posted on December 4, 2003 07:07:22 AM new
I know there are several CA voters who post here. I was wondering what your 'take' is on Arnold's plan to get CA into 'black ink' again.
I just read this article this morning, in the WSJ, and was curious as to what you think about his proposals.
If you don't agree this is the way to go, what would your suggestions be. Would you want your taxes raised higher so that social programs, education, etc. don't see further cuts? OR ????
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How Gov. Schwarzenegger will make California solvent again.
BY DONNA ARDUIN
Thursday, December 4, 2003 12:01 a.m. EST SACRAMENTO, Calif.--
For the past five years, California government has spent $23 billion more than it has taken in. Over the past five years, while revenues have increased by 25%, state expenditures have risen by 43%. If government had simply spent at the same rate that California's economy has grown, the state's budget would be balanced today.
Instead of resolving imbalances, the previous administration and the Legislature chose to borrow $25 billion from future state budgets in order to create or expand programs that the state couldn't afford. In health and human services alone, significant program expansions have totaled $1.3 billion.
The combined result of this overspending is stark. California faces massive budget deficits and has run out of places to borrow. And if we do not get our fiscal house in order, we will not be able to refinance the $14 billion of debt that matures in June, or be able to pay our bills. Gov. Arnold Schwarzenegger did not create this crisis. But he is proposing a way to help lead California out of it.
First, the governor is asking the Legislature to send to the voters a constitutional spending limit that will significantly curtail spending next year.
Second, he is asking the Legislature to send to the voters authorization for a general obligation bond--but only if the spending limit is approved--in order to reduce the cost of currently contemplated borrowing.
Third, he is asking the Legislature to start curtailing overspending--and start now. In order to balance the current year's budget and begin to gain control of our fiscal situation, Gov. Schwarzenegger has said that he would ask the Legislature to enact roughly $2 billion in current-year spending reductions.
Let me discuss each of these steps in detail:
• Constitutional spending limit. This will require that expenditures in fiscal year 2004-05 cannot exceed revenues.
It will truly require the state to live within its means. For the 2005-06 fiscal year, spending growth over the preceding year will match inflation and population growth.
This spending limit will also establish a Revenue Stabilization Fund, which will receive any general fund revenue that comes in above the spending limit. This "rainy day" fund could be used--with a two-thirds vote of the Legislature--for the following four purposes: repaying deficit bonds, tax rebates, emergencies declared by the governor, and transfers to the general fund when revenues fall below the spending limit in the future.
This spending limit will allow the governor to declare a fiscal emergency in the event that the director of finance determines that general fund expenditures are projected to either exceed available general fund revenues, or exceed the spending limit.
Once a fiscal emergency is declared, the governor is then required to call a special session and submit legislation to reduce expenditures. The Legislature would then have 30 days to enact, by a two-thirds vote in each house, any different package of legislation. But in doing so, the Legislature must make a finding that its package also solves the spending problem identified in the declaration.
• General obligation bond. This would be used to refinance $15 billion of the $25 billion in debt that has already been incurred.
As the 2003-04 budget was being debated this summer, the bond rating agencies chose to lower California's credit rating, citing the state's failure to close the gaps between revenues and spending, its reliance on short-term borrowing, and its use of spending deferrals. The rating agencies are also aware that legal challenges have been raised on both the pension obligation bonds and the deficit bonds authorized by the Legislature in the current budget.
In the discussion over whether to pursue a bond for this purpose, there's been a great deal of focus on the cost of debt. The state's financing objective is very simple--to obtain the full amount of money needed to address the accumulated deficit in as cost-effective a way as possible.
The voter-approved bond authority would provide insurance should the courts find the existing bond proposals illegal. We need to have an alternative plan.
If the bonds are structured with a longer maturity, it is no different from choosing to lock in an attractive home mortgage loan when rates are low, rather than risk having to refinance that loan in the next few years when rates are higher and new fees, or "points," have to be paid. That's why this bond proposes to refinance the $14 billion of short-term borrowing that's assumed in the current budget with longer term bonds that contain what are known as "call features"--which allow us pay that debt off earlier if circumstances warrant. That gives our economy time to grow and generate revenues. And if the economy grows faster than projected, we can pay off that debt faster.
• Spending reductions.
Estimates vary on the size of the budget shortfall for the fiscal year we're now in. But they fall in the range of between $2.2 billion and $4.3 billion. The governor is asking this Legislature to eliminate nearly $2 billion of the projected shortfall immediately.
We have a list of proposals to start reducing spending now. It includes 38 specific actions that cover a range of program areas, including transportation, resources, health and human services, and education.
