cdog
11-16-2007, 08:48 AM
Looks like I got out just in time.:)
http://www.dailybulletin.com/ci_7476295
California can't keep borrowing
Article Launched: 11/15/2007 09:39:11 PM PST
OUR VIEW: Governor and Legislature must cut the state's ballooning deficit without delay.
Here we ago again.
State Legislative Analyst Elizabeth Hill delivered the bad news on Wednesday: California is sinking deep into red ink.
Certainly, it didn't come as a complete surprise. We all know that the once-hot housing market has gone cold and credit is being crunched, resulting in lower receipts of sales taxes, income taxes and property taxes than had been projected. Corporate income taxes are lower than expected, too. High prices for gasoline and other consumer goods are reducing sales taxes further.
Hill foresees a $10 billion deficit in the state budget by next year, based on projections of spending growing 50 percent faster than revenues. It hasn't helped that the state spent $140 million to fight the recent wildfires, underestimated Indian gaming revenues by $200 million, failed to budget for a $250 million raise for prison guards, and had to pay back a $500,000 raid on the teachers' pension fund.
The good times provided by the housing market on the way up were enough to stem the state's borrowing for a while, but leaders - once again - didn't put anything aside for the inevitable downturn.
The danger is a reprise of the soaring deficits that led to former Gov. Gray Davis' ouster in the wake of the dot-com bubble's bursting. When Gov. Arnold Schwarzenegger replaced the recalled Davis, he vowed to end the
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state's structural deficit - but that hasn't happened.
Hill told legislators they need to "start now" cutting spending and raising revenues. "All the easy solutions are gone," she said.
She's right. The Republicans in the Legislature block any tax increases while the Democrats resist any cuts. But something is going to have to give on both sides. We can't keep borrowing to fill our budget gaps, passing the problem off to our children and grandchildren. It's outrageous that we already pay more in interest on debt each year than we spend on the University of California system.
The governor earlier this month ordered all state agencies to prepare to cut their spending by 10 percent. Hill told legislators they should suspend cost-of-living increases for state programs, roll back recently created programs, eliminate tax breaks and raise taxes.
What's really needed for the long haul is a complete reform of the state's tax system so that revenues don't swing so wildly up and down. California's boom and bust cycles in personal incomes wreak havoc with the state budget. Of course, that kind of reform would have been a lot easier when revenues were soaring than now, when they're going the other direction.
But right now, the governor and Legislature are going to have to do some actual financial problem-solving for a change.
http://www.dailybulletin.com/ci_7476295
California can't keep borrowing
Article Launched: 11/15/2007 09:39:11 PM PST
OUR VIEW: Governor and Legislature must cut the state's ballooning deficit without delay.
Here we ago again.
State Legislative Analyst Elizabeth Hill delivered the bad news on Wednesday: California is sinking deep into red ink.
Certainly, it didn't come as a complete surprise. We all know that the once-hot housing market has gone cold and credit is being crunched, resulting in lower receipts of sales taxes, income taxes and property taxes than had been projected. Corporate income taxes are lower than expected, too. High prices for gasoline and other consumer goods are reducing sales taxes further.
Hill foresees a $10 billion deficit in the state budget by next year, based on projections of spending growing 50 percent faster than revenues. It hasn't helped that the state spent $140 million to fight the recent wildfires, underestimated Indian gaming revenues by $200 million, failed to budget for a $250 million raise for prison guards, and had to pay back a $500,000 raid on the teachers' pension fund.
The good times provided by the housing market on the way up were enough to stem the state's borrowing for a while, but leaders - once again - didn't put anything aside for the inevitable downturn.
The danger is a reprise of the soaring deficits that led to former Gov. Gray Davis' ouster in the wake of the dot-com bubble's bursting. When Gov. Arnold Schwarzenegger replaced the recalled Davis, he vowed to end the
--------------------------------------------------------------------------------
Advertisement
--------------------------------------------------------------------------------
state's structural deficit - but that hasn't happened.
Hill told legislators they need to "start now" cutting spending and raising revenues. "All the easy solutions are gone," she said.
She's right. The Republicans in the Legislature block any tax increases while the Democrats resist any cuts. But something is going to have to give on both sides. We can't keep borrowing to fill our budget gaps, passing the problem off to our children and grandchildren. It's outrageous that we already pay more in interest on debt each year than we spend on the University of California system.
The governor earlier this month ordered all state agencies to prepare to cut their spending by 10 percent. Hill told legislators they should suspend cost-of-living increases for state programs, roll back recently created programs, eliminate tax breaks and raise taxes.
What's really needed for the long haul is a complete reform of the state's tax system so that revenues don't swing so wildly up and down. California's boom and bust cycles in personal incomes wreak havoc with the state budget. Of course, that kind of reform would have been a lot easier when revenues were soaring than now, when they're going the other direction.
But right now, the governor and Legislature are going to have to do some actual financial problem-solving for a change.