Not surprising the puppet patrol ignores this since they presumably don't have a canned talking point for it. It raises an interesting question, however. What sort of financial shape would California be in if it got to keep all the extra money it currently sends to D.C. to subsidize other (i.e., mostly red) states?Our Money?? LOL, if you reside in a Red State the odds are you've been getting money collected from other states where as CA hasn't. The amount of the Stimulus they've received just means less that they had to pay in to support dead beat Red States.
Not surprising the puppet patrol ignores this since they presumably don't have a canned talking point for it. It raises an interesting question, however. What sort of financial shape would California be in if it got to keep all the extra money it currently sends to D.C. to subsidize other (i.e., mostly red) states?
Having more money doesn't equate to suddenly having the state legislature not find more ways to blow through cash. The act of having more money means nothing if you continue to spend in the same thoughtless manner as CA dems do year after year.
Interesting. Then why as of 2008 was California 24th in per capita spending?
http://www.statehealthfacts.org/comparemaptable.jsp?ind=32&cat=1
- wolf
Have you even stopped to take into account how that chart correlates to each states budget, the nature of their budgetary situation at the time, nature of their spending, etc or are you just going off the fact that you have a chart that shows CA 28th in spending the least? Are you trying to earn browning points for a nice chart for the 2008 fiscal year?
Again having more money moneys equates to nothing if you spend it all and end up in the same place you are now.
Hmm. No doubt there is more to the picture than the bottom line per capita spending number. And no doubt CA hasn't balanced its books well at all. However, in this thread you are repeatedly blasting so-called profligate "liberal" spending on "social programs" etc etc. It seemed relevant to me that CA spending per capita isn't actually high compared to the national average.
- wolf
It is the people of California that are sending that money to DC. Not the state.Not surprising the puppet patrol ignores this since they presumably don't have a canned talking point for it. It raises an interesting question, however. What sort of financial shape would California be in if it got to keep all the extra money it currently sends to D.C. to subsidize other (i.e., mostly red) states?
It is the people of California that are sending that money to DC. Not the state.
It is the state that is spending beyond its income.
If CA did not send the money to DC; then the people would have more to spend. And would the state solve its budget problems. Probably not - they would then attempt to tax the people andi ncrease the spending.
For what CA rescieves back for every dollar spent it is very much indeed high.
Lets see CA spends more on students per capita then any other state. CA''s k-12 budget is 10.5 Billion dollars per year which according to that graph in 2008 accounted for 39% of the states budget. Yet the state in 2009 ranked 49th out of 50 when it came to pumping out high school graduates as compared to other states.
http://www.wavenewspapers.com/news/regional/37673589.html
Of course addressing the issue, raising concerns, proposing changes and ::gasp:: cuts in spending would invoke the wrath of teacher unions across the state even as they continue to fail our kids. I don't know about you but pouring money down a bottomless pit with no positive results is what some people categorize as crazy behavior.
So this example along with many more exemplifies why our budget deficit is running in the tens of billions for a very good reason. Over spending and misspending has torpedo the state. I haven't even addressed the massive and frequently abused state pension plan which continues to grow every year and further sinks the state in mired debt. Now add on top of all of this add the massive numbers of welfare recipients in the state and the illegal immigrant issue which further adds stress onto our state and local services.
Without Prop 13, people would have been forced out of their houses by rising property taxes based on the property valuation.
When a new development starts at $275K (back in 1989) and finishes 6 months later at $350K what does that do for the taxes of people that bought early. And then what about those across the street that have been there for 5-10 years at $200K.
Property taxes were killing them. that is what triggered #13. Tax burden wasat that time increasing by 10% each year and sometimes by 25% depending on the local housing market.
Sorry, bad example. The fact is CA has very low per pupil spending. We spend crap on our education here and the result is crap.
http://blog.bestandworststates.com/2009/01/29/state-rankings-on-education-spending.aspx
One of the major reasons our budget gets slammed in every recession is Proposition 13. It killed the property tax base here, and property taxes are a less recession sensitive, and more stable, source of revenue than income and sales taxes. This happens every time a recession hits - our budget takes a dump far worse than any other state.
Our overall tax burden is only a little higher than average. Our spending is about average. No doubt some of our spending is unwise. But this ideological narrative about CA being a big government liberal catastrophe that you are trying to push just isn't backed by the facts.
- wolf
Has the Golden State gone bust?
Wyatt Buchanan, Chronicle Sacramento Bureau
Monday, February 22, 2010
(02-22) 04:00 PST Sacramento --
California's dire and ongoing budget predicament is raising a tough - and touchy - question about the state's finances, one that some at the Capitol do not want discussed: Is California bankrupt?
Leaders and would-be leaders from both major parties have raised the b-word in the past weeks, and the Golden State is frequently labeled as bankrupt by people nationwide.
