California: Flirting With Bankrupcy

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I hope our representatives in Washington will take a lesson from the financial problems that California faces. Our state, burdened with the expenses of our massive education and health care systems, is teetering on the edge of insolvency. Our State Controller, John Chiang, has been forced to delay payments to guarantee that the state has enough cash on hand to meet high priority obligations. Among other things, $2 billion in tax refunds will be delayed for 30 or more days.

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You're point is a bit implicit so please forgive me if I'm mistaken about your primary argument. I believe the point you are making is that our state is insolvent because of education and healthcare spending. This argument is made often, but I'm not sure I agree with it. Our gov. cut a lot of taxes when he came into office. One was a car registration or something.

If he hadn't cut those taxes years ago, and we'd generated all that revenue, how much of our current problem would have been avoided?

Cutting revenue while maintaining spending will always lead to insolvency, but this doesn't mean that having a good healthcare and education system lead to insolvency.

Davis's tripling of the vehicle registration fees amounted to some $4 billion annually, but all of that money was being funneled to local counties and municipalities.

The budget crisis in California is complicated. Our Democratic legislature is unwilling to cut expensive and unnecessary social programs and unable to repeal spending measures passed by voters. e.g. the state's SSI supplement. Why do we even have that?

Saying that we need to cut unnecessary social programs (I'm not sure what metric would be used for this) is very different from suggesting that a good education and healthcare system are unsustainable.

There are two large elephants in the room that people don't usually talk about. They are the ballot initiatives which tie the hands of our legislature and the fact that California requires a super majority to pass a budget. This is likely why it's hard to cut programs or raise taxes. It gives too much power to the fringes.

"California is one of just three states in the nation, Rhode Island and Arkansas being the others, which requires a supermajority vote of 66 percent to pass its budget."

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This page contains a single entry by Matthew published on January 28, 2009 12:25 PM.

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