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Politics

Dominoes. California Style.

Dominoes. California Style.

Next!The City of San Bernardino has become the third city in California to file for bankruptcy protection in the past two weeks. Essentially, the city was at a point where they weren’t going to be able to meet their payroll obligations.

Stockton filed for bankruptcy protection in June. With a projected $26 million budget deficit, Stockton became the biggest city in the United States to throw in the towel.

The city of Mammoth Lakes, in a flurry of patriotic exuberance, filed for bankruptcy protection  on July fourth.  The city, with a $19 million dollar annual budget, lost a $30 million judgment in court  that has grown to $43 million (interest and legal fees).

More astronomical: Los Angeles has a $238 million dollar deficit this year. But with a budget of $7 billion they face an unfunded pension liability of $27 billion.

Twenty.seven.billion.dollars.


The next domino?

California is Los Angeles, writ large. It is also the United States, writ small. States cannot file bankruptcy. States also cannot print money like the federal government. Something will have to give.

If only California had a $42.6 billion,  one time projected  $98 billion, sorry scratch that, $65 billion high speed rail project that can get someone from San Francisco to Los Angeles in 2 hours and 40 minutes with a ticket that costs more than an airline flight that could do the same job in an hour, why, salvation would be right around the corner.

Faster than a speeding bankruptcy

A Stick Up, or A Pay Off

A Stick Up, or A Pay Off

Sixteen billion dollars. The California projected deficit for 2012-2013. California doesn't want you

Sixteen billion. The California deficit is just three billion short of the entire budget for the state of Colorado, at nineteen billion. The California deficit is three times larger than the entire budget of the state of New Mexico, at $5.6 billion.

But it is not the politicians’ fault! Stupid fiscal projections!

Governor Brown’s solution is a combination of income tax increases on high earners, and a quarter cent sales tax increase, being put before the voters in November 2012.  The nine billion dollars generated by this plan doesn’t cover the projected budget deficit. And Governor Brown is now promising to send some of the nine billion dollars to education as a funding ‘increase’.

So, let’s recap

$9billion
$16billion

-$7billion

Wait: Don’t forget about the education funding increase. I’d go ahead and subtract the education funding increase from the negative seven billion dollars, but as the state of California has demonstrated, math is hard.

In light of the new budget crisis, the Governor has released his May revised budget, along with an implicit threat: Pass his tax measure and and he’ll give the schools more money. Fail to pass his tax measure, and he cuts education funding to the bone!

So the campaign is about taking more tax payers’ dollars. Or about paying off your vote with education funding.

So, pass the tax increase measure, or (BOO!!!) the kid gets it! Gimme! Or the kid gets it.

 

When anyone can spend, it really doesn’t matter where the money comes from, as long as it comes from someone else.

When anyone can spend, it really doesn’t matter where the money comes from, as long as it comes from someone else.

California has a long history with the ballot initiative process. Most famously, Proposition 13’s passage in 1978 heralded the Tax reform wave that swept the nation in the 1980s. Proposition 13 however, impacted  how the state collected revenue, but it did not impact how the state could spend tax dollars.

The larger history of the California referendum process involves the the spending of state dollars. Bond sales feature prominently in these these ballot initiatives, always couched in a “Hey, wouldn’t it be great if we could…” sentimentality.  Stem cell research. High Speed Rail. Mandatory School Spending. California First 5 (Proposition 10).

Frequently, these ballot measures result from the California Legislature’s abject failure to do their jobs. If there is a remote possibility that legislation will not pass the assembly of the elected representatives of the people, there is a mad sprint to the ballot. Framing an issue that couldn’t pass the review of the legislative electoral body as the “will of the people” in a ballot measure proved to be successful in enacting desired legislation. Further, this has the added benefit of shielding legislators from being responsible for their votes.

