Read this and pass along. California used to be the wealthiest state. Now California has become a beggar. States like Texas, though they are having to be careful with their budget, fair much better than we in California do and Texas have no state income tax. If they don't have the money, they don't spend it!
From Mike Walker.
All,
There is talk in Washington about sending even more billions of dollars to California to bail out its government and its employees, ideally teachers, police, and fire fighters.
So why be against that? Those groups are as quintessentially American as mom, apple pie, and the American flag. But we all need to be against it because it is the right thing to do as things now stand in Sacramento. Here is why:
California’s elected officials have done very little to put their financial house in order over the last decade and what they have done is not working. In the last four months, the elected representatives in Sacramento have done nothing, absolutely nothing, to fix their budget hole. They substituted responsible governance with inaction based on a wish. They did little more than hope that there would be a taxation windfall to make the $19 billion deficit problem go away. That fantasy dissolved into thin air in May.
They were faced with a crisis and they sat on their hands. Thanks to their failure to act we are now in as bad a hole as we have ever been. Their new solution? Lobbying Washington for more American taxpayer dollars. The federal deficit is growing dangerously large yet the “pols” in Sacramento are spending their time asking for handouts and rearranging their deck chairs on the Titanic.
Do not do it. No more federal bailouts for California’s government. Make California take ownership of its problems. Do not reward this type of malfeasance by pouring ever more American taxpayer dollars down the California government sinkhole.
Is California’s government really a giant financial sinkhole? You bet.
Let us look at the facts. The huge federal stimulus program, the American Recovery and Reinvestment Act (ARRA) has already committed $55 billion to California, some $13.2 billion of that in direct aid to the California government. Clearly, the US taxpayer has made a major effort to financially buy time for California’s elected representatives to “fix” state government. Sacramento has wasted that American sacrifice.
How big is the sinkhole and how useless was ARRA in getting California’s governmental house in order? Here are the deficit projections for California’s government by the non-partisan California Legislative Analyst’s Office (LAO) after the federal stimulus monies were sent:
Fiscal year
2009-10 -$26 Billion (covered by cuts, deferrals, borrowing, and ARRA bailout)
2010-11 -$19 Billion deficit
2011-12 -$21 Billion deficit
2012-13 -$23 Billion deficit
2013-14 -$20 Billion deficit
2014-15 -$18 Billion deficit
Why did the ARRA stimulus fail to get the economy going in California and why should the American taxpayer refuse to throw billions of good dollars after bad into the California government sinkhole? Because ARRA was designed to address a national crisis and California’s government, the chief winner in ARRA funding here, was fiscally dysfunction before, during, and it now appears, will remain fiscally dysfunctional long after the recession in the rest of the country is over.
To get a taste of how futile it is to feed the California government “beast” with US taxpayer dollars, here is trip down memory lane:
Fiscal year
2001-02 California wipes out a $7 Billion reserve and goes $3.4 Billion into the red
2002-03 -$14 Billion deficit is faced; California ends up -$4.5 Billion in the red
2003-04 Sate borrows $10.7 Billion to cover deficits, asks for US taxpayer help.
In November 2006, the LAO was predicting the following government spending deficits for California:
Fiscal year
2006-07 -$4.6 Billion deficit
2007-08 -$2.8 Billion deficit
Remember, all that happened before the Wall Street financial meltdown in late 2007. This is nothing new for the California government. It was broken then. It is broke now. It will remain broken in the future. It was economic nonsense to think that funding California’s dysfunctional government would help California’s private sector pull the State out of the recession. Sadly, we have the double-digit unemployment rate to prove that foolishness.
If Washington really wants to help California, skip the Sacramento sinkhole and give the money to small businesses (up to 2,000 employees or so). They will put people to work and they will then pay more in taxes year after year which in turn helps teachers, police, and firemen on an ongoing basis. That is the win-win solution. That is what will really help California and our Nation.
Mike
