Over the weekend, California Governor Jerry Brown announced that the budget deficit for the next fiscal year has nearly doubled, from $9.2 billion to $16 billion. This almost assuredly means a commensurate increase in cuts to the state budget.
In the last fiscal year, Brown staved off a series of budget cuts by playing a game of “ta-da.” He assumed a fiscal bump from an improving economy of well over $4 billion, and used that windfall to plug the budget. That money never actually materialized, and indeed many were skeptical it ever would at the time. This bought a year to save the budget from key cuts, particularly in health care and education. But that has probably come to an end. Gov. Brown will announce the “May revise” today, with new budget projections and figures, and everyone expects a new round of cuts. “This means that we will have to go much further, and make cuts far greater than I asked for at the beginning of the year,” Brown said in a taped message.
The idea of plugging this hole with taxes is actually already baked into the cake. Because of California’s 2/3 requirement for any tax increases, Brown had already planned to go to voters in November with a series of tax hikes, which largely but not entirely fall on the rich. Brown recently turned in signatures for this measure, and it’s expected to appear on the November ballot. The governor made reference to it in his YouTube message, in fact exploiting the new budget deficit by saying that cuts will be much worse if the new taxes are not approved. “We can’t fill a hole of this magnitude with cuts alone without doing severe damage to our schools,” Brown said. “Please join me in getting our state back on track and investing in our common future.”
Sadly, Brown’s plan would not invest in the common future of Californians. The state has been cutting its budget consistently for the past four years, and there’s simply no fat left to trim. The next set of cuts will all be completely unpalatable and in many ways counter-productive.
Constrained by a balanced budget amendment, and with no help coming from Washington, California has been reduced to eating its own seed corn, particularly in the area of education. A new study released last week showed that California is producing more students accepted to the California State University or University of California programs than ever before. But less students are enrolling, simply because they cannot afford it.
PPIC reports that among all high school grads, enrollment in state universities has declined by nearly a fifth since 2007, from 21.5 percent to 17.8 percent. And here’s even worse news: The enrollment rate among the highest qualified students, those who have completed the a-g requirements, has also declined by nearly a fifth, from from 67.5 percent to 54.9 percent. Both CSU and UC have seen enrollment declines.
So what’s happening to these students? Are they going elsewhere? A few are. PPIC reports no increase in enrollments at private California universities and only a small increase in enrollments at community colleges (which have their own budget problems) and out-of-state universities. Their conclusion: “It appears that sizable numbers of high school graduates in California are increasingly less likely to enroll in any four-year college and that a small but notable share of those who were eligible and even accepted into UC and CSU do not attend college anywhere.”
We’re pricing a generation of students out of college in California. We’re not extending medical support to a generation of poor people. With this and other austerity measures, we are decidedly lowering the productivity of the entire state for decades to come.
And because of California’s sheer size, this will have an impact, however modest, on the overall national picture. This is a $7 billion austerity hit, wiping out that level of economic stimulus from, say, the payroll tax cut and extended unemployment insurance.




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It’s almost as if spending more than you earn is bad policy or something.
Wait…what?
As California goes…
Tax the psychopathic corporations. When we had a civilized tax rate for the one percenters, California had one of the best school systems in the country. We had roads that functioned. etc. etc. Look to the Jarvis Amendment to see the beginning of the decline of the entire country.
I moved from the deep south in the seventies so that my children could have good educations. Might as well have stayed in Louisiana.
I wonder how many people will go hungry or die from lack of medical care due to the murderous nature of the people sucking this country dry.
In a monetary system that requires an exponentially growing money supply to function, it is by definition impossible to not spend more than you make in the aggregate, for people and governments alike.
This mismatch between a growing monetary/credit base (same thing) and output in the real economy due to real resource depletion is what is causing the ongoing financial crisis.
Bring in The Austerions.
As someone who lives in CA, I can state that this is factual. So very many govt jobs have been cut at all levels. The Court system is just about kaput. Nearly all services have been drastically reduced. They continue to lay off teachers, PD, fire, etc. Our infrastructure is horrid and getting worse by the day. And CA students are priced out of college.
Yet conservatives incessantly vetch and whine and piss and moan about how incredily “high” taxes are, when, in fact, they’re not.
