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Ozymandias
07-01-2009, 10:01 AM
Do we have anyone from CA on here who can enlighten me a little on the budget crisis? I realize both sides are pointing fingers, but who are you guys blaming for this? It seems from what I've read that Republicans refuse to raise taxes and refuse to cut certain spending, so they can't get anything done.

What is the true situation in Sacramento? Why is the capital even in Sacramento in the first place?

Davian93
07-01-2009, 10:08 AM
They spend more than they make in revenue and they have that silly referendum system that prevents any real tough change.

Also, illegals...;)

StrangePackage
07-01-2009, 10:19 AM
Gray Davis.

John Snow
07-01-2009, 10:49 AM
the other day, let's see...
George Skelton's column (http://www.latimes.com/news/local/la-me-cap29-2009jun29,0,4866723.column)
and he speaks my mind (to use Quaker jargon) - it's Prop 13, the 60% requirement to pass a budget, term limits, closed primaries, districts gerrymandered by the state legislature, the stupid initiative process that is largely impelled by lobbyists, and the fact that our state constitution is written in pencil, as witness Prop 8.

Something Skelton doesn't mention but that costs tons of money is the number of people we put in prison, largely due to two things - the war on drugs and the three strikes law. Whatever you think of those, they are expensive as hell.

Davian93
07-01-2009, 11:33 AM
Yeah, that 60% requirement is ludicrous. CA is a national joke right now.

Ozymandias
07-01-2009, 07:01 PM
All that I've been taught, and observed, seems to point to the fact that none of those things are whats killing the Californian budget. Its that every time there is a surplus, CA funds new programs in order to score political points, which means that not only are they spending what they make, but also the aggregate of every extra cent they've ever collected.


Anyways, my question was more "who is slowing up the budget approval process" than anything else.


And I think California, hell, even the Feds should severely cut funding to multiple programs to make up the deficit.

John Snow
07-01-2009, 10:40 PM
All that I've been taught, and observed, seems to point to the fact that none of those things are whats killing the Californian budget.
Anyways, my question was more "who is slowing up the budget approval process" than anything else.


everything you've been taught, and observed, is wrong. Those points are exactly the problem. What's slowing it up is that nobody wants to admit what the problem is, because it will kill their re-election prospects and their career path after they're termed out.

Zanguini
07-01-2009, 11:57 PM
What is the true situation in Sacramento? Why is the capital even in Sacramento in the first place?

There are a couple of reasons one is than when California was incorperated as a state from it was thought tha a capital away from the don controlled coast would be better suited.

Next at the time it was the largest and only officially incorperated town in California.

Before the Gold rush there was the Silver rush and Comstock lode which helped solidify sacramento.

Frenzy
07-02-2009, 01:10 AM
actually, San Jose was the first European settlement in California, and it's first capitol. Then the capitol went to Vallejo, Benicia, then finally Sacramento.

The problem with the budget, in my opinion, comes down to a few key points:

1) the state has been using bonds to pay for everything for the last 30 years. Any idiot can put a bond measure on the ballot, and it only takes a simple majority to approve them. Plus, bonds are the first thing that has to be paid for, which sucks money from the general fund.

2) Prop 13 requires a balanced budget passed by a 2/3rds majority, which means the minority can strong-arm whatever they want with impunity.

3) Gerrymandered districts mean that state senators & assemblymen don't have to work for their phony-balony jobs. They just need the blessing of their party.

4) Term limits mean that the politicians get tossed out after a set time, so there's nothing to make them work to keep their phony-baloney jobs. Any mess they make will be someone else's problem.

5) The state loooooves progressive programs to do cool stuff and to help people in need. That stuff costs money.

6) The two main sources of revenue for the state are income taxes and sales taxes. Both are way down. Plus, something like 40% of the income tax revenue comes from the top 2% of earners. So lots of those uber-rich folks are packing up and moving to states without income taxes.

Prop. 13 requiring a 2/3rds voter approval for new taxes and capping property tax hikes to 2% per year is not a bad thing. Not in a state that wants to do everything for everyone.

Sei'taer
07-02-2009, 09:10 AM
actually, San Jose was the first European settlement in California, and it's first capitol. Then the capitol went to Vallejo, Benicia, then finally Sacramento.

The problem with the budget, in my opinion, comes down to a few key points:

1) the state has been using bonds to pay for everything for the last 30 years. Any idiot can put a bond measure on the ballot, and it only takes a simple majority to approve them. Plus, bonds are the first thing that has to be paid for, which sucks money from the general fund.

2) Prop 13 requires a balanced budget passed by a 2/3rds majority, which means the minority can strong-arm whatever they want with impunity.

3) Gerrymandered districts mean that state senators & assemblymen don't have to work for their phony-balony jobs. They just need the blessing of their party.