Often attempted, but never successful in the modern California political era, several tax increase measures are targeted for the 2012 California ballot. Governor Brown has modified his income tax increase (higher taxes on millionaires, i.e. $250K earners – and a quarter cent sales tax increase) to bring a competing tax increase measure into his efforts. Los Angeles lawyer Molly Munger’s efforts, which she has already funded to the tune of  nearly $6 million (and is prepared to spend much more on) is looking to fund education by increasing income taxes on all Californians.

Peter Schrag notes in California Progress Report, that Munger refuses to step aside so that Brown’s tax increase measure can continue unfettered by the competing measure. However, as Schrag observes

The gimmicks in Brown’s proposal are not all bad. In California’s strait jacketed fiscal system and its dysfunctional initiative-driven governmental processes, almost every inch of wiggle-room is probably a good thing.

There are several assumptions here. Tax increases regularly fail as a ballot initiative. Competing tax increase initiatives would be bound to fail. However, Brown, as he has proven in two centuries, is an effective campaigner. If he ties some spending reform to his offering, it might be enough to get some buy in from average Californians. Coupled with the concept of taxing “someone else“, those insensitive millionaires who simply don’t pay their fair share, Brown might garner enough movement in the electorate to get his measure through a general election. Especially since California’s budget gap continues to grow apace. Further bad numbers in respect to the budget deficit as June approaches might convince enough voters that something must be done to solve the decade long budget shortfall. If that something is a tax increase that the voter can inflict on someone else,  a villain that Brown can define, like a millionaire, it makes it all the more palatable. Ignore, for the moment, that Governor Brown’s Tax measure as currently constituted will not even cover the existing deficit.

Munger’s plan, while targeting all Californians, effectively pulls at the heart strings of funding education. If there has been one thing Californians have pulled the lever for via ballot initiates, it’s Education funding. Never mind that regardless of any increases California has implemented in  education funding, more dollars end up paying for administrators, and the percentage than sees its way to teachers, or measurably, into the classroom, the state’s educational ranking nationally continues to fall.

What happens, if both initiatives pass?

California is a Republic, not a direct democracy. When citizens have an opportunity to spend tax dollars via the ballot initiative, they have and will continue to do so. When Legislators can abdicate their responsibility to spend California’s tax dollars with measured restraint, laying the blame at the feet of the voters, they, too, have and will continue to do so. A not too insignificant portion of California’s budget morass can be found in bond repayment obligations, generally inflicted by well intentioned voters via the ballot initiative.

Pundits, lobbyists, political activists and politicians bemoan California’s broken initiative process, while encouraging more dysfunction via the very same process. Perhaps it is time to look at reforming the ballot initiative process to exclude spending. The responsibility for spending has always laid with the legislature. Why not amend the California constitution to prohibit spending measures from the ballot and leave the initiative process simply for reforms to the Constitution?

 

Darrell Steinberg wants a tax increase: But 2 out of three are bad.

Darrell Steinberg wants a tax increase: But 2 out of three are bad.

In a Sacramento Bee article, California Senate President Pro Tem Darrell Steinberg (D Sacramento) notes that the possibility of sending competing tax increase measures before the voters is fraught with peril. Make no mistake, Senator Steinberg wants a tax increase to pass. Because California’s highest earners aren’t paying enough?

Steinberg said it “scares the heck out of me” that if the other tax measures remain on the ballot, Brown’s might fail. For Brown, he said, it’s a “tough time” to be governor.

“In some ways the system is designed, especially in the modern era, it invites a lot of chaos,” he said.

It’s a little bit of direct democracy run wild.”

Spending initiatives passed by California Voters are part of the California Budget problem. But Senator Steinberg is speaking out of both sides of his mouth. Spending (and taxing),  is the responsibility of the Legislature. Senator Steinberg wants to abdicate his responsibility to “the will of the people”.  He would prefer not to be holding the bag, voting for a tax increase in the Senate, especially if it barely passes. Passing a tax increase by a Democrat majority would mean that he would effectively own it. Much easier to bestow that ugly mantle of ownership onto the voters.