Yes, there probably was waste at various levels of CA state & local govts. Yes, too many of the local govts (not so much the State) did funny-business with their employee pension schemes (San Diego stands out on that score), and that definitely needed to stop pronto.
But what far too many citizens here don’t realize is that CA has a huge number of very very very wealthy individuals *earning* money at very very high levels, for which their state and local taxes are incredibly low. Same goes for business/corporate taxation esp for those mega-corps, which are taxed far too low and find far too many numerous loopholes.
As usual, the middle and working classes are the ones, proportionately, who are being squeezed and squeezed to fund the majority (proportionately) of services… services such as roads, highways, PD, fire depts, and yes even the dastardly public school system, which are *enjoyed* by all, including the excessively wealthy 1% out here.
Now Brown proposes a slight tax increase on millionaires and the shrieks, screams & whining is unceasing.
It’s unclear to me what the mega-wealthy plan to do. There’s comes a point where you simply cannot outsource everything to third world countries, although I guess most of them have walled themselves into gated fortresses with private security both in their mega-manison homes & business “campuses.”
Of course, if there are wild fires, earthquakes and/or floods, all these rich greedheads are first in the line *demanding* that the government (aka, CA middle & working class tax payers) bail them out PRONTO!!!!
Same old, same old. CA isn’t collecting the same level of taxes because the middle & working classes DON’T HAVE JOBS anymore. Conservatives are all so keen and eager to see hated school teachers, police, fire dept, social workers, librarians, etc, LOSE their damn jobs because they’re just such “parasites” or something.
Well, guess what? They lost their jobs… and now there’s less middle and working class “income” to suck the life-blood off of. What a surprise…. cue the whining and moaning from the blood suckers at the top…
Austerity! More austerity is what we are looking at in California the 9th largest economy in the world. This is a fractal spiral…the federal cuts and the state and local government cuts have shrunk the state economy so surprise surprise lower state revenues and that will be passed on to the local government. More pain more homeless.
That’s not really fair. Sometimes, the order is different. heh..
And speaking of whining, get ready for the hysterical advertising about “Tax Increases on the Job Creators!!” that we’re sure to see during the runup to the election. The really sad part is that plenty of people will fall for it and (again) vote against their own self-interest. And to those people I say, “How are all those fucking potholes workin’ out for ya?”
Answer:
Bingo. That’s how the its done in the 3rd world.
California…..our own personal Greece…..er I mean Spain(actually it’s economy is larger than Spain.)
I feel for Californians. With thousands set to lose their benefits and increases in taxes and “fees” along with cuts its going to get way worse.
Why whatever happened to ol’ “deficits don’t matter?” What amuses me is that a conservative would whine about the philosophy when you consider they funded an entire darn war while deferring payment on it.
Oh wait I forgot the DoD/National Security is always excluded because in imaginary land THAT part of the budget doesn’t count even though it’s at least 1/5 of our spending.
California, like the rest of the USA is becoming Mexico — a deeply impoverished state where a tiny cabal of wealthy lord over a dirt poor, ignorant, unemployed, desperate and hopeless population.
Why? So the 1% can have slaves. That’s right. Slaves. No more wages, no more benefits. Just work in exchange for a bowl of rice.
Heckuva job.
How about raising taxes on the top 10%?
Evidently, there’s an over-abundance of dumb-fucks in CA who keep voting down tax increases on the 1% and who won’t change the 2/3 requirement to do so. Some comedian was right when he quipped, “Living in CA is like living in a bowl of Granola. Whatever isn’t fruits and nuts, is flakes.”
Are CA residents really that dumb that they can’t understand the simple truth that they can’t cut their way to prosperity? Or even a tolerable standard of living? Do they really think a modern, technological society pays for itself? Or can be had at Walmart prices? Seriously?
If you read the letters to the editor to the various nooz papers in Ca, the answers to your questions are: Yes, Yes, Yes, Yes, YES!
I don’t get it either because there are often citizens in either govt or union jobs who continue to vote conservative, and who vetch and moan about how unfair the “excessive tax rates” are for the 1%. Does not compute.
