One of the key differences that people need to understand is that the composition of the state budget is very different from the local budget. Locally, employees make up over 70% of the city’s costs. The result is that increases in compensation both in terms of salaries but also in terms of promises for pensions put a huge strain on the budget.
The city of Davis managed to survive first through the collection of a half-cent sales tax that produced around three million per year in revenue and also because property tax revenue was increasing at a very robust rate during the last decade. However once the real estate market flatlined in Davis and busted in the rest of the state, revenues could no longer keep pace with increases in employee salaries.
Indeed, as the myth goes, “They are to blame for some things: bullying liberal allies they deem insufficiently subservient (Senate leader Darrell Steinberg [D-Sacramento] is the latest target); blocking reforms they feel threaten members (teacher unions are notorious); and driving up retirement benefits to unsustainable levels (CHP officers, prison guards and civil servants are all guilty).”
The belief then is that as California once again grapples with a $19 billion deficit, the government can “cut its way out of the hole.” Instead, “Sometimes when government cuts spending, it actually costs money.”
Writes Mr. Skelton, the true culprit is more complicated. “California’s budget nightmare stems from a devil’s brew of sins: lack of discipline on both spending and tax-cutting in the past; an outdated and unreliable tax system too susceptible to economic booms and busts; the unhealthy dependence of local governments on Sacramento; and a dysfunctional state budgeting process that requires a gridlock-generating two-thirds majority vote.”
Many people believe that Sacramento could make its ends meet by cutting the salaries of state employees by 10%. In point of fact, last year, most state employees have seen their salaries decline by a lot more than that, on average about 14% through furloughs, however, as Mr. Skelton points out the state still has a $19 billion project deficit.
The Governor’s current proposal would see a 5% salary cut, require workers to contribute 5% more to their retirement, and cut the workforce by 5%. According to Mr. Skelton, that would save $1.8 billion. Not chump change, but not going to balance the budget.
“Fire every prison guard, every CHP officer, everyone who works at the DMV, everyone who works for the state parks system … and you’re still not there,” notes H.D. Palmer, spokesman for the state Finance Department.
One of the big problems is that 70% of the state general fund flows to local governments, whether they be schools or cities. This is the unintended consequence of Proposition 13 which crippled the ability of local government to raise property taxes locally.
Pension also do not make much of a dent. Writes George Skelton, “The governor has budgeted $3.8 billion in state contributions for the next fiscal year. But only $2.1 billion of that would burden the bleeding $83-billion general fund. The rest would come from self-sustaining special funds.”
As he puts it, even if the state paid zero month on employee pensions, which would not be possible, the savings would only get the state about 11% of the general fund budget hole.
George Skelton then talks about the union concessions that we reported last week, where four public employee unions agreed on retirement rollbacks for future hires. These four unions represent about 10% of the governor’s workforce, including firefighters, Highway Patrol officers, health and welfare personnel and psychiatric technicians.
As Mr. Skelton points out, “The pacts return pensions for future employees to roughly the levels that existed before then-Gov. Gray Davis and the Democratic Legislature boosted benefits substantially in 1999. And that rollback is long overdue.” However, the total savings from that is only $72 MILLION a year, that’s million with an “m” and only $43 million of that comes from the general fund.
This is not a futile gesture for the state, it will help in future budgets, just not this one. “The state gain from the union agreements derives from increases in employee contributions, a workforce cut and one unpaid day off a month. The actual pension rollbacks will help future generations balance the state books, but they’ll be of no use to current budget-writers.”
The state would like the same deal with the remaining employees, that would fill about 6% of the budget hole.
What about cutting welfare? Welfare cuts would only shift the burden to already cash-strapped counties. “If Schwarzenegger, for example, succeeds in his effort to close down the state’s main welfare program — a $1.2-billion savings — that “clearly would have a significant impact on the counties,” Palmer concedes.”
Why? “That’s because counties legally must provide the safety net of last resort for the poor with their general assistance programs. Dan Carson, deputy legislative analyst, estimates there’d be a cost shift to the counties of “at least $1 billion” if the Legislature accepted Schwarzenegger’s proposal. Which it won’t.”
Another target is IHSS (In-Home Supportive Services). As Mr. Skelton points out, that merely shifts money from IHSS to Medi-Cal. “Schwarzenegger also is trying to cut spending on In-Home Supportive Services by $750 million. But that could force many frail, elderly people into much more expensive nursing homes. This would significantly jack up Medi-Cal costs.”
We could go on and on. There are no real saving solutions here. In the end, we know that the state once again has to close an enormous budget gap. And the state has to do it without raising taxes, because even the modest tax proposals last year resulted in the few Republicans who agreed being targeted and electorally damaged. We also know as we reported a few weeks ago that the state is spending money at its lowest levels in years. The problem is not spending at this point, it is revenue and until that turns around, we are looking at more cuts and more expenses down the road due to those cuts.
