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XMFSinchiruna (27.55)

Balancing California's Budget ... Can it be Done? You Try!

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July 09, 2009 – Comments (21)

The LA Times has created this terrific interactive tool to give Fools a real sense of the situtation California is facing. Use this tool to see what you would do if you had to walk a mile in the Governator's insolvent shoes.

http://www.latimes.com/news/local/la-statebudget-fl-2,0,6957202.htmlstory

Now, let's say you managed to get that deficit slider bar all the way down to zero. Peruse the list of measures you had to enact to get it there, and then ask yourself how your once star-struck consituents would be feeling. How angry will they be whe the state starts chopping away at pensions? How betrayed will they feel when health and human services are slashed to inhumane levels, yielding untold pain and suffering? How on Earth are the citizens of this suddenly impoverished state going to afford the massive tax hikes that would be required on top of all those unacceptable cuts?

Now I think I understand why the budget was not resolved in time ... the legislators are afraid to do what is required to balance the budget, and rightfully so! There is no solution that avoids causing massive pain and suffering for the citizenry at large, and ultimately I will not be surprised to see this shortfall bailed out at the federal level. You already own GM and Citigroup and countless chunks of once-revered companies ... prepare to own a slice of California.

21 Comments – Post Your Own

#1) On July 09, 2009 at 9:32 AM, XMFSinchiruna (27.55) wrote:

http://finance.yahoo.com/tech-ticker/article/276062/California-in-%22Never-Never-Land%22-No-Sign-of-Progress-on-Budget-Impasse

California in "Never-Never Land": No Sign of Progress on Budget Impasse

Faced with a $26 billion deficit, California started issuing IOUs on July 1 after its legislature was unable to reach a budget compromise. With the new fiscal year now a week old, you’d think there’d be a lot of action coming out of Sacramento.

Instead, there’s “a lot of talking [but] no concrete action,” according to Stephen Levy, director and senior economist of the Center for the Continuing Study of the California Economy in Palo Alto. “The parties remain completely in gridlock…. unwilling to make compromise and give up old positions in the face of deep crises.”

The IOUs aren’t the problem, it’s the lack of progress on the budget, says Levy, who doesn’t expect a resolution anytime soon. “We’re in never-never land now,” he says.

As to how to close the state’s massive deficit, the economist recommends the so-called “balanced package,” which features cuts in areas such as education. But “all of the cuts that seem reasonable are not nearly enough to bridge the deficits,” Levy says. (Too see for yourself, check out this LA Times interactive graphic if you want to take a crack at balancing California’s budget.)

Levy, whose firm provides independent research for both public and private entities, does not advocate new taxes either, noting the state passed about $11 billion in temporary tax hikes earlier this year. “Permanent [tax] reform shouldn’t be discussed right now,” he says.

Instead, Levy advocates for more Federal relief for California – and other states struggling with the recession – as we’ll discuss in part two of the interview.

 

 

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#2) On July 09, 2009 at 9:33 AM, XMFSinchiruna (27.55) wrote:

Sorry, the link somehow failed in the original post.

Here is the LA Times budget balancing tool.

http://www.latimes.com/news/local/la-statebudget-fl-2,0,6957202.htmlstory

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#3) On July 09, 2009 at 9:45 AM, kaskoosek (90.64) wrote:

Sinch

I hope not.

Another alternative in my oppinion could be outright default. That seems feasable. 

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#4) On July 09, 2009 at 9:51 AM, whereaminow (42.34) wrote:

You have to love it. They kept promising one thing after another unitl they can't afford any of it.  It's just awesome.

I'm sure there are other thing that could be cut.  This is bit of a sham.  They are only offering up two choices (as usual): cut services that people depend on or raise taxes.  They're hoping that people see this and say "well, I guess we need a tax hike."

Still, for fun, here's how it went:

Education benefits: GONE!  Private schooling is superior and cheaper to public schooling anyway.  

Health benefits: GONE!  Sorry, but I didn't make the promises. See your local charity or Christian health center for support.

Civil Service: Worthless, See ya!

Law Enforcement: Buh-bye!  Time to relax California gun laws so the law abiding can protect themselves.

Welfare: Adios, amigos!  

Tax increases and one time borrowing: NONE

I have no sympathy for State parasites, so I cut everything, and without raising taxes or adding any bogus one-time incomes, was able to bring the budget deficit within $1 B.  Give me some real ability to cut spending and I'd have that State humming along with a surplus (a REAL surples, not a BUDGET surplus which is nothing but a projection) in no time.

Closing done the whole show would be the best thing for California's economy.

David in Qatar

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#5) On July 09, 2009 at 10:35 AM, 4everlost (29.39) wrote:

First, stop the funding for any line item that contains the word "study".  Then eliminate all jobs that contain the word "liaison" in the title (or job description).  Next, go on the hunt for any job or program that features "oversight".  The worst are the "liaison to the oversight committee" jobs.  Then purge the "business analysts".  Any program with the name of an animal, insect or plant has to go.  Then we can cut about half (maybe more) of the "administrators" and "assistant administrators".  Next, look at any program with "affirmative", "reform", "advocacy", "consultant" or "assurance". 

That's just a start, I can't think of any more, my brain needs a break.

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#6) On July 09, 2009 at 10:38 AM, tonylogan1 (28.13) wrote:

Cutting that budget was easy with no tax raises. I got well past zero and was disappointed there was nothing left to cut.

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#7) On July 09, 2009 at 10:42 AM, tonylogan1 (28.13) wrote:

There is SO much waste in CA governement spending. The city of LA spends $500,000 a year on Caligraphy! But who would dare touch that budget. We would not get fancy invites to useless meetings and events we can't afford.

