The Los Angeles Times story starts,
State tax collections plummeted unexpectedly in April, wiping out months of steady gains that legislators hoped would ease their budget troubles and restore California’s economy faster than experts predicted.
Perhaps the Legislature or newspaper writers should ask California tax professionals what would likely happen to tax collections. The only thing that was unexpected about the drop off was that it’s a surprise to some. California’s unemployment rate has risen to 12.6%. The Legislature increased income and sales tax rates in 2009. Many more people are out of work now than a year ago. How in the world were tax revenues going to increase when the average Californian is saving money rather than spending money?
California faces an $18.6 billion to $22 billion deficit. The state’s regulations make it clear that expanding businesses should look elsewhere. What California needs to do is drastically cut wage packages to unionized state employees. When I was growing up, civil servants received relatively low salaries but had good retirement packages. Today, they have great retirement packages and make more money that comparable individuals in private industry. This needs to change, just for state employees but all levels of government.
I’m not holding my breath for this to happen in Sacramento this year.
Tags: 2010CalBudget