4) Term limits mean that the politicians get tossed out after a set time, so there's nothing to make them work to keep their phony-baloney jobs. Any mess they make will be someone else's problem.

5) The state loooooves progressive programs to do cool stuff and to help people in need. That stuff costs money.

6) The two main sources of revenue for the state are income taxes and sales taxes. Both are way down. Plus, something like 40% of the income tax revenue comes from the top 2% of earners. So lots of those uber-rich folks are packing up and moving to states without income taxes.

Prop. 13 requiring a 2/3rds voter approval for new taxes and capping property tax hikes to 2% per year is not a bad thing. Not in a state that wants to do everything for everyone.

Sounds like a great way to run a country, at least with 3 - 6.

John Snow
07-02-2009, 10:42 AM
And the whole anti-tax movement is really coming home to rest. Neither conservatives nor progressives will push for anything like taxes to pay for their programs.....that idiot Schwarzenegger got elected in part by smashing up a car tax - which, were it still in place, would be enough to cover the deficit. I don't understand it - how do people think the government can do their favorite programs without taxes from themselves......

Frenzy
07-02-2009, 09:03 PM
i like to point to a vote in Oakland a few years back that sums up the problem nicely.

Oakland, in case you're curious, i the Detroit of California when it comes to crime. (actually Richmond is, but that's the town nextdoor. why quibble) The people of Oakland demanded something be done, so two measures were put on the ballot. One was asking if the City should hire more cops, and the second was a parcel tax to pay for more cops. The first proposition passed overwhelmingly, while the second was soundly defeated.

People want stuff, but they don't want to pay for it. i doubt that is unique to California. It's just amplified in a state this large.

(btw, i read an op-ed by Pat Buchannan blaming California's problems on multi-culturalism making people distrust everyone. Pat Buchannan is still full of shit, so the world isn't going to end tomorrow.)

Davian93
07-02-2009, 09:12 PM
Your tourism commercials are great to watch though...

...and I loved wine country when we visited. I'd never want to live there though...way too many issues.

GonzoTheGreat
07-03-2009, 04:58 AM
One was asking if the City should hire more cops, and the second was a parcel tax to pay for more cops. The first proposition passed overwhelmingly, while the second was soundly defeated.I think that the technical term for this is "Duh!"

Those two options should have been combined into one package, so that people could actually vote for or against a realistic proposal.
As I'm sure you all know.

Ozymandias
07-03-2009, 01:26 PM
1) the state has been using bonds to pay for everything for the last 30 years. Any idiot can put a bond measure on the ballot, and it only takes a simple majority to approve them. Plus, bonds are the first thing that has to be paid for, which sucks money from the general fund.



Whats wrong with bonds?

Last I checked, the major problem with CA is their cap on the real estate tax, which is severely hampering their ability to make money.

And now they've been downgraded several times by the major rating agencies so they're screwed.

As a disclaimer... I work in the municipal bond market, so I'm pro-Bond

JSUCamel
07-03-2009, 01:43 PM
As a disclaimer... I work in the municipal bond market, so I'm pro-Bond

Me too! I think Connery was the best.

Davian93
07-03-2009, 02:56 PM
Me too! I think Connery was the best.

Connery will always be the classic Bond but the current guy is fantastic.

Gilshalos Sedai
07-04-2009, 09:24 AM
Daniel Craig, FTW.

Davian93
07-04-2009, 09:34 AM
Daniel Craig, FTW.

Yeah, I know his name...I simply chose not to use it.

Frenzy
07-04-2009, 04:18 PM
007 aside, there are several problems with governments relying too heavily on bonds.

1) The government can sell $10 billion in bonds, and has to pay back over $20 billion to settle that debt. Or more, given the state's crappy credit rating.

2) Government debt is paid by the General Fund.

3) Bonds in CA can be passed by a 55% majority. General fund increases must be passed by a 66.67% majority.

4) Many municipal bonds go for capitol projects. Which isn't necessarily bad for utilities and such. But when you use bonds to build libraries, community centers, parks, etc., the bonds pay for the land & construction only. Not the maintenance, upkeep, or staffing. The City i work for has dozens of lovely new park buidlings, community centers, and fire stations, yet lacks the money to operate them because the general fund is overtapped by paying off bond debt (among other things).

5) bonds are a one-time infusion of a huge amount of money. It isn't a steady, sustainable source of funding. Plus, governments with a sudden crapload of money are only slightly more reponsible than a teenager with a sudden crapload of money.

6) Here are some of the bond measures passed last november: $980 million to build childrens' hospitals, $9.95 billion for high-speed rail between LA & SF, and $900 million for loans to veterans. That was only 9 months ago, when we were in the middle of the biggest budget clusterfuck in decades.

7) People are stupid.

