Taxable Talk

The results for California’s first month of the new fiscal year (July, for 2010-2011) are in, and they’re not pretty. “California still lacks a 2010-11 state budget but its deficit is already widening as revenue falls below official forecasts and spending runs above expectations, Controller John Chiang said today,” per the Sacramento Bee.

But you need to look at the actual numbers to really see the problem. Revenues (aka taxes) came in just 1.9% under expectations. However, disbursements (aka expenses) were 12.6% higher than expected.

As I keep saying: It’s time to massively cut spending. Pensions need to be cut for government workers, and scandals like that in Bell need to end. We need a small government in Sacramento, and a decrease in regulations.

Of course, the Democrats in Sacramento are currently considering imposing regulations on grocery bags. It’s 42 days without a budget (beyond the constitutional deadline) and they’re debating about “Paper, or Plastic?”

I return home from my vacation and it’s as if I’ve never left. There’s no progress in the California budget situation. There have been no talks, and there’s nothing scheduled.

The Democrats did unveil a new budget plan last week. Governor Schwarzenegger called the plan “DOA.”

The only other news that came out last week is that Controller John Chiang warned that IOUs would begin to be issued in August rather than September if a budget isn’t passed this month. That seems a certainty at this point.

Governor Schwarzenegger announced yesterday that he has reimposed mandatory furloughs on state workers. Beginning in August there will be three furlough days a month for most state employees. These days are without pay and are a means of helping to close the budget gap.

Of course, the problem is that there is no budget. The reason is simple: Democrats in Sacramento don’t want to cut programs and/or employees of their major constituencies. Regardless of Democratic politicians’ desires, those cuts are coming; the easy “low-hanging fruit” is all gone.

Meanwhile, State Controller John Chiang is warning that unless there’s a budget by September he may be forced to issue Registered Warrants (aka IOUs). There are no budget talks currently scheduled.

California’s constitution required a budget be enacted by June 30th. Californians ought to ask June 30th of what year as there are no negotiations in Sacramento right now. Meanwhile, there was some news from Governor Schwarzenegger. He told reporters today, “If I do not get all of the things that we need … I will not sign a budget, and it could actually drag out until the next governor gets into office.” Democrats’ response is that the Governor threatens children and public education.

What does Governor Schwarzenegger want? He is demanding changes to public pensions, and to California’s budgeting and taxation systems. He opposes Proposition 25 (on the November ballot); that ballot measure would eliminate the two-thirds voting requirement in the legislature for passing a budget and replace it with a simple majority. To no one’s surprise, labor unions and Democrats are in favor of Proposition 25 and the California Chamber of Commerce opposes it.

Meanwhile, Californians are caught in the middle. There is a cost for not having a budget. Instead of making the budget cuts today that are going to happen, those cuts will be made sometime in the future…and those cuts will have to be larger in order to have a balanced budget. It appears that Democrats in Sacramento are more than willing to wait it out.