I wasn’t going to say anything about this as it was so obvious. Then I realized that it is obvious as I lived here and lived through it, for other folks, it might be entirely unknown. So, a small note just to say “Maybe there is a God, and with a sense of humor…” or, perhaps, sometimes you reap what you sow…
As you are likely well aware, California is a giant basket case. Not only is the state way in debt over it’s head, it has punishing levels of taxation, giant expenditures, a regulatory burden that makes the national EPA look like Austrian Economists, and a current budget deficit that has been variously estimated at anywhere from $14 Billion to $40 Billion. (Not hard to have that kind of range when you have budgets with no connection to reality and a load of unfunded mandates and entitlements). Lately there was news that the latest month tax receipts were off by 20% compared to expectations, or to prior year, (or both). That’s off 20% FROM an expectation of that massive shortfall…
But hey, we have Medi-Cal so everyone can have Medical Care, and we have Welfare, so everyone can have a place to live and food and a case worker, and we have a large variety of Progressive Social Programs and all the right laws. Besides, the weather is great!
(Well, it’s supposed to be… been cold and wet lately)
The Governor has proposed to “Raise Tax Rates On The Wealthy!” via a ballot initiative (that will almost certainly pass as most of the state is either clueless, or is in some way paid via a government related check…) This, of course, will simply drive even more business and wealth out of the State and result in even more of a ‘revenue shortfall’.
When you realize that California is about 4 times the size of Greece, it starts to sink in just how bad this is…
Pity the Governor?
Our current Governor is Jerry Brown. He was originally governor back in the 1970’s when we called him “Governor Moonbeam” for his crazy ideas. But that was the age of peace, love, smoking dope, and Governor Moonbeam, so it all fit. He then went off to be Mayor of Oakland as a place to hang out for many years. Now he’s back.
What makes this a deliciously ironic moment? Well… Governor Moonbeam did things like halt all freeway construction. The idea was to stop development so as to save the State. (He was ‘ahead of his time’, but you can see how he fits the Agenda 21 doctrins). For about a decade we had a major freeway interchange about 60 feet in the air, with no approach roads. Just sitting, half finished, where it was when he canceled it. (Later we tossed him out and finished the freeways). He did other things, too.
In fact, it was largely his policies that, years later, leads to where we are today.
Now, while I’m saddened that we have him, arguably the one person least able to “fix it”, in office; OTOH, it’s some sort of cosmic justice that HE has to be nose to nose and belly to belly with the ultimate consequence of the path he chose for the State. One can only hope that he learns something from the experience.
OK, couple of links:
There’s a wiki where you can see what he looks like and read about his history from a “special” POV… Also has pictures of him as a “young pup” being sworn in as Governor Moonbeam.
A nice article that someone pointed me at about the impact on business lately:
It makes an interesting observation about the genesis of the problem, but doesn’t point out the Irony.
The benefit of leaving California is immense. Vranich says businesses save 20% to 40% a year in costs after their out-of-state moves are completed.
One company executive who left told Vranich that “we compete globally and we can’t compete with California’s costs.” Another told him that California “is the worst state in the country to do business in. . .. There doesn’t seem be any improvement on the horizon.”
The root of the problem can be traced to 1974 when voters elected current California Gov. Jerry Brown to that office. It was during Brown’s first term that his “administration proceeded to scuttle some infrastructure spending, limit development and expand environmental regulations,” Steven Malanga wrote in the autumn issue of the Manhattan Institute’s City Journal.
The only thing missing is enough intelligence on the part of the folks in power to realize that this mess is the necessary consequence of their earlier actions. Sadly, being as they are from the “never spank, no consequences, fragile self esteem” generation, I fear they do not have any grasp of the idea of consequences of their actions. As long as they feel good about themselves, how could they possibly have done anything “wrong”?
But at least I can enjoy watching them squirm trying to solve what they made without the needed skill, nor understanding, and completely out of touch with the inevitability of their failure (and just how spectacularly big it is…).
When I was a kid, this was called “The Golden State” meaning the land of opportunity. Anyone could ‘strike it rich’ here. Now it’s a floundering welfare state and ‘Progressive Wasteland’ that the article headlines as: “California: The Sick Man Of America”.
Well, at least we’re not Greece… no IMF can impose “Austerity” on us, and we can always ask Obama and Pelosi for more “Stimulus”… and they will have to bail out the State; otherwise it would cast doubt on their whole plan for the Nation…
Thanks to a State Law (passed when I was a kid) that made State Senators directly elected (instead of appointed by the Counties) we have a mini-States-Rights issue internally (actually “Counties Rights”) and the State has regularly raided the money supply of counties and cities and pushed unfunded mandates onto them (counties and cities MUST spend on certain mandated services, even though the State gives no money with the mandate).
When I was young, every county had a County Hospital with free medical care for those unable to pay. They also very effectively ran many other services as free agents. Now the State sucks up the tax money and shoves down the costs. The result is that we’ve had County Bankruptcy from time to time, and have most counties basically broke. So in addition to the State being on the verge of default, we have counties and cities too:
Notice that it says “again”…
Moorlach: O.C. again could be bankrupt
August 29th, 2011, 12:54 pm ·
Second District Supervisor John Moorlach warned in a weekend editorial in the Register that the county is poised at the edge of bankruptcy – again.
To make his point, Moorlach compared Comprehensive Annual Financial Reports for June 30, 2010, for Irvine and Newport Beach to the county’s.
“The county’s net assets are $4,794,221,000. The net investment in capital assets is $3,097,843,000. The restricted resources are $1,384,586,000, thanks to our relationships with the state and the federal governments,” Moorlach wrote in an Aug. 26 guest editorial. “That leaves unrestricted net assets available to the county of $311,792,000, or just a little less than that of Irvine and Newport Beach combined. ”
“The net investment in capital assets doesn’t even cover this debt,” Moorlach wrote of the county.