—David M. Greenwald reporting
Our State government is completely dysfunctional and I believe that our budget woes stem from that, as well as a severe economic downturn which, unfortunately, will drag on for years (whether we double-dip or not).
Like our national politics, our state politics have become mired in partisan bickering rather than a pragmatic approach to governing. We have gerrymandered districts, a budget process that requires super-majorities to do anything, a tax system which is one of the most pro-cyclical in the country– leading to a boom and bust revenue cycle (thanks in part to Prop 13 which limits stable property tax revenues and pushed the state to a very cyclically unstable income tax system).
I agree state employees unions are not the main culprit here, but they have not helped. For example, the prison guards union has not helped and today CA spends almost double the national avg per prisoner ($47,000 vs $24,000; Texas spends $16,000). And California faces a huge problem with unfunded pension liabilities which will force State and local governments to reneg.
At the municipal level I think unions are one of the main culprits.
More cuts are coming and labor is a large percentage of State expenses. CA workers are also quite well paid compared to most states (and labor unions have played a role there)
I don’t see taxes going up substantially. I’d support sensible increases–extending the sales tax to services and out of state purchases (which hurt bricks and mortar retailers and is a huge boon to Amazon).
I ‘d like to be optimistic here but I believe we are only in the second inning.
Excellent article, but I think it is a mistake to view public employee unions as the culprit; these unions do what all unions do–get the best deal they can for their members. The problem is the inability of the legislators to say “no.” Of course, it is hard to say “no” to your largest contributors. We need look no farther than our current city council to illustrate this truth. Again to take a page from our own fair city, the solution to this problem is to educate the electorate. Maybe we need a California Vanguard.
Public sector “bashing” often makes no sense except in a political context. For example, Ca public employees whose salaries DO NOT come out of the State budget but rather come from fees charged to the corporations whose activities they are responsible to oversee. The Governor’s authority to issue his furlough edict has already been rejected in court. I assume that this decision is being appealed.
Public employees and their unions are the root cause of most financial woes for the state. The shift of responsibilities down to the counties only moves the problem from one class of public trough to another.
You can either cut public employee’s goodies, or you can cut handouts… choose.
That’s whole point of the article and stats, there is no evidence to support your viewpoint that they are the root cause. The root cause is a deep recession, not spending.
If you look at data from the state controller’s office, and budget information from the department of finance, you find that:
State budget ’10 – ’11 is approx. $86.1 billion.
Payroll cost is $17 billion per year, or 20% of the budget.
That covers 240,000 active employees, at an average annual pay of $71,000.
My suspicion is that there is a lot of gov’t waste going on. The reason I say this has to do with items like the $1.8 million federal grant UCD received to research how public school students can be better prepared for college. Now does that make sense to anyone? Fire teachers in the public schools; cancel classes and raise tuition at the college level – but research how to better prepare students for college? How about taking that $1.8 million and hire back a few of the teachers fired? Or how about taking the $1.8 million and lowering college tuition so more students can get in?
The city is going to spend money on an EIR for a Sports Complex – a Sports Complex the city cannot afford if it cannot fix its own roads. The way the gov’t spends/wastes money is positively appalling/frightening…
There’s definitely a lot government waste going on. Finding it is not so easy. If it was, they would have found it and pulled it out by now as they’ve had this battle the last three or four years and are desperate to find money they can cut. One problem is that even $1.8 million in waste, if it were pure waste, they would have to find 500 such wastes just to get even close to a billion in savings. That’s a lot of time to look at and not much return.
[i]”Locally, employees make up over 70% of the city’s costs. … There seems to be an assumption that the same dynamic has played out at the state level, but that is actually not true.”[/i]
It actually is true, if you widen your definition of who is and is not a “state employee.” The direct payroll cost of $17 billion per year for the state doesn’t include any school employees as state employees, despite the fact that almost their salaries are funded by the state budget. It also leaves out all “outside contractors” who are effectively making their entire living on state contracts. In other words, people who could be directly on the payroll.
George Skelton writes: “… roughly 70% of the state general fund flows out to local governments and schools, one of the unintended consequences of Proposition 13, which slashed the property tax 32 years ago.”
Most that 70% goes to people who are in effect state employees. The only difference is that the governor and the legislature don’t negotiate their contracts.
Skelton should also include this information about state property taxes in California: over the last 32 years, our state has collected (as a percentage of per capita income) more than all but a dozen or so states. As such, our state revenue problem historically has not been too little in property tax revenue, though since the housing crash, the reality is now different.