The main problem in California is NOT the cap on real estate taxes. See #5 and #7 above. Besides, the real estate market is in the toilet, and bank-owned properties don't pay property taxes. And once they are sold, property values have dropped 10%, 20%, and more. Opening up that one revenue stream isn't going to fix anything.

Sei'taer
07-05-2009, 05:45 PM
The main problem in California is NOT the cap on real estate taxes. See #5 and #7 above. Besides, the real estate market is in the toilet, and bank-owned properties don't pay property taxes. And once they are sold, property values have dropped 10%, 20%, and more. Opening up that one revenue stream isn't going to fix anything.

DAMN! Only ten to twenty! We went down 25% to 35% here, but taxes went up 28%. You should have seen the lines at the county assessors office contesting the property taxes.

Also, everyone has to remember that banks are not realtors or developers. In my city alone, pop. 40,000+/- there have been 6 entire subdivisions that have been foreclosed on. It totals about 250 lots. One 8 lot s/d was sold just before foreclosure. The other 6 are now just sitting waiting on someone with enough capital to buy, so no taxes are coming from those lots. 2 years ago we averaged about 50 new home permits a month, last year it was 30, this year in 4 months there have been 3. I am living off of capitial improvement projects right now. If it wasn't for those I would be out of a job...I may still end up losing my job. My guess, from talking to home builders and realtors is that the new home tax revenue is going to be close to zero for a long time to come because the builders who have managed to stay in business are not going to put themselves in a losing position, so they will only build for a sure thing. Meaning a new house that has financing already established by a buyer, otherwise there is no way anything is going to happen.

The only thing holding up the housing right now is people buying homes that are already built and those are selling for super sheap right now since owners can see that is the only way they are going to get out from under that payment, by taking a loss. I even saw a foreclosed home, 5700 sq ft, go for $109,000 at auction. Barely covered what the bank had in it, but they had to get it off of their books.

Frenzy
07-05-2009, 07:21 PM
Cali is a huge state, Sei'taer. i was trying to average it. There are places in the Central Valley where home values have dropped in half, if not more. JWB could give you specifics, since he lives out there.

Our City's building inspectors are hurting hard too. All those lovely bond-funded projects are done, so the workload has dropped. Plenty of work in stormwater, though. Want to come work for me? ~weg~

Sei'taer
07-05-2009, 07:31 PM
Cali is a huge state, Sei'taer. i was trying to average it. There are places in the Central Valley where home values have dropped in half, if not more. JWB could give you specifics, since he lives out there.

Our City's building inspectors are hurting hard too. All those lovely bond-funded projects are done, so the workload has dropped. Plenty of work in stormwater, though. Want to come work for me? ~weg~

God I hate stormwater....the various DECs can kiss my ass.

Ozymandias
07-06-2009, 08:57 AM
The main problem in California is NOT the cap on real estate taxes. See #5 and #7 above.

Spending is never the issue. With unlimited funds you can have unlimited spending, ergo, its never the spending money that is the problem. Its spending what you don't have, or in other words, raising money. And one of the biggest reasons Cali can't get its tax revenues up is the cap on the real estate tax.

Besides, the real estate market is in the toilet, and bank-owned properties don't pay property taxes. And once they are sold, property values have dropped 10%, 20%, and more. Opening up that one revenue stream isn't going to fix anything.

I think you'd be incredibly surprised.

5) bonds are a one-time infusion of a huge amount of money. It isn't a steady, sustainable source of funding. Plus, governments with a sudden crapload of money are only slightly more reponsible than a teenager with a sudden crapload of money.

Most bonds are issued with a specific use in mind. Either to bridge into the next fiscal period, or build a specific project, but never just to have a little extra spending money.

2) Government debt is paid by the General Fund.

Only some of it. By no means all, and (and I can check this later if I get time) probably not even most.

But when you use bonds to build libraries, community centers, parks, etc., the bonds pay for the land & construction only. Not the maintenance, upkeep, or staffing.

You could make an argument that such projects increase home values and therefore, increased real estate tax revenues would help with funding...

If Cali hadn't capped their real estate taxes

Gilshalos Sedai
07-06-2009, 09:19 AM
but never just to have a little extra spending money.


And how much of Social Security actually makes it to the elderly's pockets?

Frenzy
07-06-2009, 11:08 AM
Spending is never the issue. With unlimited funds you can have unlimited spending, ergo, its never the spending money that is the problem. Its spending what you don't have, or in other words, raising money. And one of the biggest reasons Cali can't get its tax revenues up is the cap on the real estate tax.
well of course if you have more money you can spend more. The problem is it isn't their money that the state is spending. It's the taxpayers' money. Not only that, there is no accountability for the legislature that spends it, so why should they care if they take more? In fact, they feel so-called pressure when projects in their districts are cut.
I think you'd be incredibly surprised.
No, i wouldn't. Depending on one source of income is short-sighted and stupid. Cali had buttloads of money pouring in when times were good, so programs extra funding and new programs started. When funding dried up, programs had to be cut. Funding always dries up. There is no such thing as unlimited resources.
Most bonds are issued with a specific use in mind. Either to bridge into the next fiscal period, or build a specific project, but never just to have a little extra spending money.
True, but most bonds are issued without a repayment process set up. They rely on existing, overtapped resources to pay for the additional debt.

