All Talk and No Actions

The California budget fiasco continues. In theory, the state must have a new budget in place by June 15th—tomorrow—in order for short-term loans to be taken out in July.

There’s no chance of that.

It’s not that Democrats and Republicans disagree on there being a major problem. There’s no doubt that California faces a $24 billion budget deficit (and growing). Unfortunately, that’s about all they agree on.

Democrats still hope to be able to pass legislation that increases revenues, probably through “user fees.” There’s a danger here, though; courts have struck down “user fees” that were disguised taxes.

Republicans vow to block all new taxes. It does appear that California voters don’t want any more taxes. The last time that California faced a budget fiasco (February) new taxes were passed. Californians were told that the budget that passed resolved everything through the end of the 2009-2010 fiscal year (June 2010). That wasn’t true.

Amazingly, only Governor Schwarzenegger has proposed a budget. His budget has cuts everywhere. That’s what needs to happen. The bureaucracy needs to be cut. Regulations need to be rolled back. The state needs to open negotiations with unions and force changes in pension plans to defined contribution from defined benefit. The pain must be shared.

Taxpayers are sharing in it. We’ve seen sales taxes increased by 1%, and state income taxes increased by 0.25%. Will our legislature actually take action by June 15th? No. Can it at least take action by June 30th?

We’ll see, but I wouldn’t bet on it.

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