So it’s convenient to use the electorate to do what the Senator has not the will, (nor the support) to so himself, but competing measures are direct democracy run wild. Which is it Senator? You can’t have it both ways. Either the initiative process is democracy at it’s purest, or it’s chaos.

But indicative of the all the competing tax increase initiatives, is the concept of class warfare. “We need more money, so I ask you to vote to take it from someone else.” The idea that the government can choose who to make pay for reckless spending should be frightening to one and all. That they elect to couch it in terms of “making millionaires” pay higher taxes is just populist pablum. If the support for higher taxes is present in the electorate, then just pass a tax increase in the legislature, and have the Governor sign it into law. But instead of acting boldly, and because they know there isn’t any real support for tax increases, regardless of who would have to pay for it, they want to leave the smoking gun in the hand of the voter. They want to profit from robbing the citizen, but have the voter pull the trigger, and face the consequences. The California elected class are simply Street Gang Lords – they invite the crime, and the chaos, but choose to hide behind the voters, their gang, when it comes time to pay the cost of the crime. Cowards.

The Teenage Mindset: Go sit in the corner.

The Teenage Mindset: Go sit in the corner.

Saw this in the comments at The Bleat today.

“We even have an entire political party arguing that telling someone to pay for their own stuff is the same as telling them they can’t have it – the very essence of the teenage mindset.”

Keep it simple. Just because I don’t want to pay for something you want, doesn’t mean I don’t want you to have it. I just don’t want to pay for you to have it.

Stop worrying about what I want to pay for, and go worry about how you are going to pay for what you want.

How to build a monster, or, How California Government feeds on itself.

How to build a monster, or, How California Government feeds on itself.

Dan Walters, in the Sacramento Bee points out the obvious about government, and the impacts of it’s intrusion into the lives of it’s citizens:

Every new regulatory or taxation policy immediately spawns an array of financial stakeholders who then hire lobbyists and political consultants, distribute money to political policymakers, and seek self-serving applications of government power.

They may be a subsidy from a local government redevelopment agency, a tax loophole, a regulatory crackdown on a competitor, a change in the coastal zone’s regulatory boundaries, or monopoly licensing status, to name but a few examples.

It is so obvious, the buying of votes with the voters’ own money, the pointed pandering at the expense of the people, the naked quest for power, it should make one ill.

The Capitol’s chief activity is, in fact, directly or indirectly taking money from someone and giving it to someone else. And one of its dirty little secrets is that the hundreds of millions of dollars spent on lobbying, contributions and other tools of persuasion pale in comparison to the many billions of dollars that politicians can dispense.

Walters concludes with an example of one of the laws where the Legislature attempts to give exemptions to those who have curried political favor:

If CEQA is a good law, it should be good for everyone, not just those who lack the political clout to gain some relief from its restrictions and requirements.

And if CEQA is too onerous, it should be changed, not merely riddled with special-interest loopholes.

California cries about jobs, while killing job creators

California cries about jobs, while killing job creators

California Unemployment is going up. Not that it wasn’t already up. It has hovered near  12% for well in excess of a year. And it certainly isn’t going to get better soon.

California has a functional $9 billion budget deficit. Meaning that functionally, because of spending mandated via legislation, and the Californian public’s absurd predisposition of spending through bond initiatives, the state is committed – by law – to spending $9 billion a year more than it takes in.

How does the state raise money – er, sorry- revenue? Taxes. Property and, primarily, income taxes. The fewer people working, the less taxes come in, the more dollars go out for Unemployment Insurance (which is already $20 Billion in debt, but that’s yet another story). So fewer people working is extra-super-double-bad for the budget deficit.

But here is an example of a California company that is growing. Waste Connections is one of the larger waste management companies in the country. They are a national business, in that that they have acquired other companies, and operate in 30 states. It is the  Sacramento region’s largest publicly trade company, employing about 200 people in it’s Folsom CA office. They figure that they bring about $100 million to the local economy through various taxes, and charitable giving.

