California On The Brink

California is teetering on the precipice.  Yesterday Governor Jerry Brown said the state is facing a $16 billion budget deficit.  He proposed some spending cuts to make up the shortfall and asked voters to vote to raise taxes, “temporarily.”

If I were a California voter, I’d be a bit skeptical of Brown’s budget figures.  He forecast a $9.2 billion deficit in January; only four months later that amount has nearly doubled.  His budget also assumes economic growth, a sharp increase in new home construction, and $1.5 billion from Facebook’s initial public offering.  The Governor’s budget also counts on the use of one-time funds, and assumes that he will be able to convince state employee unions to accept a reduced workweek and that he will be able to convince the Democrats in the California state legislature to cut spending on social services.  Notably, Governor Brown also refuses to cut spending on a high-speed rail program.

In short, it’s the by-now-familiar scenario where voters are asked to approve “temporary” increases to the sales tax and income tax on the promise of cuts that never quite materialize.  Brown’s budget contemplates spending $91.4 billion.  Can’t California assign priorities and just cut those programs at the bottom of that priority list?  Rather than relying on phony promises of reduced workweeks and percentage cuts, or overly optimistic growth forecasts, how about making tough decisions and ending programs altogether?  How about firing employees, rather than negotiating to trim their workweek?  How about cutting the dreamy high-speed rail program in the face of budget realities?

The Wall Street Journal has an interesting piece contrasting how New Jersey Governor Chris Christie dealt the deficit he inherited with Brown’s approach.  Christie ended a high-speed rail program as an unaffordable luxury.  Christie vetoed tax increases as economically suicidal.  Christie was able to close New Jersey’s budget deficit without raising taxes.  Why can’t California make similarly tough decisions?

1 thought on “California On The Brink

  1. That proposed high speed rail project that is supposed to start from a spot something like 90 minutes southeast of LA, and go from there into Vegas, is one of the nuttiest suggestions I’ve heard in a long time – which probably means it has a good chance of happening.

    Maybe the new Facebook IPO billionaires could fund it!

    Thanks for the post, as always.

    Like

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