(with the exception of stuff like toll bridges or those Veteran's loans i mentioned in an earlier post)
Only some of it. By no means all, and (and I can check this later if I get time) probably not even most.
Feel free to research it. i'd welcome the opportunity to be proven wrong that the debt of the state doesn't get paid out of property taxes, sales taxes, income taxes, etc.
You could make an argument that such projects increase home values and therefore, increased real estate tax revenues would help with funding... If Cali hadn't capped their real estate taxes
that same argument is used for Eminent Domain.

Capping the increase of property taxes limits growth, but it also makes for a more stable revenue stream. My property taxes have increased the full 2% every year i've owned my home, even WITH the tanking of the market. Property values were overinflated, so when they came back down the decrease in property tax revenue wasn't as large. A person who bought their home for $500,000 back in 2000 then saw their value shoot up to $1 million then saw it sink back to $500,000 paid the same 2% increase every year. They didn't have to pay in proportion to the home value spike.

Another example: my uncle in Texas has a home that's valued at roughly half of what my piddly little place in Cali is. But he pays more than double what i do in property taxes every year. He owns his home outright, but he can't retire because he has to pay a 5-digit tax bill every year which is equal to more than 10% of his property's value. How is that a sane way to do business?

Cali is WAY over it's head in debt, and issuing bonds is the coward's way out. The legislature should raise income taxes and be done with it. (Because of gerrymandering they likely won't lose their seats.) The state needs at least a decade to rebuild it's credit rating, and should focus on paying down it's debt load and restructuring it's priorities to core services at reasonable costs instead of every proverbial cool thing or saving every proverbial sick puppy.

Ozymandias
07-06-2009, 06:17 PM
No, i wouldn't. Depending on one source of income is short-sighted and stupid. Cali had buttloads of money pouring in when times were good, so programs extra funding and new programs started. When funding dried up, programs had to be cut. Funding always dries up. There is no such thing as unlimited resources.

No I meant that its a LOT of money. Obviously they can't rely solely on that, but even a 1 or 2% increase is gonna come out to billions a year, probably. If they would raise that, they would be basically out of debt problems overnight.

True, but most bonds are issued without a repayment process set up. They rely on existing, overtapped resources to pay for the additional debt.

This could not be less true. Looking only briefly, in 200(1?) rev bonds made up about 70% of new issues against 30% general obligation bonds. Revenue bonds, you'll guess, are set up with a specific revenue in mind to repay them (tolls, hotel revenues, whatever), whereas GO's come out of the general fund or general taxes. Of course, the state is legally obligated in that case to raise taxes to pay off the debts, so voter concerns are almost irrelevant. And the shift towards revenue bonds has been going on for a unmber of years, its likely more pronounced today.

Feel free to research it. i'd welcome the opportunity to be proven wrong that the debt of the state doesn't get paid out of property taxes, sales taxes, income taxes, etc.

It does. But there are a bunch of types of bond structures and repayments. Decades ago, most issues were general obligation, but thats switched over to a large degree (as I said, over 2/3 are now revenue bonds). The GO debt gets paid out of various tax revenues or grants or whatever... its just becoming less common.


Another example: my uncle in Texas has a home that's valued at roughly half of what my piddly little place in Cali is. But he pays more than double what i do in property taxes every year. He owns his home outright, but he can't retire because he has to pay a 5-digit tax bill every year which is equal to more than 10% of his property's value. How is that a sane way to do business?

Well now we come to the crux of the debate about gov't, right? Not knowing anything about Texan social services, I'd go out on a limb to say that your uncle pays those kinds of taxes, and in return, gets to see at least some benefits of it in terms of public services.

Cali is WAY over it's head in debt, and issuing bonds is the coward's way out. The legislature should raise income taxes and be done with it. (Because of gerrymandering they likely won't lose their seats.) The state needs at least a decade to rebuild it's credit rating, and should focus on paying down it's debt load and restructuring it's priorities to core services at reasonable costs instead of every proverbial cool thing or saving every proverbial sick puppy

I absolutely agree. Bonds are a terrible idea for Cali right now. I'm just saying, as I said to Neilbert a few weeks back, that debt is NOT some evil to be decried wherever it is met. Its often an excellent and expedient way to get important things done. It just needs to be monitored responsibly, and the California legislature was highly irresponsible.