California’s
budget mess
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Why
is it that when people spend public funds they often seem to lose touch with
reality? How many times have we seen
individuals we consider to be upright, responsible citizens, who normally
personally live within their means, suddenly become spendthrifts with a public
purse? What is there about holding elective office that somehow makes it
acceptable for politicians to spend more money than we can afford or to run up
bills for things they would never think of doing in their personal lives?
Political credo
The
reflexive answer to a budget shortfall always seems to be to raise taxes. Look for something to tax, anything, but
whatever you do, don’t cut back appears to be the politicians’ motto. In the words of Ronald Reagan, “The government’s
view of the economy could be summed up in a few short phrases: If it moves, tax
it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
The
credo of most politicians appears to be: Raise taxes and expand the budget when
the economy is healthy and generating more money than government needs, then
raise them again to cover the shortfall when revenues decline.
But,
never curtail spending and never give anything back to the taxpayers if it can
possibly be avoided.
Witness
the charade that’s currently taking place in California. At the very time when the state is facing a
massive budget shortfall, the salaries of California’s legislators have just
been raised.
The
Sacramento Bee observed (December 3, 2007), “California pays legislators at
least $30,000 more than any other state, but numerous city or county managers,
auditors or school superintendents receive far higher paychecks.”
A ‘fiscal emergency’
Writing
in Forbes.com (Sept. 1, 2003), Rich Karlgaard noted,
“California took in 44% of its revenue from fewer than 10,000 capital gains tax
payers in 2000.
The
state’s legislators insisted on basing the budget on what was clearly
understood to be a temporary spike in tax revenues. When the easy money flew off, so did the tax
receipts.”
Furthermore, “… state spending has soared
under Schwarzenegger even faster than it did under his predecessor …” His
budget “spends 34% more than when he took office just four years ago. His spending plan was based on the fallacy
that revenues would continue to pour into the state’s coffers.”
(ibdeditorials.com, Dec. 17, 2007)
California’s
budget is now projected to be some $14 billion short, and in January the
Governor may find it necessary to declare a fiscal emergency, “… in order to
give him and the legislature more power to deal with the state’s growing
deficit.”
This
would “trigger a special session and force lawmakers and the governor to begin
addressing the shortfall within 45 days.”
(nbc11.com, Dec. 14, 2007)
But,
why on earth do they need to declare a “fiscal emergency” to force themselves
to do the obvious, that is, deal with a crisis?
And,
what have our politicians been doing up to now about the financial disaster
caused by their overspending? Certainly
not spend less.
California’s budget mess
Columnist
Dan Walters noted, “The good news is that California politicians, who have
sidestepped the state’s shameful and ever-worsening budget mess for six years,
may finally face the music. The bad news
is that they really don’t have a clue how to close the chronic deficit, given
its three-dimensional nature.” (Sacramento Bee, Dec. 16, 2007)
“The
widely followed UCLA California forecast took the state to task in its 2008
outlook for a budget ‘based on a combination of overly optimistic projections
of revenue, wildly optimistic assumptions that spending would decrease on its
own and a handful of accounting gimmicks to make up the difference’… Anyone
with half a brain knew that soaring tax revenues were about to reverse, based
on the housing crash, which has hit California harder than the rest of the
U.S.” (ibdeditorials.com, Dec. 17, 2007)
Always spend more
Too
many politicians seem to think it’s always necessary to spend more money — and
never save anything. No project seems to
be too insignificant for them to fund.
Whatever the cause, they invariably believe it’s
worth the cost, especially their own compensation, which at the state and
federal levels is now automatically raised without an open vote of the
legislators themselves being required.
If
Californians do not regain control of their government’s budgets, we can look
for our politicians to borrow more money or raise taxes again to cover the
shortfall. If that happens, more
taxpayers will leave the state, especially businesses, while those who pay
little or no taxes will continue to move in — a disastrous combination. It’s a serious mess!
© 2007 Harris R. Sherline
All Rights Reserved
NOTE:
Read more of Harris Sherline’s commentaries on his
blog at “opinionfest.com.”