Federal law prohibits states from declaring bankruptcy and without a legal framework, assertions about California's solvency are left to interpretation. But persistent multibillion-dollar budget deficits, cash crises, tens of billions of dollars in debt and other obligations have blurred the legal distinction.
"California is deeply in debt. You could say that it's bankrupt," Attorney General - and presumptive Democratic gubernatorial candidate - Jerry Brown told a group of young Democrats earlier this month.
Republican U.S. Senate hopeful and former Hewlett Packard CEO Carly Fiorina raised the specter of bankruptcy in a discussion with Southern California business owners. And Republican Assemblywoman and retired banker Diane Harkey of Dana Point (Orange County) said the state is "literally bankrupt."
Protecting state's reputation
She compared the state's situation to a family with a mortgaged house, maxed out credit cards and zero savings. She said her outspokenness on the topic at public meetings and other forums has caused some at the Capitol to tell her she is apocalyptic, and she said she has been asked to quiet down.
"It would be nice if we could hide our problems like nobody knew about them, but the bond market is watching. It's not a secret," Harkey said, adding later: "I'm scared. I want to get the state fixed."
Statements like Harkey's could actually hurt the state, said Tom Dresslar, spokesman for Treasurer Bill Lockyer.
"You might score some political points by saying the state is bankrupt, but you're hurting taxpayers when you do that. We are not basically bankrupt," Dresslar said. "When you have that kind of talk out there and it makes it into the papers, it poisons the market when you go to sell bonds."
He noted a recent report done by the Fitch credit rating agency that said if public officials actively discuss bankruptcy, "Fitch will assess whether the entity's current rating should be maintained." A lower rating makes it more expensive to borrow.
Although there is no legal definition of bankruptcy for a state, smaller municipalities are able to declare bankruptcy, like the city of Vallejo two years ago and Orange County in 1994. The definitions differ depending on the type of bankruptcy, but generally, municipal bankruptcies occur when a government is unable to pay its bills in the immediate future and/or through the next fiscal year, according to bankruptcy experts.
That won't happen in California, state financial leaders say, because the lowest the state could fall financially would be to miss a debt payment. That hasn't happened since the Great Depression, but California owes $8.8 billion in short-term loans that have to be paid off by June and almost $120 billion in outstanding bonds and interest that will be paid over decades.
Over the next 16 months, the state has a $20 billion deficit in the general fund budget. That's the equivalent of nearly a quarter of the current spending plan of $84.5 billion. Much of that spending is locked in because of voter initiatives and federal mandates, limiting options for lawmakers. The deficit this year is more than the state spends on higher education and prisons combined.
The state's pension fund, CalPERS, has $16.3 billion more in liabilities than assets at the latest calculation, although that number fluctuates with the system's investment portfolio. Adding to that, a state report released this month calculated that California also faces a $51.8 billion bill - in 2009 dollars - for the health and dental benefits of state retirees and future retirees.
State Controller John Chiang, who made that report, said, "No, we are not functionally bankrupt." He said California would reach its breaking point if there were court intervention due to debt default.
"That's our equivalent of going into bankruptcy," said Chiang, adding that, "I don't want that to be put in the real, serious realm of discussion." The state Constitution mandates that debt service has the second highest priority for payment, after only education, and the state continuously receives tax revenues.
Lacking cash to pay debts
But while California has had steady cash to make those payments, it has not always had the cash on hand for its other obligations. Last year, the state issued 450,000 IOUs to vendors and to residents awaiting state income tax returns and halted construction on thousands of infrastructure projects. The state has the lowest credit rating of any state in the nation, although it still is above junk-bond status.
If the state falls to junk status, some investors would be unable to buy state bonds, making it even more difficult for the state to borrow money and infuse cash into its coffers. Either way, it now costs the state more to borrow the money it needs to function.
Chiang also published a cash-flow forecast this month predicting that over the next 10 months, even if lawmakers adopt Gov. Arnold Schwarzenegger's plan to balance the budget, California will have to borrow multiple billions to pay its bills later in the year. Cash-flow borrowing is common and has been necessary for the state for more than two decades due to the cycle of when bills are due and when revenue comes in, according to the controller's office.
Another cash shortage this summer could mean more IOUs and other delayed payments, but Chiang and others are making strong assurances the state will have no trouble paying its most necessary bills.
"Going back to the Great Depression, California has never missed a payment to a debt holder or a bond holder and we will continue to move heaven and earth to make sure that never happens," said H.D. Palmer, spokesman for the state Department of Finance.
The state's finances are a bigger picture than just the infamously indebted $84.5 billion general fund. Including bond funds and special funds that by law have to be spent for specific purposes, the budget is $119 billion. Those funds are continuously depleted by lawmakers in an effort to fix the general fund, and they have to be paid back eventually.