There have been several letters to the editor in my paper over the past few days whining about how “outrageous” it is that grocery store workers make something like $18 – $21 per hour for “just checking out groceries.” It’s an outrage, I tell ya! that these citizens actually make something approaching a “living wage.” On the same day, other conservatives are *demanding* that History NOT be taught in the school system AT ALL because it is a “waste of time and money” to teach it.
So there you have it: that’s how they “roll” out here in CA. Such letters being written in the same nooz paper that is reporting how various local cities are dead broke and getting worse, how home owners continue to be upside down on their mortgages, and while I continue to see more and more homes going into foreclosure in my supposedly “upper middle class” neighborhood.
Let them eat cake…
I’d be very happy to see that happen, and it’s possible that it might have an impact on me (not sure). I, however, appear to be among a decidedly declining breed who believes in – gasp! shriek!! – paying my FAIR SHARE in order that our communities are *functional.*
I know! What an “insanely radical” concept that has become – eh??
Some people need to learn the hard way I guess and I have to say the “leadership” in California is lacking because they do a poor job laying things out.
I try real hard to remind folks here we pay taxes for schools who in turn educate our future work force and keep us economically competitive. We pay taxes for roads that enable us to have access to goods and services. we pay taxes for police and fire services so that we have a modicum of safety. Taxes, as unpleasant as they may be, have a purpose. I don’t understand (alright I do but I don’t like that the Dems are cowardly)why the Dems keep shying away from the idea of selling taxes as patriotic and instead are leaning towards the idea of “fees” or helping promote cuts. Furthermore, I don’t understand how they can’t possibly sell the idea that companies, like people, ought to be at least partially responsible for paying for training for their future workforce, paying for the safety and security of their work environment and helping cover the costs of the means that enables them to engage in interstate commerce. The idea that states should be giving them money to get out of these obligations and foisting these costs onto average taxpayers is ridiculous.
Fortunately for them (the 1%), they don’t have to re-invent the wheel.
Boy, that sounds depressing.
Signed,
Hopeless Population
It does appear this whole thing has gotten away from them. 1 in 11 people in the country live in Califiornia. And, they have some of the wealthiest people in the country.
“It’s a puzzlement”.
Brown’s a corporatist.
He’s part of the problem.
Most of CA politicians are corporatists.
They’re also part of the problem.
Anyone else wonder why Brown and group didn’t institute single payer for CA?
They actively worked to stop it.
It’s not personal. It’s just business. Brown and his kind got theirs.
Whitman was bad news. Brown is just the lesser of evils. Ie. still evil. He will serve the 1% very well.
Until California gets rid of Prop 13, the state is doomed to a long and lingering demise. Especially since the only non-tax solutions consist of raising fees on the 99% and cutting essential services.
They also need to make it harder to stampede mobs of morons into voting for dumb propositions.
* = Fair disclosure, my wife and I are former Californians who, after living abroad for several years, realized we simply couldn’t afford to move back there. Not because of taxes, but because the cost of living is too damned high.
CA is the only place in the world that refuses to tax oil depletion. They ignore the ability to transfer commercial real estate without triggering a new assessment since 1978. Despite the large number of people with college degrees, the comments section of CA papers are dominated by the ignorant arrogant right who look forward to all collapse of government. Obstruction began with Prop. 13. Initiatives cater to the wealthy from anywhere in the world and change the state constitution. The miracle is that CA has lasted as long as it has without death from lack of police, firefighters and infrastructure. CA has been the right-wing petri dish.
Agree. Quite.
In this case, I held my nose & voted for Brown. He is def the lesser of two evils. But in this case, Whitman was so horrify to contemplate that I do believe Brown is a marginally better choice for CA.
With Whitman, the destruction would’ve scorched earth.
Then again, one wonders how much “better” it is with “incrementalists” like Brown who are “incrementally” better than their opponents but not by much. Hard to say.
It’s not been pretty, that’s for darn sure.
That said, conservatives in CA froth at the mouth over that d*mn socialist, Brown, blah blah blah, lather rinse repeat. There is no end to the stupidity, that’s for darn sure.
Often the highest educated CA spout out the most arrogantly ignorant stuff. I used to be amazed by it but not any more. I happen to “travel” amongst some extremely well educated (& well traveled & pretty sophisticated) individuals, often with *numerous* tertiary degrees.