Together, these total $1.9 billion in budget savings in the current and next year. I will seek additional savings through the new authority granted in this year's budget for the executive branch to make midyear expenditure reductions. Furthermore, we expect to generate additional savings from actions the governor is taking by executive order.
We have a realistic assessment of the state's fiscal picture, and a comprehensive plan to begin to fix fiscal problems that have grown in the past five years. No one is under illusions about how difficult this task will be. But the alternative--failing to take action--is simply not an option.
Ms. Arduin is the finance director for Gov. Schwarzenegger of California.
[ edited by Linda_K on Dec 4, 2003 07:13 AM ]
posted on December 4, 2003 07:42:15 AM new
Doesn't matter if she is or isn't. Censorship, like charity, should begin at home; but unlike charity, it should end there --Clare Booth Luce
posted on December 4, 2003 07:46:57 AM new
If I weren't rushing out the door to work, I'd discuss this more. Briefly, I hope the governor can pull this off.
There's going to be a lotting of moaning, groaning, whining and pleading. But the simple fact is that we need to suck it up and do what needs to be done to put our state back in the black. Censorship, like charity, should begin at home; but unlike charity, it should end there --Clare Booth Luce
posted on December 4, 2003 09:08:56 AM new
helen, helen, helen...
I was just curious -- since she excluded answers from non voters....WHEN has that EVER stopped you before?
No, I'm not a CA voter, and you know that. I was, up until 4 years ago, and I may be once again. I am interested in politics and especially politics that are related to a state where I lived most of my life. Is that okay with you?
I can think of at least 5 people who do live in CA and who semi-regularily post here. And I was interested in whether they thought this might just work.
But FEEL FREE to post anything you'd like....no reason to start whining that you're being censored now.
I won't interrupt your thread, Linda. I'm amazed that one little question that could be answered yes or no has caused such a silly response from bunnicula.
Actually, I thought that you were from Oklahoma or Arkansas?
posted on December 4, 2003 04:51:54 PM new
Helen: Linda didn't exclude anyone from answering--she was simply wondering how people here who do live in California feel about the proposals.
You immediately asked her if she lived in Califronia, as if that made any difference. Censorship, like charity, should begin at home; but unlike charity, it should end there --Clare Booth Luce
posted on December 4, 2003 06:57:53 PM new
Nearthesea is always singing..."Ooooooklahoma..." cause it's really her favorite state
HEY!
NOT!
the tiny town where we lived for 3 grueling years had approx 180 population, and I do believe everyone was related.. We fondly call it WHACKERVILLE now (its really Thackerville)
I lived in CA too, for about a year near Napa, now if the governor can pull this off, I would be all for it. (would, because I don't live down there, so I cannot vote on these things)
Wanna Take a Ride? Art Bell is Back! Weekends on C2C-www.coasttocoastam.com
posted on December 4, 2003 07:50:21 PM new
I honestly believe thst the only way to balance the California Budget inn a timely manner is with a combinaation spending cuts and taxes.
The budget is not going to be eliminated in a timely manner without a two pronged attack because there are some cuts that simply cannot be made. There are issues in which voters, rather than dictating a specified percentage of the budget be directed towards them, specified actual amounts. You can redistribute the way the money is spent in order to do it more responsibly but you cannot cut the actual dollar amounts.
As long as California is in the red our bond rating is in the tank, why would anyone want to buy bonds from a from a state with a negative rating.
It is important to get this state out of debt in the fastest yet least damaging manner possible. The car tax should have stayed where it was. (The five year decrease was a rebate you spoiled rotten uninformed incessantly whiny twits) San Diego County alone lost 74 million in revenues that were to be directed to police and fire even as the last of the wildfires still burned. That's damaging. There is no fiscal justification whatsoever for the repeal.
I think there should be a luxury tax on any vehicle over $40k and .10 per gallon tax on gasoline to be cut in half once the state is out of debt with future income being divided equally between road care and equipment acquisition and upgrade of police and fire equipment.
I think that 25% of high schools should go to split schedules to avoid the need to build new schools with the saved funds being divided among new teacher hiring, raises and repair and upgrade of existing buildings.
I believe that ALL state contractors should be audited every 90 days. Cost overruns via preapproved situation only with time overrun penalties. In addition there should be a two year freeze on salaries and performance bonuses for all public officials.
That would be a good start. I'd have to sit down with actual budget expenditures to go further.
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If it's really "common" sense, why do so few people actually have it?