Over the last 30-40 years, our four most salient problems have been:
1) on the spending side of the equation, every time revenues have gone up, we have increased expenditures to levels which are unsustainable in a recession;
2) the salaries and benefits paid to those who directly work for the state and the indirect monies paid to state contractors (like medical doctors and nurses who care for prisoners) have risen to unsustainable levels;
3) because our income tax levels (for the rich) are so high, we tend to have much higher fluctuations of marginal state revenues, and our budgeting process, mandated by Prop 98, never prepares for the downturns; and
4) voters in California have repeatedly passed very expensive bond measures, which we have to pay off, making it that much harder to meet our service obligations.
The right-wing extremists in this country have successfully sold many of the electorate a bill of goods. “Taxes are the root of all our fiscal woes. Public employees are a major cause of higher taxes.” We hear it trumpeted from Hannity and Limbaugh almost daily. The republicans, applying the age old GOP dictum, “A scapegoat is easier to find than a solution,” were so successful in putting Schwarzenegger in office by slandering Davis, that they have chosen the same tactics to not fix the state budget. When affirmative proposals are made, even by their handpicked governor, they can only deride them, offering no compromise or alternative. When they are done with the public employees, who will be their next target? Perhaps “Wasteful” municipal governments?
[i]”State budget ’10 – ’11 is approx. $86.1 billion. Payroll cost is $17 billion per year, or 20% of the budget. That covers 240,000 active employees, at an average annual pay of $71,000.”[/i]
Your $86.1 billion figure does not jive with the LAO budget numbers ([url]http://www.lao.ca.gov/laoapp/laomenus/lao_menu_economics.aspx[/url]). They have $86.4 billion for 2009-10 and $83.4 billion for 2010-11. And those are not the total state budget. Those are just the General Fund numbers.
For 2009-10 and 2010-11 fiscal years, by percentage, these were the components of our GF expenditures:
Criminal Justice $8,981,761 (10.4%); $10,820,216 (13%)
General Government $3,769,556 (4.4%); $1,864,822 (2.2%)
Health $15,194,587 (17.6%) $16,563,534 (19.9%)
Higher Education $10,516,721 (12.2%); $11,740,256 (14.1%)
K-12 Education $34,547,843 (40%); $33,493,646 (40.2%)
Resources & Env’tl Protection $1,943,490 (2.2%) $2,101,062 (2.5%)
Social Services $9,213,298 (10.7%); $6,295,295 (7.5%)
Transportation $2,298,065 (2.7%); $524,932 (0.6%)
As noted, that $86 billion General Fund total is only one component of the state expenditures. Our total state budget in 2009-10 will be $217.8 billion; in 2010-11 it is estimated now at $209 billion.
There are four major funds:
General $86.4
Special $23.3
Bonds $12.6
Federal $95.4
It would be nice to get an accurate estimate of the percentage of the State budget, but I am sure it is far higher than 20% –looking at budget data is tricky. For example the UC/CSU budget is overwhelmingly labor but may not show up as such. Public schools are overwhelmingly labor; health has high labor costs, prisons etc.
We need to have accurate numbers or we are no better than some of the yahoos criticized above.
Just as a reference point about 2/3 of this US economy is labor. Much of what the State funds involves labor intensive services such as education, so it is quite likely the State % is a bit higher than 2/3.
It is a strange notion that the Republicans “hand-picked” Schwarzenegger, since he ran in an open race without the support of the Republican party establishment. He is probably their least favored office-holder. Notice that he isn’t even campaigning for Meg Whitman. I don’t think he’s even endorsed her.
Every governor swears that he/she is going to root out “government waste.” Ronald Reagan’s entire career as governor was based on that notion, and he gave it constant lip service as president as well. But each government program has its own constituency. Usually these are really just competing priorities.
I don’t believe any governor could balance the current deficit just by identifying duplicative and wasteful programs. It is going to require cutting employment costs, reducing funding to the local governments and school districts, and raising some taxes and fees. The last will be impossible unless they can pick off one or two Republicans again. It is frustrating that a minority of legislators can thwart any kind of compromise that would balance revenues and expenditures in a compromise. But that is the structure of our current government, and until the voters undo the super-majority Republicans will control the budget outcome.
One note about the cost of the prison guards, which is a favorite whipping boy (of mine and many others), is that their salaries and funded pension benefits do not comprise the majority of the cost of incarceration. In 2008-09, it cost $47,102 per prisoner in our state. Of that, $19,663 went to members of the California Correctional Peace Officers Association; $12,442 was spent on inmate health care; the other $15,000 went to operations, administration, inmate support, rehabilitation and miscellaneous programs.
I am not saying prison guards are not overpaid or they are not politically powerful. They are. Their per guard total labor costs have gone up dramatically in the last 25 years; and their total numbers have more than doubled.