Moorlach was appointed Orange County’s Treasurer-Tax Collector in 1995 after Robert Citron resigned from the post following Orange County’s bankruptcy, the largest municipal bond portfolio loss and bankruptcy in U.S. history. He served as the county’s treasurer for nearly 12 years before running for county supervisor.
“The county of Orange, which went bankrupt in 1994, is a bankruptcy candidate again,” Moorlach wrote.
“If the county experiences an unforeseen financial calamity, then a bankruptcy judge may just have to approve a reorganization plan, again. This course of action is very expensive, but at least we’re familiar with it.”
In the meantime, the county is scrambling to convince state Legislators to give back the $48 million Orange County receives from California vehicle license fees as part of a guarantee worked out while the county pays off its 1994 bankruptcy debt.
Yup, that’s right… It wants relief from the prior bankruptcy terms so that it can hold on just a bit longer before the next bankruptcy…
But that’s not all. There are cities going bankrupt.
Vallejo Is Largest California City to File Bankruptcy (Update3)
That one was back in 2008. Since then Stockton was rumored to be ready as their economy was mostly based on building housing for folks who commuted to The Bay Area for jobs that have now gone to China and Texas.
Oh, and Alameda chased out The Navy and turned the old Alameda Naval Air Station into commercial property during the boom (as folks in California felt that the military was just too ‘blue collar’ for our sort of people…)
Their proposed solution? Raise tax rates!
The city of Alameda, California, is nearing bankruptcy because of the costs of employee benefits and the recent economic situation.
Alameda is considering laying off city workers, as well as having more workers pay for benefits, in order to fend off a bankruptcy situation, according to a report. If the city does not produce or receive enough funding, officials believe that it will have more than $22 million in debt by 2015.
During a recent city council budget workshop, Alameda’s council members announced that the city’s debt will continue to get worse, even if no one receives a raise for the next five years, according to The Oakland Tribune. Lisa Goldman, Alameda’s City Manager, has requested leaders to create budget scenarios that would get the municipality to shave 5 to 10 percent of fees off of its current spending plan.
A parcel tax is being considered to be presented to voters in the city, in order to pay for the police and fire departments, the news source said. The city is predicting a $710,000 loss in sales tax revenue, as well as being $6 million short on the 2011-12 budget.
Lets see. Business is fleeing. You drove out the Uncle Sugar revenue generator. Taxes and regulations are the reason folks are leaving, so the solution is… A parcel Tax! Yeah, that will increase sales tax revenue…
Stockton bankruptcy first step likely
City leaders expected to face stout opposition
By Scott Smith
Record Staff Writer
February 23, 2012 12:00 AM
STOCKTON – The City Council on Tuesday is expected to take its first step toward filing for bankruptcy in a dramatic move to remedy Stockton’s crippling finances.
If bankruptcy ultimately happens, Stockton would be the nation’s largest city to fall into Chapter 9 protection.
While city administrators remained silent on any plans, it became an open secret Wednesday. The Downtown Stockton Alliance board of directors in a public meeting discussed the city’s bankruptcy timetable.
Have I mentioned lately that Municipal Bonds, especially in California, are NOT a safe investment?
But that’s not all. Even the individual school districts might file on their own.
If the state’s budget crisis seems far away, it shouldn’t. The latest evidence is a scary report from the California Department of Education that lists 174 school districts in the state as fiscally troubled.
What does that mean? Those are districts that, according to state projections, may be unable to “meet their financial obligations” — that is, pay their bills, including debt service, for the just concluded school year and the school year that begins this fall. Frighteningly, the state’s largest school district, Los Angeles Unified, with an annual budget of more than $6.3 billion, is on this list.
For those in other lands unfamiliar with our byzantine system: Over 1/2 the State Budget, by law, must be spent on Education. We did this by initiative of the voters to force the State to fund education. That, however, mostly just lead to things like School Administrators getting very fat salaries and BMW cars (IIRC it was about $130,000 / yr for ONE San Jose administrator about a decade ago, plus new BMW, plus office allowance plus…)
That money goes to the “School District” as a distinct legal entity, which can also run up their own credit card with bond issuance. So they can do their own bankruptcy when the State says “Sorry, no money today”…
So what that little link is pointing out is that there’s a whole lot more below the surface than just a 20% shortfall or revenues on top of a several $Billions deficit on top of an untold $Billions State Debt.
But at least the weather is nice… IFF it would ever stop raining and wasn’t snowing on Mount Hamilton in spring… I’d run the fireplace, but we now have mandated Fireplace Police that control when you can run your fireplace (IF you already have one, they are forbidden in new construction) and if you burn them at the wrong time they give you a ticket. The wrong time being pretty much any time… but at least our electricity stays on now (even if it is frightfully expensive). It was Governor Gray(out) Davis of the Democrats who brought us electricity “at mini-bar prices” (to quote Dennis Miller) via yet another crazy idea that a Government Managed Market was the way to go. That lead to the bankruptcy of PG&E Pacific Gas and Electric in 2001-3 (our major utility provider). He was the Second Governor in the nation to ever be recalled… (After which we got the RINO Republican In Name Only Arnold…)
But, no worries, now that Governor Moonbeam is back in charge, we can all start feeling smug and good about ourselves again. Even if the schools are bankrupt and the State is unable to issue checks. (When that happens they issue I.O.U.s called ‘warrants’. They are almost like a real check and get cashed… someday… by some places… maybe.) But you do get to feel morally superior. Even if a bit hungry. Did I mention that the weather is supposed to be nice? Maybe next week…