[ edited by fenix03 on Dec 4, 2003 08:31 PM ]
posted on December 6, 2003 09:37:14 AM new
Well....it looks like the Senate is not going to go along with Arnold's proposals. At least that's where it stood yesterday. Today, however, I've read that they were up burning the midnight oil still trying to agree on a spending cap.
For the life of me, I sure can't understand what the democrats have against letting these proposals go to the voters....the people this will most affect. Is it that they don't want the voters to have a say in this matter????
posted on December 6, 2003 12:00:30 PM new
If the legislature will not pass a rational spending bill he should resign and tell them to find someone else to take the blame - he gave it his best shot and if there is no cooperation he should wipe his hands of the matter.
They deserve that. Maybe the next fellow up to bat they will pay more attention.
posted on December 6, 2003 12:54:39 PM new
Get a grip. there is noting rational about mass spending cuts across the board done purely to make yourself look good. Thank god on this matter our legislature is looking out for what is best for the state rather than falling into lock step with arnold passing whatever he wants just because he wants it.
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If it's really "common" sense, why do so few people actually have it?
posted on December 6, 2003 01:02:41 PM new
Get a grip??? Are you having a rough day?
There are financial deadlines that will have to be met.
I understand some voters are opposed to any cuts in any services and only want to dip into the taxpayers pockets once again. There's been a pattern of that being done for years. Spend...spend...spend and then raise taxes. I think that's why many Californian's revolted and recalled Davis. They don't want to pay more taxes.
Voters won't forget that they weren't given a chance for their opinions to be heard by voting on these issues. They might decide to put them out of their jobs too, come the next elections.
posted on December 6, 2003 03:59:35 PM new
No Linda I am not having a bad day but to think that large acrross he board cuts is going to solve the problem is short minded and niave. The California school systems are already in crisis - how do you think a 20% cut is going to affect them? Hospitals are shutting down the your big cure is to lessen their resources further?
These problems were not created overnight and they are not going to be solved overnight, at least not responsibly. Do there needs to be spending cuts? Absolutely, however I think there are more prudent ways to do it and a temporary tax increase will not hurt either. Put higher taxes on luxury items, etc. Education should be one of the most important aspects of Californias budget, its needs to be increased not cut further. I see the kids coming out of the California school systems daily - they are barely literate. If you want to insure that long term success then you invest your funds wisely - cutting school budgets today is only going to result in neccesary public aid funds later. It is not fiscally responsible. Even if you say to hell with welfare, Medical and all other public works you still end up with an illiterate generation unable to earn a decent living or to support local businesses, property values, rents and home prices drop and businesses fail as a result of lower average spending abilities resulting in reduced tax income to the state. Our kids need to be emersed in learning with higher standards and better teachers who stay at the job for longer periods because they it is financially worthwhile to do so. This is how you insure the future of the state.
You can't duct tape the budget. Eventually the glue dries out, the tape falls away and everything collapses.
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If it's really "common" sense, why do so few people actually have it?
posted on December 6, 2003 04:19:21 PM new
fenix - While I appreciate your 'take' on how you think this should be dealt with, there are many others who disagree and who *don't want to pay anymore taxes*, but would rather see benefits reduced.
You appear to think Arnold's calling the shots. I don't see it that way. What I'm seeing is he wants to *let the CA voters decide*. What problem do you have with that?
The idiots who created this mess, don't want the people to decide how they would like to see it dealt with. They get elected and seem to forget they represent ALL the people of the state, not just the special interest groups.
posted on December 6, 2003 05:04:03 PM new
My personal observation to the financial issues you bring up is this:
schools - If as you project a 20% decrease in spending needs to come about, I bet that could be met easily. Get down to the basics only. Pouring more and more money into them over the last 30 years has improved nothing. Money is obviously not the answer. It's all the special programs that are draining the pool of funding.
Whatever happened to all that money from the Lotto? That was passed to help schools. Who's spending that now?
hospitals - Too many illegals...too many free-loaders are the major cause of hospitals closing. I've posted quite a few links showing how the cost of caring for illegals are a big cause of hospitals going in the red, and then closing. But those who support illegals having the same benefits as US citizens have forced the these closings by not heeding the warnings. Saying those of us who opposed taking on that responsibility were 'so mean/uncaring/unfeeling'. No, we weren't....we could just see what was coming. And it has.
Now many don't want programs cut...but continue asking for people to pay more and more, and they're fed up. I saw it happen with Prop 13. The people revolted....they'd had enough. At that point they didn't care what was funded or not funded....they were losing their homes because of the constant increase in taxes.