But the real problem with prison costs is the large number of inmates relative to our population and the rapidly rising cost of prisoner health care. (Note that we have a growing number of elderly prisoners, who are likely no danger to the public but will never be released, due to our sentencing guidelines and other statutes.)
In 1987, we incarcerated 2.4 out of every 1,000 people in California. We now incarcerate 4.7 out of 1,000 – a 94 percent increase. In 1987, our state’s prison population averaged 66,975 inmates per day. By 2007, that figure rose to 171,444.
In California, 21 percent of prisoners are “second strikers.” That doubles their sentences. So a six-year term for burglary becomes a 12-year term, costing us more than $565,000. Another 5 percent are third strikers, meaning they are serving 25 years to life, even if the third strike was a minor crime. A further 12 percent are serving life with the possibility of parole. Two percent more have life without parole. And 0.4 percent are on death row.
The money for these prisoners is coming directly out of the higher education budget: In 1984-85, we spent just over $1 billion on corrections. That was 4.07 percent of the general fund. In 2009-10, we will spend more than $8 billion. That’s 9.36 percent. In the 2009-10 budget, 5.75 percent will go for higher education (UC, CSU and the California Maritime Academy). Yet 25 years ago, we allotted 11.13 percent of the budget to our public universities.
Maybe my memory is failing Don, but as I recall the election of 2003, the only Republican candidate that did not drop out of the race besides the governor was Tom McClintock, who Schwarzenegger beat by about 3 million votes. While I don’t know how many of those votes came from republicans, it is a fact that almost all of his contributors were republicans with business interests in the state. Perhaps there is a better word than handpicked.
If you guys recall, a few weeks ago I posted the employee percentages by department:
UC – 24.6%
Corrections – 17.4%
CSU – 13.2%
Transportation – 5.9%
CHP – 3.1%
That makes up nearly two-thirds of all employees…
[i]”… as I recall the election of 2003, the only Republican candidate that did not drop out of the race besides the governor was Tom McClintock, who Schwarzenegger beat by about 3 million votes.”[/i]
That is right. However, there were actually 50 Republicans on the ballot* and altogether they drew 5,435,528 votes. Arnold won 4,206,284 (77.4%) of those; McClintock got 1,161,287 votes (21.4%).
[i]”While I don’t know how many of those votes came from republicans, it is a fact that almost all of his contributors were republicans with business interests in the state.”[/i]
Arnold’s votes were likely [i]mostly[/i] not from conservatives or from Republicans — given their small numbers in out state — as that contest was open to members of all parties, all independents and candidates from every possible stripe.
[i]”Perhaps there is a better word than handpicked.”[/i]
I think you should distinguish between the voters for the Republican Party, who are generally very conservative in all respects and the moneyed interests in the Republican Party — they are people, much like the unions for the Democrats — who give money to candidates expecting a financial return on their investment. People who gave big money to Arnold were betting on him to win, regardless of how out of step he was and is with the typical voter for the GOP.
*These were the parties, No. of candidates in each label, total votes and top vote-getter per party in that election:
REP (50 candidates) 5,435,528 votes – Schwarzenegger
DEM (61 candidates) 2,830,780 votes – Bustamante
GRE (3 candidates) 247,850 votes – Camejo
IND (40 candidates) 131,624 votes – Huffington
LIB (3 candidates) 5,887 votes – Roscoe
NL (2 candidates) 2,449 votes – Adam
AI (2 candidates) 2,171 votes – Pineda
PF (1 candidate) 1,626 votes – Weber
“California’s budget nightmare stems from a devil’s brew of sins: lack of discipline on both spending and tax-cutting in the past; an outdated and unreliable tax system too susceptible to economic booms and busts; the unhealthy dependence of local governments on Sacramento; and a dysfunctional state budgeting process that requires a gridlock-generating two-thirds majority vote.”
The 2/3 majority vote argument is simply a complaint about not being able to raise California taxes to be the highest in the nation and cement our destiny as the next Greek tragedy.
I contracted with a state agency for a couple years several years ago. The agency hired me because they could not get their existing employees motivated to work as hard (including training to acquire my special skills) to complete a particular project. Hence, I was hired as contract labor at a higher rate of pay. There is a very healthy contacting industry in Sacramento supporting state government. I assume the cost of contract labor is not included in the State payroll numbers, but it should be.
For full disclosure, in addition to using my real name, I’m also a state employee and member of one of those unions. We don’t regard ourselves as all powerful.
