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California's financial problems

By Jack Ward
web posted January 28, 2008

While the private sector has been doing a good job supporting the economy, the same can not be said for our local, state, and federal officials. Previously I've addressed the massive unfunded obligations that the federal government has amassed. But the mismanagement of taxpayer's money isn't isolated to our congressional representatives in Washington. Our city, county, and state politicians have also forgot who pays the bills. Now I'll address the fiscal dilemma facing the states.

An analysis by the Center on Budget and Policy Priorities has revealed that 13 states face shortfalls in the next fiscal year and another 11 states expect budget problems within the next two years. For example: Florida is forecasting a $1 billion shortfall, New York is projection a $4 billion deficit, but that pales in comparison to the $14 billion deficit projected in California. But California's problem isn't the lack of income. California State Senator Dick Ackerman said "Our problem is we've just been spending too much. Our income has gone up every year, but the rate of spending has gone up greater than the income." This is probably true with most of the cities, counties, and states facing a budget shortfall.

Since California leads the pack in fiscal mismanagement, it can be used as an example of what not to do. The California voters staged a coup several years ago by recalling the sitting Governor, Gray Davis. Davis had inherited a budget surplus but yielded to a spend-happy legislature and the state began to run up massive deficits. As a result, Davis was dumped and Arnold Schwarzenegger was elected to restore fiscal discipline to the state.

But replacing the governor did not replace all the spend-happy legislators.

Shortly after taking office, Schwarzenegger proposed several ballot propositions to solve the fiscal crisis. One was a Constitutional Amendment to limit spending and another was a Constitutional Amendment to control the budget. Unfortunately the politicians, bureaucrats, and unions spent millions to defeat the measures. Why would anyone oppose fiscal stability? The answer is simple. The proposed spending cuts would cut off the pork and these special interest groups would no longer be able to feed at the public trough. When the votes were counted, the special interest money defeated fiscal sanity. After the humiliating the defeat, the Govenator was reduced to a political ‘girlie man' and began to sign the budget busting spending legislation. As a candidate Schwarzenegger promised to make government more efficient, but in reality the General Fund spending has increased 44% since he took over.

Currently California is spending $400 million to $600 million more each month than it is collecting in revenues. Most families would recognize this as a problem, but big spending politicians are oblivious to such trivia. But Schwarzenegger woke-up from his ‘girlie man' slumber and signaled - the Governator was back. Governor Schwarzenegger said: "We do not have a revenue problem; we have a spending problem." To address the chronic boom-and-bust budget cycle and spending problem he proposed the ‘Budget Stabilization Act' as a long term solution; and massive cuts to reduce the deficit as a short term solution. But on cue, the politicians, bureaucrats, and unions opposed the cuts spending and efforts that would restore California to a sound fiscal footing. For these big spending politicians, cutting spending is like sunlight to a vampire.

But this political melodrama wouldn't be complete without an ironic twist. The same politicians that spent California into debt now want to modify the existing term limits requirement with Proposition 93. This clever slight of hand proposition would nullify the existing term limit requirement and allow these irresponsible politicians to remain in office for several more years. The justification for this charade is that if the proposition isn't passed California would ‘lose' all that experience. Remember, these are the same clowns that created the $14 billion deficit. California can not afford that kind of experience.

But California isn't unique. Fiscal irresponsibility is an affliction that has infected most Progressive politicians. Spending someone else's money and living the high life of a political big shot gives them a feeling of entitlement. Taxpayers need to pay attention to California and make sure that your state doesn't follow the same path. ESR

(c) 2008 Jack Ward






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