Sacramento Bound

California doesn’t have a budget. When I return home from Sacramento on Sunday, California will not have a budget. It’s probable that when we vote in the mid-term elections in 40 days that California will not have a budget. Why is that?

Democrats complain that the reason is that Republicans are being intransigent; they are demanding cut, cut, cut to programs that can’t be cut any more; the only solution is that “some” taxes must go up (along with a whole lot of smoke and mirrors and a little bit of budget cutting).

Republicans say enough. Spending in California has grown massively; regulations have grown immensely; the only solution is cutting spending. Republicans say they won’t vote for one penny of new taxes. As I’ve said before it’s the unstoppable force meeting the immovable object.

However, there’s a hidden reality that’s known to both sides: The people–you know, those pesky voters like us–have said no to new taxes three times over the last two years. It’s quite apparent given the mood in the country that they’d say no again if asked. The Democrats are well aware that they will have to enact cuts.

The problem is that these cuts will now hit the Democrats’ core constituency: unions, especially public employee unions. Salaries, pensions, and the number of employees will be going down. Democrats don’t dare enact a new budget (that is, one that can pass the legislature) before Election Day; that would anger their constituents. Who cares that it’s costing California $50 million a day? If Democrats vote for what their constituents don’t like, they might be out of a job.

Supposedly, legislative leaders will be meeting with Governor Schwarzenegger tomorrow, but don’t hold your breath. My guess is that the budget will not be signed into law until November.

Why am I heading to Sacramento? The annual liaison meeting between California’s tax agencies (BOE, EDD, and FTB) and the California Society of Enrolled Agents (CSEA) and the quarterly Board of Directors meeting of CSEA.


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