A very basic concept that is missing from just about every discussion on public spending whether the issue is pensions, employee compensation, or whatever is the notion that public spending is a form of investment. There are virtually no state or local programs that don’t have a business constituency behind them. I don’t hear anyone here discussing state and local tax expenditures in the same way they would discuss business investment. There is a return on investment in public spending. If you look at the big departments mentioned in this blog like Caltrans (Transportation) you must, as a taxpayer and voter, have some inkling of what return on the investment of their total Departmental budget is to know whether or not there is “waste”. Using all state and federal funds, special funds and including all contracts to private vendors, you may well come up with $220B. So what does that mean? If you generate $250B is economic activity as a result, you’re $30B better off in aggregate than if you hadn’t spent a dime. You would want to root out waste to improve return on investment, but you would not even consider cutting the amount of investment.
To make any kind of argument for cutting public spending, you have to make an argument that your aggregate benefit is equal to or larger by not spending that amount of money. If I can invest $1.0Million in a program that generates $2.0Million, what sense is there in cutting that program? When you find an investment that gives you a rate of return in excess of 15%, you stick with it. Why should the rules in public investment be any different from private investment except for ideology? I would like to see the evidence that supports the notion that there is a rate of zero or negative return on state operations when taken as a whole.
Take Caltrans as one example. Rich’s figures above (I think those numbers should be read as thousands, not taken at nominal value) suggest that Caltrans has a general fund budget of around $524M. What is the annual value of trucking industry returns, the value to manufacturers who rely on motor transport, the value generated by small businesses that in any way rely on the state and county highway system? What is the value to people who live in Davis and work in another town? I’ll admit it may be hard to quantify, but if you think the option of disinvesting in infrastructure is wise, then I suggest that kind of thinking is the real and underlying crisis in state government. When all you want to do is take the value and not invest, you’re dooming yourself.
Taxes are an investment in social and business infrastructure. The very wealthy have a disproportionate interest in getting the mass of us to pay for their infrastructure. That’s okay, because we all still believe in trickle down economics. The rest of us get something out of it as well, though not in proportion to what we pay, but we still come out ahead. The Republicans in the legislature are anti-tax because they understand that FAIR taxation would mean increasing taxes on wealthy individuals and corporations (their base); the Democrats are afraid to really get out there and lead on FAIR taxation because of the Fox News environment around the issue that precludes rationality and the justifiable fear that they would be out-gunned by major media (owned by anti-tax corporations). I suppose.
Taxes are an investment in social and business infrastructure. The very wealthy have a disproportionate interest in getting the mass of us to pay for their infrastructure.
Davehart: you make points worth considering, but then you engage in the DNC talking point class war. Pay for “their” infrastructure? Last I checked people at all levels of prosperity can use the roads, bridges and bypasses. Did I miss the check point that only let the rich go through?
The top 50% of wage earners pay 96.03% of the taxes. The top 10% pay 68%. The top 1% pay more than the bottom 95%.
The facts are just the opposite… the rich pay the tab so the rest get the benefit. Should the rich pay more? That is a question worth considering, but you are off the mark suggesting that they reap the benefits of government largess more than the masses. That might have been the case when our government was doing what the Constitution required, but certainly not after FDR.
The other counter to your point worth considering: wealth is completely variable and transitory in this country. In the book of American dreams, rags-to-riches stories are the plot and not the subplot. Nothing is holding anyone back other than their own drive and determination… two things I often find lacking in many public sector workers.
Socialism leads to mediocrity. Everyone gets a trophy, no matter if you tried and succeeded or didn’t try.
Darn socialized prison.
“In the book of American dreams, rags-to-riches stories are the plot and not the subplot.”
Something like half of the wealthiest people in the US simply inherited their fortunes. Many of us benefit from the wealth accumulated by previous generations. Should the rich pay more? Sure. I agree, though, that there are practical limitations to how much you can tax the highest income-earners.
“The 2/3 majority vote argument is simply a complaint about not being able to raise California taxes to be the highest in the nation…”
If the voters of California routinely elect a majority prepared to raise taxes as part of a compromise to balance the budget, and if public opinion polls show a majority would support modest tax increases, it seems undemocratic to allow a minority of determined Republicans to dictate state fiscal policy. Eliminating or reducing the supermajority (3/5 would be fine with me) would allow for a more reasonable approach to solving the state’s fiscal crisis. Democrats, independents, and moderate Republicans could have solved this problem the way Gov. Wilson and the Democratic party leaders did: a mix of spending cuts and tax increases. Hard-right Republicans presently hold inordinate and harmful power over the state budget process.
