The Los Angeles Times has a story today on how government agencies in California have been forced to lay off workers. The Times calls the cuts “ravaging.” I’d call them necessary and the tip of the iceberg.
There’s a basic fact of budgeting that I and other small business owners must live with: We can’t spend more than what we take in. If I spend $50,000 more than my revenues, I’m either going to have to use my savings or tap a loan or line of credit. The latter is a short-term solution; the former causes most business owners consternation.
Government agencies have considered themselves “self-perpetuating” organizations. Some politicians talk about the “Government Sector.” The last time I checked, government is supposed to be of the people and for the people, not for the government. While I do feel sorry for the workers who have been laid off some portions of California’s government are starting to learn about basic economics.
California faces an interesting choice in the election on November 2nd. The Republican candidate for governor, Meg Whitman, touts her experience in running eBay and her business acumen. The Democratic candidate, former governor Jerry Brown, says he’s never increased taxes. The negative advertising has been loud and furious (by both candidates, and their surrogates). My mother said it’s one of the worst barrages of political advertising she can remember.
Yet there’s an obvious truth that must be noted. Jerry Brown’s biggest supporters are public employee unions. Public employees (especially their contracts and pensions) are a huge part of the problem in California. If Jerry Brown wins, will he be willing to fight the unions? Like it or not, the next governor will be faced with the choice of drastically raising taxes to pay for public employees’ largess or fighting the unions. Somehow I doubt that Jerry Brown will fight the hand that is feeding him.