Tough Times for California Bashers

during enron, they were the world's 5th largest economy,last i saw,coiuple years maybe, they were 8th,wonder what they are now
 
Just because this thread got hidden from the new forum roll over, and I had it book marked for hilarity.

LINK

California's Budget Miracle A Mirage After All

Just under a month ago, the mainstream media and blogging coat-tail-riders all hailed the miracle that was a huge windfall rise in California's tax receipts as a sign; a glimpse of what was to come from our centrally planned utopian recovery. Surpluses, taxes up, life is good. Unfortunately, as is always the case in reality, if its too good to be true, then it is! The LA Times reports that the historic $5bn revenue bump appears to have been an accounting anomaly! Just as state accountants were starting to allocate the magical inflow of tax receipts, Governor Brown's administration says the extra money was "likely the result of major tax law changes at the federal and state level having a significant impact in the timing of revenue receipts." Taxpayers were paying a share of their bill early, getting income off their books in the hope of limiting exposure to the tax hikes that recently kicked in. The administration was expecting that money to arrive in April. Now, officials are saying it won't, and that just as January's receipts soared, they'll be offset by a spring plunge. We need another miracle, stat!

Via The LA Times,

The surge of revenue that showed up unexpectedly in state coffers last month may well be offset by a revenue dip in coming months, according to Gov. Jerry Brown's administration.

The surprise money has been the source of much speculation in the Capitol. Unanticipated tax receipts filled state coffers with more than $5 billion beyond initial projections for January — more tax dollars than are allocated to the entire state university system in a year.

The revenue bump was historic. But the question for budget experts was whether lawmakers could begin allocating the windfall toward government programs and tax breaks — or whether the money amounted to an accounting anomaly.

Brown's budget office now advises in an official cash report that it is probably the latter. Lawmakers need not do much reading between the lines to understand that the governor does not see the revenue boost as an occasion to pack the budget with extra spending.

The report says the extra money was "likely the result of major tax law changes at the federal and state level having a significant impact in the timing of revenue receipts."

That is: Taxpayers were paying a share of their bill early, getting income off their books in the hope of limiting exposure to the tax hikes that recently kicked in.

The administration was expecting that money to arrive in April. Now, officials are saying it won't, and that just as January's receipts soared, they'll be offset by a spring plunge.
More...
 
California’s Balanced Budget: Not as Good as It Looks

Remember how a few weeks ago the governor of California, Jerry Brown, was making the media rounds to talk about how he had managed to balance his budget? I heard him on NPR explaining how a mix of tax increases and spending cuts was the secret of his state’s new fiscal health. The Economist even had an editorial on the governor’s surprising announcement:

CALIFORNIA’S governor, Jerry Brown, has never bothered to disguise his irritation with those who mock the Golden State as America’s answer to Greece. So it was with some relish that he strutted before journalists, on January 11th, to announce that California had eliminated its budget deficit. The general fund (which accounts for about two-thirds of state spending, bar federal transfers) would, he predicted, end the 2013-14 fiscal year $851m in the black. Surpluses of varying size were projected for the next three years.

Even better, the provisional budget he unveiled did not, for the first time in years, take an axe to public services. Instead Mr Brown was able to increase spending on schools and universities by around 5%, and to avoid cuts in most other areas. Money was found to help the state meet its new obligations under Barack Obama’s health-care law. Listening to the governor giving the news was like “waking up from a nightmare”, said a San Diego college official.
More...

I am sure that I wasn’t the only one not quite buying it. In fact, even The Economist added:

On January 14th the independent Legislative Analyst’s Office (LAO), which in November had forecast a $1.9 billion deficit in 2013-14, said that the books were “roughly in balance” without quite agreeing that the deficit had gone. Mr Brown’s numbers are no more than best guesses: he must revise his budget in May after 2012’s tax returns come in. But this is a solid achievement for a governor who just last May took to YouTube to announce that “much greater” cuts were needed to deal with a deficit that had ballooned to $16 billion.
More...

Today, the Examiner’s Conn Carroll has a piece exposing some of the reasons why this fiscal health may be just an illusion:

Brown’s budget not only assumes $1.1 billion in higher income and sales tax revenues than the November projections, but it also takes advantage of an additional $1 billion in revenues that will supposedly be created by the state’s new cap-and-trade program and the elimination of certain development tax breaks.

But Brown was hardly in a position to make such assumptions. Before his speech, the first round of cap-and-trade auctions had already taken place, producing only 14 percent of expected revenue. In addition, California’s state controller had already released numbers in December showing that actual tax collections were 10.8 percent below projection.

Will any of Brown’s magic new revenue actually materialize in state coffers? History suggests it won’t. A recent California Common Sense study showed that, since the recession began, governors’ budget projections have overestimated revenue by an average of 5.5 percent. Apply that average to Brown’s 2013 projections, and California’s budget would suddenly go from $1 billion in the black to $3.9 billion in the red.
More...

Budget projections that seem too good to be true should, obviously, be taken with a grain of salt. This is especially true considering California’s long-term fiscal problems. It means that a balanced budget in the short run won’t be enough to fix the state’s over-commitment or under-funding of its public employees’ pension and health care costs .

We can’t be sure what will happen yet, of course, but California may also provide another example of a balanced approach to deficit reduction that has gone bad. If that’s the case, we shouldn’t be surprised. The academic world has already produced great insights into what can be done to help a country or a state reduce its debt problem. The data show that countries that try to address their debt problems with lots of tax increases and little spending cuts fail. The ones who adopt fiscal-adjustment packages consisting mostly of spending cuts successfully reduce their debt to GDP ratio.

LINK
 
Quote from Lucrum:

Who could possibly be naive and gullible enough to believe CA was going to have a balanced budget?
More...

They might,only time will tell.They are doing much better then they were under the last republican governor who left Brown with a fiscal mess similar to what Bush left Obama
 
Quote from AK Forty Seven:

They might,only time will tell.They are doing much better then they were under the last republican governor who left Brown with a fiscal mess similar to what Bush left Obama
More...
Didn't/don't the democrats control the CA state legislator?
 
Quote from AK Forty Seven:

They might,only time will tell.They are doing much better then they were under the last republican governor who left Brown with a fiscal mess similar to what Bush left Obama
More...

Parlor tricks, nothing more.
 
You must log in or register to reply here.
Back
Top