[i]”The facts are just the opposite… the rich pay the tab so the rest get the benefit. Should the rich pay more? That is a question worth considering, but you are off the mark suggesting that they reap the benefits of government largess more than the masses.”[/i]
The main financial beneficiaries of government spending are certainly not the poor or the lower-middle income groups. The main beneficiaries are 1) public employees whose total compensation is far greater from the government than it would be if they worked with equal productivity in the private sector; and 2) a lot of wealthy special interest groups and individuals who use their connections and campaign contributions to get a windfall back. Some examples of the latter are farmers who have the state build and maintain levies so their land remains productive; other farmers who pay sub-market rates for their water which comes from state water projects which all taxpayers paid for; and developers who use their relations with key legislators to get permission to urbanize their rural properties.
Dave Hart speaks passionately about all the good all that investment does. But he misses the key point: it’s filled with wasteful spending. Instead of allowing a bridge to be built by those who are capable of doing the job well with a low bid, the unions have rigged the system so that every worker has to make the prevailing wage (which means the highest possible wage) and every possible union benefit has to be afforded and every union work rule — which harm productivity — has to be followed. So it ends up costing taxpayers 3-4 times as much as it should to do things like build the new Bay Bridge. And that is repeated with the construction of every public road, building, school and so on.
Further, lower-skilled jobs, like janitorial services and secretarial work and the like, pay in the public sector at least 5 times as much as they do in the private sector, once you account for all the paid time off they get, all the years they are paid a publicly financed pension upon a young retirement, their inflated salaries and their inflated benefits packages.
Maybe it is the case that the majority of people want it that way. That is, they want public sector employees and wealthy insiders to profit from our system. But it seems as if this model is no longer sustainable. The unions and the lobbyists have stretched it to the breaking point.
[i]”Darn socialized prison.”[/i]
When a court order forced (or maybe allowed) Gov. Schwarzenegger to outsource prisoners from our socialized prisons in California to privately run facilities out of state, the per-prisoner cost of housing them dropped by more than 50%!
But the real problem with private contractors who do business with states and local governments — including those private prison operators — is that over time those so-called “private” enterprises capture the regulators and the legislators even better than the unions do. So maybe it is cheaper at first, when they put in a competitive bid. But I don’t think the evidence is good at all to show that private prisons or other private parties which do the same jobs that government is now doing, really saves us any money. If they remained competitive and if our system was not corrupt, they probably would. But the private operators do not end up competing for very long and our system of campaign finance is corrupt. So it’s hard to justify going that route.
As it happened with our actual out of state prisoners, they now charge about 10% more than those housed in state in our “socialized” prisons.
[i]”Hard-right Republicans presently hold inordinate and harmful power over the state budget process.”[/i]
This might change with the passage of the open primary initiative. In 6-8 years, I think we will be electing a lot more Lois Wolks and fewer Mariko Yamadas.
“Hard-right Republicans presently hold inordinate and harmful power over the state budget process.”
Thank the Lord, otherwise the Democrats would be taxing California into oblivion. Look at how many jobs and people are already leaving the state due to the current high taxation. Raise them more and you’ll see an exodus of ggod jobs and well to do residents bringing their revenues to other lower tax states.
If they did, they’d get voted out of office, that’s the protection the voters have. On the other hand, the current system does make it near impossible to do budget deals, especially when those who work with the Dems get punished like they were last year.
“especially when those who work with the Dems get punished like they were last year.”
Why do liberals always see it as the Republicans won’t work with the Dems?
Solution, the Democrats need to work better with the Republicans. It works both ways David, even though I’m sure you can’t possibly gather yourself to see it that way.
I covered Sacramento very closely last year and I saw the Democrats willing to compromise all over the place, they ended up supporting the Governor’s budget essentially, which is not the budget they would have preferred, and the Republicans could only get three people in each house to go along with their own Governor’s budget and those who did were punished. I’m sorry but the empirical facts seem to suggest that the Republicans would not work with the Democrats or their own Governor.
“the Republicans could only get three people in each house to go along with their own Governor’s budget”
That’s a laugh, Arnold isn’t a true Republican and you know it. Arnold’s more of a Dem than anything, GOP in name only. I hope the state Republicans stick to their guns. What’s funny is you guys crying about the 2/3’s majority but if the GOP was in charge and they were trying to change the law you Dems would be crying like babies.
If the Republicans were in charge, I would disagree with the policy, not the process.
The main financial beneficiaries of government spending are certainly not the poor or the lower-middle income groups.
I think that is argumentative and certainly subjective. What is the commensurate life value provided a zero-taxed low income citizen receiving public assistance for food, housing, healthcare… on and on, plus being able to walk on the streets, drive on the roads and pee in the parks… compared to a wealthy business owner who pays hefty corporate and personal income tax, and endures the tremendous cost of regulatory compliance enforced by the over-paid government bureaucrats. Don’t forget that the wealthy business owner is also taking financial risks that warrant a return.