And right now, they are negotiating with Texas to move from Folsom, to Austin, Houston, or Woodlands.

Pivotal in Waste Connections’ decision to relocate to Texas, is whether a piece of legislation passes the California legislature that would allow them to move a higher volume of non-local waste to a landfill in Solano County, where they have made a $100 million dollar investment.

But it is the pervasive attitude of California government, at the State, and local levels, along with the environmental lobby, that frames the story of how California’s economy became the disgrace that it is today. In an environment where California cannot grow new jobs, it is insistent on even chasing away the jobs that are already here.

Kelly Smith, attorney for an environmental group that opposed the bill and Waste Connections’ Solano County expansion, said he hopes the company’s potential exit would result in new landfill owners who are more willing to work with the local community. “I don’t think anybody is going to miss a couple of accountants in Folsom,” said Smith, who represents Sustainability, Parks, Recycling and Wildlife Legal Defense Fund.

Lawyers. It’s always lawyers.

Mr Smith, how many jobs have you created? Mr. Smith’s solution is to run a growing local company out of the state, in the hopes, *hopes!* that other owners would submit to his green beliefs. Waste Connections has already contributed more to local communities through jobs and charitable giving than you or your feel-good, do-gooder-ism cohorts could hope to contribute in your racketeering, hold-up-artist lifetimes.

Don’t think “anybody is going to miss a few accountants in Folsom”? There are 200 employees in the Waste Connections offices in Folsom. With families. That spend money locally. That pay taxes. Taxes that help hold businesses ransom through governmental edict, so that  flim flam shyster dirtbags like yourself can manipulate companies with your gangster tactics into either paying up or leaving. Have you created 200 jobs? Can you? Can you manufacture them on command? Because Folsom will be missing them, and could use those 200 jobs.

At this point, with our state collapsing in upon itself, we cannot afford to wantonly cast aside any jobs. We don’t have the luxury of selecting only those jobs that meet the narrow minded approval of the self appointed arbiters of Gaia. California should not be in the enterprise of chasing away  businesses, picking winners or losers. We need to foster business and employment.

Margaret Thatcher wasn’t so far from wrong when she quipped: “The trouble with socialism is that eventually you run out of other people’s money’.” It’s even harder to run out of other people’s money when they’ve taken it and moved to Texas.

The path back to California largess is though employment. There is no other way.

Once Upon A Time, A Golden State

Once Upon A Time, A Golden State

Victor Davis Hanson posits at Pajamas Media on the past state of California’s greatness, and our lack of attribution to those who carried the burden of achieving it:

5) I can never quite understand the writ against our ancestors.

I came into this world in 1953 replete with electricity, and modern medicine at the dawn of the age of antibiotics and polio vaccines, and relative peace — no Japanese imperialism, or German Nazism, no death from tetanus. Who gave us all that and at what price? California had then a wonderful university system, impressive freeways, a lean and hard working public sector, and vibrant industry. We were given so much and yet appreciate so little of that inheritance, citing the sins of past generations, less commonly the gifts they bestowed. I said “gifts” because if they were not benefactions, we would have blown up Hetch-Hetchy dam, turned off the juice from the Morro Bay or Moss Landing power plants, or passed on driving on the 99. Has our generation improved test scores, or created safer streets? Is air travel so much better than forty years ago? When one walks into the DMV, or the county assessor’s office, are the employees so much more polite and competent than in the past?

As to VDH’s assessment of California, he’s on point (except to referring to Highway 99 which runs near his Fresno farm homestead as The 99. Only folks from southern California call a highway or interstate “The”).

I was born in 1967, and by the time I was in elementary school the first coloring of the California retreat was manifest. You could still point to the greatness of the California largess, but the cracks were there, and hard to ignore.

Basically, when you live in the land of milk and honey, everyone after the first generation whom built it, or the second generation that saw it being built, expects nothing less, because it was given to them, not because they worked to achieve it. Then the campaign becomes full-throated to provide for citizens, and the reasoning is twofold:

  1. People like it when things are given to them, and paid for by someone else.
  2. Giving people something, and having someone else pay for it, is a source of power, and wins votes.

