Taxable Talk

Earlier this week Governor Schwarzenegger told an audience in Silicon Valley, “There’s a good shot that we will have a budget in the next two to three weeks.” The Democrats are proposing an increase in the income tax (and a smaller decrease in sales taxes) to close the $19 billion deficit. Republicans in the legislature are opposed. There must be Republican support in order for a budget to pass the legislature (it takes a two-thirds vote to pass the budget). In fact, Republican legislative leaders consider the current proposal a non-starter.

There have been no budget talks and none are scheduled.

I can only conclude that the Governor is using extremely wishful thinking. As of now, there’s no sign that the budget stalemate will end any time soon. Indeed, October is far more likely than August as to the month the stalemate ends.

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.