By the way, this wealthy business owner provides jobs to others. She purchases more goods and services which stimulates the economy and causes a need for more jobs. She donates more to private charities. The point so often ignored by the left view of static economic class stratification is that she is not an island, but sits atop a pyramid of value… and can be knocked off by competition. Yes, it is the trickle-down concept. The stats delivered by the Marxists and consumption-siders to discredit this reality fail to incorporate the real mitigating factors of global competition, increased productivity through technology and innovation… and the growth of onerous and oppressive labor-favoring laws and regulations combined with a piss poor education system that ensures any manager worth his or her salt would adopt a business strategy that reduces their reliance on workers.
As an example of how self-made CEO’s arrive at their place in life, here is the lineage of Meg Whitman:
[url]http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389×7694259[/url]
“What is the commensurate life value provided a zero-taxed low income citizen … “
When I was a juror, I had to listen to an expert witness describe exactly that during a wrongful death trial.
“…compared to a wealthy business owner…”
Obviously the wealth created by the wealthy is higher than the wealth created by the unwealthy. But I don’t think that should necessarily be the basis of our tax policies. Personally I would favor an increase in the current progressive income tax structure, I would favor expanding it so nearly everyone pays some income tax, and would favor reducing all the regressive taxes and fees.
Jeff, you and I probably agree on this topic more than we disagree, but I will highlight what perhaps are differences:
[i]“What is the commensurate life value provided a zero-taxed low income citizen receiving public assistance for food, housing, healthcare… on and on, plus being able to walk on the streets, drive on the roads and pee in the parks…”[/i]
I don’t know exactly what you mean by life value?
As to those on welfare, I look at them in four distinct groups:
[b]1)[/b] People who have no motivation, who don’t want to work, who don’t contribute to the greater good, who have not tried to better themselves through honest effort and so on;
[b]2)[/b] People who have few skills but do want to work and work hard when they have work, but in a poor economy need some assistance;
[b]3)[/b] The children of the poor; and
[b]4)[/b] The mentally and physically disabled who cannot care for themselves.
I understand your anger toward the first group, but not toward any of the last three. I think the current budgetary cost of the first group is quite small when compared with two bigger, related problems:
[b]1)[/b] The moral hazard, where many people who depend on aid programs get trapped, because staying on various forms of public aid pays more than working does*; and
[b]2)[/b] The generational hazard, where unmarried women on welfare reproduce generations of fatherless young men who are mostly raised without the cultural values of hard work, educational excellence, honesty, goodwill toward man and so on which are the essential building blocks for most successful people in our society.
As to the financial costs of welfare for the latter three groups, I think it is in general what we should be doing. However, very often, with these programs, the big money goes not to those in need directly, but instead goes to middle men. We see these people in Davis, as they build and run various low-income housing programs. My view is that for those in need, unless they are feeble minded, we should try to give them direct assistance (in the manner that we do with so-called food stamps).
*The Earned Income Tax Credit overcomes this problem. It is essentially welfare for the working poor. The more a person works, though, the better off he is under the EITC. The only problem, as I see it, is that the EITC is too niggardly. I wish we were much more generous with that assistance and less generous toward grain farmers who get hundreds of billions of dollars of welfare payments every year.
[i]“… compared to a wealthy business owner who pays hefty corporate and personal income tax, and endures the tremendous cost of regulatory compliance enforced by the over-paid government bureaucrats. Don’t forget that the wealthy business owner is also taking financial risks that warrant a return.”[/i]
Again, I am confused by your “life-value” notion. I certainly don’t think any more highly of the wealthy son of Walter Shorenstein (named Doug Shorenstein) who makes millions of dollars a year leasing out the commercial and office space which he inherited from his father than I do the guy who sells tacos, burritos and greasy churros off of his lunch truck.
With regard to private businesses, we likely agree. I think our income tax rates (as well as our sales tax rates) are too high. They have driven business investment out of California, which has disemployed people here and caused less in net tax revenues to flow into the state’s coffers**.
But I distinguish between those private companies which make an honest product or provide a good service which is bought and sold in the competitive marketplace and those which are the byproducts of favorable government policies, won by giving millions of dollars in campaign contributions or won by cashing in on relationships with other powerful people in government.
**Also, many wealthy people who make their livings in soft industries – like entertainment, some software development and other high tech, venture capital and various other kinds of financial sectors – have the ability to live in California but make sure their income is earned elsewhere, so they pay no state income tax on that income. They would not do that, but for the fact that we have such high rates on our income tax.
“If the Republicans were in charge, I would disagree with the policy, not the process.”
When the Democrats are in charge, you object to the process (the 2/3 budget approval requirement).
If the Republicans were in charge, you admit you would not object to the process.
There’s nothing wrong with being partisan if you are honest about it.