Instead, lets say all that is left is to cut the police budgets or take it from starving kids. Give me a break. 

The program I am in favor of is a welfare program to provide assistance to out of work politicians. That is the best way to save serious $.

 

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#8) On July 09, 2009 at 11:26 AM, ocsurf (< 20) wrote:

Here's how I would close a BIG gap in the budget!

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#9) On July 09, 2009 at 11:43 AM, outoffocus (23.71) wrote:

California is collapsing under its own outrageously high cost of living.  When I hear that government auditors over there were making like 90k a year, I can only imagine how many other over bloated government salaries they have there.  What about their "free college" benefit. Have they gotten rid of that yet?

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#10) On July 09, 2009 at 11:49 AM, outoffocus (23.71) wrote:

I would recommend all the highest paid state employees take a 5-10% pay cut.

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#11) On July 09, 2009 at 12:28 PM, ChannelDunlap (< 20) wrote:

I got the defecit cut over 50% with just the things on that list.  Between Ocsurf's idea and a few others that weren't available on that page, I'm confident I could cut the budget without too much pain for the citizens.  Assuming I didn't have the hassle of pushing my iniatives through a legislative body, of course.  That's their real hang up.  It's easy to cut a budget.  It's tough when everyone has a different idea for how.

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#12) On July 09, 2009 at 12:44 PM, FoolishChemist (97.03) wrote:

$26 billion spread among the 37 million people in CA works out to around $700 per person.  I'm just mentioned this because you never really hear just how much it would really cost to fix it.  Some people probably have that around their neck, others that's a month of rent.

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#13) On July 09, 2009 at 12:45 PM, Starfirenv (< 20) wrote:

I suppose enforcing immagration laws, suspending greencards, and wholesale deportation would be out of the question. I've heard #'s as high as 30% of California being 'undocumented'. I have to think this would be a huge first step to help slow the bleeding. Wouldn't this affect everything from public healthcare, to overwhelmed school systems, law enforcement, the courts, prisons, the foodstamps, housing and utility assistance? Anchor babies?  How bad does it have to get before we can get past political correctness and deal with a broken system?

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#14) On July 09, 2009 at 1:05 PM, dsp444 (78.88) wrote:

The problem with the tool is that it is rigged to only allow changes in the way the author wanted.  Almost as if to say "There are the only options for balancing the budget...poor us...see we can't do it"

 I call BS - the fix is going to require intelligence, creative thinking, and balls.

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#15) On July 09, 2009 at 1:07 PM, Starfirenv (< 20) wrote:

http://www.latimes.com/news/nationworld/nation/la-na-illegal-immigrants26-2009jun26,0,1414295.story

A $BILLION just on incarceration statewide and $100 MILLION in LA alone?

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#16) On July 09, 2009 at 2:24 PM, starbucks4ever (98.82) wrote:

This calculator was set up with a specific purpose: to "prove" to the public that the Governator needs a bailout. Of course when your goal is NOT to balance the budget, you will always find a thousand reasons why it can't be done.

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#17) On July 09, 2009 at 3:12 PM, Entrepreneur58 (40.12) wrote:

No need for cuts. 

No need for taxes.

Just keep spending and run up huge deficits and let the Federal Government bail you out.

California is too big to fail, and it knows it.

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#18) On July 09, 2009 at 7:18 PM, DCarlsonGT (30.06) wrote:

I've got an idea to return Cali to the real world (the world where economics actually applies.)  Start by laying off the maximum percentage of the government possible (down to only the bare minimum, the people keeping sewage plants open, people fixing power lines, etc.)  Then open job applications at 50% pay downgrade, and only open about 10% of the previous jobs that were there.  People will cry about the pay at first but once their rent comes due, they'll start to come around.  (make sure that around 5% of the re-hires are police who're willing to evict people too.)  That way, California government will have the upper hand and when people don't work hard, they're easily replaced because there's 90% of today's workforce still chomping at the bit to become employed.  Lay off the bottom 5% of workers after 3 months and you'll never have a problem getting the same amount of work done with 9.95% of the current workforce ever again.  When people realize they won't get a job somewhere else, they're willing to take lower salaries, fewer benefits, and they'll work harder to keep themselves employed.  End of story.

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#19) On July 09, 2009 at 8:03 PM, UKIAHED (44.35) wrote:

Thanks for the link Sinch – that was fun.

 

For all you that “solved” the budget problem – you are almost there – now you just need to convince 2/3 of the legislators to agree with you (yes we need a super majority here in CA).  Then get the Governor to sign!

Oh yes – don’t forget to clear your calendar for all those court dates.  Half of what you cut will be challenged in court.  Did your cuts break a contract with any unions?  Did your cuts shatter an item on the state constitution?  Did you endanger any lives by cutting services?  How about federal mandates – any ignored?

Yep – we have issues.  We’ve been here before and we’ll be here again.  The system is screwed up and may need to start over from scratch.  I’m glad I’m not the one to actually solve it – that will take some special type of person.

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#20) On July 09, 2009 at 10:47 PM, bostoncelitcs (57.37) wrote:

Isn't this why they recalled Gray Davis???.........Maybe they'll recall the "Governator" and Sarah Palin can relaunch her political career in California.

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#21) On July 09, 2009 at 11:17 PM, DownEscalator (21.19) wrote:

Obviously that LA Times widget is rigged to high heck.  I just cut everything except the "one time fixes" and I'm still short 840 M.  These numbers just don't add up.

That said, California is still f'ed, and it's their own damn fault.  Promise more obligations that you can ever deliver and this is what happens.  Demand more of government than you put in and this is what happens.

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