A high level of education is no guarantee that the person isn’t still as dumb as a rock when it comes to politics. Ignorant & self-centered cupidity makes CA voters continue to vote against their own interests time after time. Very sad.
just a point of clarification: i thought that one of the propositions getting rid of that 2/3 requirement DID pass.
very well said, and should be disseminated widely. In my Kansas, we have a governor who wants to eliminate all corporate taxes, but fortunately we have a few mug-wumps who are opposed.
I could live with such a political party. The Mug-Wumps.
The country is bereft of leadership who will take the problems of the states and nation to the people and lay it out honestly and inspire us to work to set us to right.
Without that, the other method of resetting society is crash and burn.
I much prefer the first.
The cost of living is too damned high, but the solution is to get rid of Prop 13 and raise every homeowner’s property taxes? Great logic!
Many think getting rid of Prop 13 is the answer because the state and local government entities will then have enough money to pay for all the things everyone wants. But where is that money going to come from? Out of the pockets of folks like you and me. Residential property which has not changed hands recently is going to get hit the hardest. I’m retired. My SS is $1,400 a month. If my house, purchased in 1978 for $82,500, is reassessed at it’s current market value, my property taxes will go from about $1,500 a year to about $800 a month. Yeah, more than half of my SS check would go just to my property taxes.
“Then again, one wonders how much “better” it is with “incrementalists” like Brown who are “incrementally” better than their opponents but not by much. Hard to say.”
Yes, the questions of incrementalism is troubling. But I don’t think it’s hard to say. Just ask, how’s it working for the people. And there’s your answer.
On top of that, raising property taxes would happen alone. Corporate taxes will not go up. Only down. The same for the 1%.
They will keep laying off people, and gutting the tax base. Yup, they’re morons.
Or are they? Whole segments of various generations are being ground into the dust. Young, old, and all those in between. And it’s going to get worse.
My guess is that in 5-10 years there will be a spark. And then … well then I see the states fending for themselves. Circling the wagons. And then all the so-called “liberals” and so-called “conservatives”, and of course the so-called “independents” will fight it out, just like Mad Max. Of course then it won’t matter what you are. Everyone for themselves. States in the south will fall to theocracy. States elsewhere will fall to the 1%, who already own the place and most of the big guns. The police and armed forces work for the 1% so they’ve picked their side.
Ya ya, I know, classic apocalyptic BS. But that’s the “fun” awaiting us.
I personally want to be part of the grand kingdom of New York. I hear they will be giving out free ponies.
Here’s what practically nobody on the Dem side wants to admit is the reason that CA has such a budget hole: much as I generally despise them, the R’s were right back in the 90′s when they predicted that overly generous public employee pensions — and the failure to adequately forward fund the liability for same — would result in a future point where demand for pension funding would compete with and crowd out funding for current government services. And this is exactly what has happened.
And why are the Dems so loathe to loathe to admit this? Because they were complicit. The unions hold most of the board spots on CalPers. The others are held by elected government officials who serve ex-offico, by virtue of their offices. Even when we had GOP governors, most of these other offices were held by Dems.
Compounding the entire problem is the fact that until 2006, government entities weren’t required to account for future pension costs on an accrual basis. They only had to provide for the current year’s pension assessment obligations and could ignore the coming tsunami of future unfunded pension liabilities.
That was Prop 25, which eliminated to need for a 2/3 majority to pass a budget
And, Prop 13 needs to be nuked
I say ‘tax the crap out of them and see what happens.’
It will go one way or the other. Let California be the guinea pig for everyone else. If successful, then, everybody else go that way.
If not successful, then, Krugman can complain that the problem was you didn’t tax the crap, snot and bejeezus out of them.
Or, you didn’t spend enough.
Then there’s this
http://www.californiaprogressreport.com/site/offshore-tax-havens-cost-average-california-taxpayers-423-year-each-california-small-business-2010
And, for good measure
http://www.youtube.com/watch?v=woIkIph5xcU
Agreed.
What they did is as irresponsible as expecting the USPS to fund its obligation forever. Different end of the spectrum, but both extremes.
And yes the Ds were complicit. But no shocker there. Different branch of the corporatist party.