Kudos to you for not pretending to be objective on this.
JR: You misinterpreted what I said. I said I object to the process, if Republicans were in charge without a two-thirds vote, I would not have a problem with that.
rich rifkin: “2) The generational hazard, where unmarried women on welfare reproduce generations of fatherless young men who are mostly raised without the cultural values of hard work, educational excellence, honesty, goodwill toward man and so on which are the essential building blocks for most successful people in our society.”
It takes two (a man and a woman) to tango (make a baby). Women could not reproduce without the assistance of men! Furthermore, there was a study done by the state of CA during Pete Wilson’s reign as governor, that showed 80% of the welfare recipients were a single parent with children, where one parent was no longer in the picture (either through divorce and failed to pay child support or abandonment and failed to pay child support). I have no idea whether the 80% figure is accurate – but I know abandonment of children by one deadbeat parent or the other is a growing problem, as society moves away from the notion of traditional marriage. And CA has one of the worst child support enforcement records of any state.
It is all too common a phenomenon for a parent to attempt to walk away from financial responsibility when they walk away from a marriage/relationship. Because alimony is normally not awarded anymore, and both parents are expected to work, often one parent if not properly educated with a job, finds themselves left literally destitute when the other parent leaves financially/physically. Furthermore, some partners are getting very savvy, and not marrying – but building equity in their name only. The other partner is too trusting, and when abandoned, are left with nothing but the responsiblity of raising children alone with no finances/equity.
No matter how much you give counsel to young people to think before they engage in sex, very rarely do they think through the consequences of what may happen. And that goes for adults who engage in adultery and the consequences that result. As long as society condones this type of behavior, or looks the other way, and has little in the way of consequences to the person who abandons their children, you are going to continue the cycle of dependency on the welfare state. We need to have stronger child support enforcement systems in place… and education in schools about what a person’s responsiblities will be if they give birth to/father a child.
Again, I am confused by your “life-value” notion.
My point was to counter the prior argument that the wealthy benefit more from government spending than the poor, not that some poor are more deserving than others. Government provides them a greater commensurate life-value than it does the wealthy. Only with the Marxist view that the wealthy exploit natural resources and labor unfairly can you arrive at the conclusion that wealth earned is some government-allocated allowance not provide the poor. Even those receiving inheritance are beneficiaries of past earned wealth that is considered private property. A tax-cut is not a government concession to give more of the people’s wealth to the wealthy; it is a concession to allow those that earn wealth keep more of the wealth they earn. With minimum exception, every person in this country can become wealthy if they have the drive and determination to do so, and they posses moderate intelligence and learn some marketable skills. Those that choose not to for whatever reason should stop letting so much class envy eat at their brains. They should also notice that the two wealthiest people in the US are working hard to give it all away for charitable causes.
Getting back to the original point…
Look at the 2007/2008 State budget:
53% of tax revenue came from income and corporate taxes paid primarily by the wealthy.
Only 8.2% of the budget went to Business and Transportation. This was davehart’s bogie for the wealthy getting all their roads and bridges, but my point was that the poor and middle-class directly and indirectly benefit from this spending too.
26.6% went to Health and Human Services. I don’t think that the wealthy rely on these services.
31.5% to K-12 education. Here a percentage of wealthy send their kids to private school. Certainly some wealthy benefit sending their kids to public schools.
10.4% to higher education. Here a percentage of wealthy benefit, but they pay full tuition with zero financial aid. However, certainly we can make the case that the cost of their education is subsidized by government handouts to the state universities.
So, my point was/is, that the wealthy pay almost all the taxes, but do not reap the level of benefits provided the poor.
The issue with wealthy business owners getting fat off the largess of the government through lobbying, campaign contributions and insider contracting… many today blame the business side of this equation while I see more a problem with government. In a past private sector job, I was responsible for purchasing multi-million dollar mainframe hardware, software and services, and I was offered just about everything you would expect from sales people pursuing their self-interest to land the sale. It was my decision who to do business with… and any unethical advances from these people resulted in me crossing them off the list. Wining and dining the customer was part of the game, but I would not let it cloud my judgment for what was right for the business. Why not hold government and politicians to these same standards? The buyer always has more responsibility, accountability and control than the seller. As the buyer you can always say “no”.
Another point… you have some dislike of these companies milking government for easy soft money… I have to assume that the contracts they get awarded are for needed services? If one company is more successful landing contracts (assuming their bids are competitive and the selection process was objective), but performs, then why would I care if they are more profitable? Fairness administered by the government can be the antithesis of competition: it results in SLOW contract awards… and often trades true vender-capability for other social engineering requirements like race and gender. It drives up the cost of doing business only to make us feel more inclusive.