On the asset side of the balance sheet, the state also owns billions of dollars worth of property and structures, scenic parks and other holdings.
California's overall balance sheet has $34 billion more in net assets than net liabilities, according to a controller's report from 2008, the most recent published. The report also showed the ratio between assets and liabilities declined 25 percent from the year before.
Jack Ayer, a UC Davis professor of law emeritus and a former federal bankruptcy judge, said a fair measure of an insolvent state would be if its assets are worth less than liabilities and if it could not pay all of its bills. The real-world outcome of that would be banks no longer lending money to the state, he said.
Considering state's assets
"The banks are happy to keep lending - they don't want to stop - but if they aren't going to get paid back, they are going to stop," Ayer said. And while the state does have assets, a fire truck or a courthouse doesn't have much value to any entity other than the government, he said.
That's a key distinction for states as opposed to other entities when considering assets, said Jason Sisney, director of state administration at the legislative analyst's office, who said the vast majority of the state's assets aren't able to quickly be turned into cash at any given time.
"State governments, on a day-to-day basis, don't operate thinking about any of these things," he said, adding that there is "no real way to pretend there is cash when there's not."
Still, he said, it is "nearly impossible" for the state to miss a debt payment. States are sovereign entities with the power to tax, change spending through law and issue IOUs.
The treasurer plans to sell $10 billion to $14 billion in bonds this year, with the first sale of $2 billion scheduled for the first week in March.
The neighborhoods where most of the residents rent instead of owning their own homes are negatively impacted because the landlords who own the properties continue to pay low property taxes under Prop 13 while collecting increasing rental fees.Over time taxes are shifted from corporations to individuals. Righties fail to see the disastrous effects this has had on our schools and individuals trying to afford a home.
Of course, but that's semantics irrelevant to my question. How would CA's budget look if Californians' red state subsidy was instead routed to their own state coffers?It is the people of California that are sending that money to DC. Not the state.
It is the state that is spending beyond its income. ...
http://www.census.gov/govs/school/Sorry, bad example. The fact is CA has very low per pupil spending. We spend crap on our education here and the result is crap.
http://blog.bestandworststates.com/2009/01/29/state-rankings-on-education-spending.aspx
One of the major reasons our budget gets slammed in every recession is Proposition 13. It killed the property tax base here, and property taxes are a less recession sensitive, and more stable, source of revenue than income and sales taxes. This happens every time a recession hits - our budget takes a dump far worse than any other state.
Our overall tax burden is only a little higher than average. Our spending is about average. No doubt some of our spending is unwise. But this ideological narrative about CA being a big government liberal catastrophe that you are trying to push just isn't backed by the facts.
- wolf
California is screwed. Ahnold has basically given up, and he is just going through the motions and saying what most Californians want to hear until he can get out of politics and make Terminator 4: I Told You I'd Be Back.
Probably true, but in my view California in its present format is essentially ungovernable given the supermajority required for tax increases. After all, if Ahrnold as a highly popular, nonpolitical GOP moderate who by all appearances gave it his best effort to solve the problem couldn't bring the legislators to the table, who can?
Good luck, Californians, but you made your bed with the stupid tax limits voted in by the electorate. Now you are facing a deteriorating infrastructure, crumbling social institutions and no elected official having either the will or the ability to do the tough love necessary to get things back on the right course. Without massive and continued prop up by the feds, it looks to me like California's day has come and gone-forever.
Of course, but that's semantics irrelevant to my question. How would CA's budget look if Californians' red state subsidy was instead routed to their own state coffers?It is the people of California that are sending that money to DC. Not the state.
It is the state that is spending beyond its income. ...
My suspicion is that the same problem would exist.
CA and many blue states have demonstrated that they will find a way to take extra money and spend them on increased services/pet projects rather than reduce the taxation level and/or pay down their debt.
The fact is, and has been for years, that so-called red states are being subsidized by blue states by receiving more federal tax dollars than they give. Not a bad shell game-whine about taxes while having the other guys subsidize you.
Nonpartisan source for this red tax swindle: http://www.taxfoundation.org/taxdata/show/266.html (click on one of the links at the bottom to get the full chart).
To put it more accurately, the states at the top are receiving more federal money per dollar paid in federal taxes.If I'm reading that chart correctly, then the states at the top are spending more than they're paying, and the states at the bottom are paying more than they are spending?
To put it more accurately, the states at the top are receiving more federal money per dollar paid in federal taxes.
The fact is, and has been for years, that so-called red states are being subsidized by blue states by receiving more federal tax dollars than they give. Not a bad shell game-whine about taxes while having the other guys subsidize you.
Nonpartisan source for this red tax swindle: http://www.taxfoundation.org/taxdata/show/266.html (click on one of the links at the bottom to get the full chart).