And on earning a 'living' wage to afford the high real estate property prices. How I see this issue is that there is plenty of available land in CA to build on. But all the regulations that the liberals have passed like setting lands aside for wildlife, etc. have taken that land off the market. [Can't build here...can't build there.] Zoning laws have affect this too. This land is no longer available. So the land that is still available costs many times what it should and thus leads to higher home prices.
Without checking, I'm not sure if CA citizens pay the highest tax on gasoline in the nation already or not. But I'd bet they're #1 or #2. And you want to raise it more? Even poor people have to buy gas. Buses that the poor ride will have to increase their rates. People who bought homes and drive or hours to get to work will pay more. They're your 'average' income earners. And look at how many times AmTrac has been bailed out. Why keep putting money into such a huge program that few use and will most likely NEVER become self supporting. The train stations [4 years ago] were empty every morning I passed them. Few using that multi-million dollar project.
posted on December 6, 2003 05:44:35 PM new
::schools - If as you project a 20% decrease in spending needs to come about, I bet that could be met easily. Get down to the basics only.::
What more do you think should be cut Linda? Which "special programs" still exist that should be cut?
::Whatever happened to all that money from the Lotto? That was passed to help schools. Who's spending that now?::
That's a fantastic question. I wish I knew.
As far as the hospitals - you are right, in a perfect world there would be less drain on the hospital system but unless you would like to increase the Federal debt in order to increase the INS budget to increase INS officer presence at hospitals that is going to be an inheirant problem.
::And on earning a 'living' wage to afford the high real estate property prices. How I see this issue is that there is plenty of available land in CA to build on. But all the regulations that the liberals have passed like setting lands aside for wildlife, etc. have taken that land off the market.::
So should we turn this naion into a parking lot? To hell with purple mountains majesty, we'll just pass zoning ordances requiring homeowners to paint their houses purple to give the impression of them? Should we eliminate all wildlife? Who needs it anyway right? It's all well documented on film, in photos and paintings anyway right?
::So the land that is still available costs many times what it should and thus leads to higher home prices.::
I completely disagree. Housing prices are dictated by the per capita income of their area. If the money isn't there, the prices drop. If the next generation can't afford 600,000 homes, no one will build 600,000 home and existing home prices will drop to meet the financial status of those shopping. To give an example, a local developer is proposing a development of 200k homes in a tracet of land he has aquired along the San Ysidro border. 15 miles awat is a development of half million dollar homes being built - is the land less available 15miles away? No, not at all. It's simply a matter of builder choice and pricing.
::Without checking, I'm not sure if CA citizens pay the highest tax on gasoline in the nation already or not. But I'd bet they're #1 or #2. And you want to raise it more? Even poor people have to buy gas. ::
You got it. But I also think it should be a temporary increase to be dropped when the deficit is eliminated. (like the Coranado Bay Bridge that collected toll only until it was paid for) A 10 cent per gallon increase means what.. an extra $2 per tank?
::Buses that the poor ride will have to increase their rates. ::
Why? Public transportation can easily be exempted. The tax is at the pump and I'ver never seen a bus pull into the local Arco station.
::People who bought homes and drive or hours to get to work will pay more. They're your 'average' income earners.::
Sorry Linda but the people who are driving hours to work generally are not "Average" income earners, they are upper income that drive for hours because they have paid premium home prices to live outside the city.
::The train stations [4 years ago] were empty every morning I passed them. Few using that multi-million dollar project::
I don't know abbout LA but the San Diego trolley is always SRO during rush hours and at at least 60% capacity during off peak. Both lines run thru downtown (and are currently being expanded as studies from connecting busses into outlying areas show increasd demand) every 15 minutes and I've never seen an empty car.
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If it's really "common" sense, why do so few people actually have it?
posted on December 6, 2003 07:07:36 PM new
fenix - I can answer your additional questions if you wish.
BUT you are not addressing my core question. Just as with you and I, we see different ways we either believe things can/should be changed or can't/should not be changed. I believe it would be the same with all the taxpayers of CA....disagreement on which is the best way to go.
Why do you object to letting this decision be made by the voters????
posted on December 6, 2003 11:15:06 PM new
I dont Linda but if the proposed cuts violate pre dictated budgeted amounts in certain areas then there is no point sending it to the voters. If blanket cuts are going to increase problems in the long run then why consider them? Do we now put every concept put forth to the voters? Arnold has been in power for a month - I don't think he has enough experience in state politics and spending to decide where responsible cuts are yet.
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If it's really "common" sense, why do so few people actually have it?
