and income levels and the cost of labor (either union wages or outsourcing to contractors) and you have a ticking time bomb. California has further limited it's options by creating tax laws that turn the whole process into a Gordian knot. What's worse is that everyone in the government is fighting for their piece of the pie, whether for political power reasons or financial viabitity or just plain self-interest. As long as protecting those things is more important than getting the budget under control, nothing will get changed.



Short of massive changes to both tax laws and spending requirements, California's bonds are worth less than the paper on which they are printed, and that includes every city and county in the state.</blockquote>
That doesn't sound good for muni-bond holders.</blockquote>


It isn't, and even worse for the CDS writers.</blockquote>
That's just dandy, bad enough that all those CDSs were written on I-banks and alike but now we'll have to deal with the fallout from these time bombs when these cities/counties/states default on their debt?</blockquote>


<a href="http://www.bloomberg.com/apps/news?pid=20601109&sid=aNbSSaVZXZ.M&refer=home">interest rate swaps on munis</a>
 
You must log in or register to reply here.
Back
Top