Monday, August 17, 2009
"California has avoided fiscal reality for so long it's fitting that the state legislature reverted to subterfuge last week while voting for its third budget deal in nine months. ... This vote scrubbing [of a bill to allow offshore oil drilling] is symbolic of the lengths to which California's leaders want to paper over the state's deficit. Some $1.2 billion of the money 'saved' in the budget deal comes from simply shifting the day state workers get paid by one day into the next fiscal year. Cities and counties will sue to declare the $3.2 billion raid on their propery tax revenue unconstitutional, and they might well win in court. ... No wonder the new Public Policy poll finds only 28% of voters are happy with the job done by GOP Gov. Arnold Schwarzenegger. He's tied with New York's Democratic Gov. David Patterson for the nation's worst rating. The California legislature's approval rating is even lower: 17%. ... Just 144,000 wealthy families. or 1% of taxpayers, provide half of the state's income tax revenue under the state's steeply progressive tax rates, which top off at 10.3%. ... The hour is late. Until the 1980s, Californians got richer than the rest of the nation did. But in 2007 alone, 260,000 poeple moved to other states with more opportunity. The Tax Foundation says only New York and New Jersey have worse business tax climates. ... Some business and labor groups say a constitutional convention is necessary to sweep away restrictions such as the requirement that a state budget muster two-thirds support in the legislature. But giving legislators more maneuvering room isn't the answer", my emphasis, John Fund (JF) at the WSJ, 1 August 2009: http://online.wsj.com/article/SB10001424052970204619004574321970408646040.html.
JF is a WSJ opinion writer. JP doesn't use the "I word" once. Suppose California elminated the 2/3 budget rule. Then what? It would spend as usual until it has no one left to tax. Productive Californians, leave. It doesn't want you. Did the change JF notes took place in the 1980s result from California's changed demographics? Perish the thought. JF, what is your answer?