    So here we are today in California: bad schools, a crumbling infrastructure, business crushing regulation, a built-in functional $12billion budget hole, and no solution in sight. The most important goal now in California budgeting is The Safety Net.

    We used to be something.

    Sad, isn’t it?

    San Francisco considers new tolls.. to cross town.

    San Francisco considers new tolls.. to cross town.

    A bit of Friday morning delight. From the Sacramento Bee:

    San Francisco transportation officials are considering charging drivers to cross downtown and the city’s southern border with San Mateo County.
    Among the ideas under consideration is a $6 charge to leave the city’s northeast sector, which includes the Financial District, weekdays between 3:30 and 6:30 p.m.
    Hey – kind of like a ransom, no? The Toll receipt should look just like a ransom note, using letters cut out of news papers and magazines!
    I believe that we have discovered the key to solving California’s budget problems. We just need to charge people to leave the state. A big ‘ol toll booth on the eastern terminus of Highway 50 At the Y in South Lake Tahoe. Why not a Floriston Wall on Interstate 80, similar to the one we lost in Berlin?
    We can charge for visitors too! Get ’em coming and going!
    While we’re at it, let’s get rid of those pesky Red Light Cameras. Let’s just charge implement a Red Light Tax Fee. Everyone pays! Those things cost money to run, you know.
    What about those that don’t use cars? That’s a lot of potential revenue that we’re leaving on the table. Very well, time to initiate the Cross Walk Toll. That will be used in conjunction with the Just Standing There Toll.
    I don’t know why our State Budget was so late, when the streets here are paved with gold.

    Photo by Noah Berger / San Francisco Chronicle
    Doctor Zero: “Hopelessness and Stasis”

    Doctor Zero: “Hopelessness and Stasis”

    The soulful stylings of Doctor Zero, on the President’s September 20, 2010 Townhall Meeting in Washington D.C.

    Responding to a question about the perception of business leaders that his policies are hostile toward them, Obama field tested a new meme about how the recession has really been over for a year:

    Well, first of all, even though economists may say that the recession officially ended last year, obviously for the millions of people who are still out of work, people who have seen their home values decline, people who are struggling to pay the bills day to day, it’s still very real for them.

    And I think we have to go back to what was happening when I was first sworn in as the 44th President of the United States. We went through the worst recession since the Great Depression. Nothing has come close. In fact, if you look at the consequences of the recession in the ‘80s, the recession in the ‘90s, and the recession in 2001, and you combine all three of those, it still wasn’t as bad as this recession that we went through.

    Translation: Experts say we’re all being irrational.  The recession’s been over for a year!  We should stop being such ingrates to the dazzling heroes who saved us from the Bush Great Depression, and get back to our assigned duties of creating jobs and pumping out tax revenue.  By next week, this meme will go swirling down the memory hole, since it will dawn on Obama that he’s insisting the recession ended before he and his Congressional accomplices swindled us out of that trillion-dollar “stimulus.”

    The President has a problem with allowing people to keep what they have earned. The President’s considered position is that it is all well and good to spend $800 billion dollars, that our children will have to pay back, on a stimulus package whose effectiveness is clearly in doubt, but it is criminal to allow citizens to keep $700 billion dollars of their own wealth. Got it!

    “Future generations?”  You mean the kids who will be born into bankruptcy because of your irresponsible spending, Mr. President?  The truth is that Obama’s policies are entirely based on the concept of robbing future generations blind, to pay off current constituencies and expand government power.  There are intravenous tubes reaching into the future to suck blood from the next generation for the nourishment of ObamaCare.  Cap-and-trade energy policies will transform the mobility we take for granted into bedtime stories, which the children of 2020 will be told by candle light.  No President has cared less about the freedom and prosperity of future generations than Barack Obama.

    Doc Zero gives me the vapors.