News California Governor Jerry Brown Proposes Spending Cuts

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California Governor Jerry Brown is addressing a significant $25 billion budget deficit by proposing over $12.5 billion in cuts across various sectors, while state pensions appear to be exempt from these cuts. The governor's plan includes a potential special election to extend current tax increases on income, sales, and vehicle taxes, which could generate an additional $12 billion in revenue. However, skepticism exists regarding the feasibility of raising these funds, especially given the state's high unemployment rate of 12.4% and the historical resistance to tax increases among voters. Discussions also touch on the possibility of federal intervention, with concerns that a bailout could lead to an unfair financial burden on other states and encourage irresponsible fiscal behavior. Suggestions for alternative solutions include legalizing and taxing drugs, cutting welfare benefits, and restructuring state spending, particularly in relation to public-sector unions and healthcare costs. The overall sentiment reflects a deep concern about California's fiscal sustainability and the potential need for drastic reforms to avoid a financial crisis.
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WhoWee said:
California Governor Jerry Brown, faced with a $25 billion deficit has proposed over $12.5 billion in cuts, nearly across the board.

Where is he going to get the other $12.5 B. They are headed for the cliff and I can't imagine who wants their bonds. Maybe the State pension funds would like to buy them?

Skippy
 
skippy1729 said:
Where is he going to get the other $12.5 B. They are headed for the cliff and I can't imagine who wants their bonds. Maybe the State pension funds would like to buy them?

Skippy

http://www.mydesert.com/article/20110111/NEWS01/101110310/Brown-proposes-deep-cuts-tax-hikes

"Having the Legislature call a special election in June to give voters an opportunity to continue the current increases in the income, sales and vehicle taxes for another five years.

The taxes are set to expire this year. If approved by voters, the taxes and proposed funding shifts would generate $12 billion in revenue.

Brown said his spending plan for the fiscal year that begins July 1 is intended to end the state's continual deficits and balance the budget for the next several years without borrowing money to do so.

“It's better to take our medicine now and get the state on a balanced footing,” the newly elected Democratic governor said in releasing his plan."
 
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And it won't pass. It never passes. This state, for supposedly being so educated, is full of morons.
 
Pengwuino said:
And it won't pass. It never passes. This state, for supposedly being so educated, is full of morons.

I have no sympathy for CA. Then I see ideas like this being kicked around.
http://www.economicpolicyjournal.com/2010/11/will-fed-print-money-to-bailout.html

"Will the Fed Print Money to Bailout California?
Speculation is brewing that this just might be the direction the Federal Reserve may be headed in for various cities and states. It's clear that many state and local governments are in major financial trouble."
 
WhoWee said:
Will the Fed Print Money to Bailout California?

Goodness, I really hope the fed doesn't stoop to bailing out a wayward state. Such would be the epitome of insanity.
 
A federal bailout of California would have to be done on incredibly punishing terms. Otherwise every state would spend as much as they wanted, tax as little as they wanted, and would let their neighbors (through the feds) pay for it. It would also be an enormous transfer of wealth from red states to the bluest of blue states - and from the poor to the wealthy. (California has the 9th highest median household income)

However it was done, it would have to be so bad that the other 49 states would be scared off. However painful living within their means would be, this would have to be worse. How bad? I suspect you would find people looking at Reconstruction as the closest historical parallel.
 
Can the state go through bankruptcy in the way a corporation can (like Chapter 11), where it continues operating, but just must go through specific changes to come out leaner?
 
  • #11
CAC1001 said:
Can the state go through bankruptcy

It's never happened. Which laws apply is not a simple thing, though.
 
  • #12
Vanadium 50 said:
Otherwise every state would spend as much as they wanted, tax as little as they wanted, and would let their neighbors (through the feds) pay for it.
Isn't that just the same as transferring taxation to the federal government instead of state taxes?
 
  • #13
NobodySpecial said:
Isn't that just the same as transferring taxation to the federal government instead of state taxes?

An argument centered around unfundated mandates (Medicaid) by the states might gain traction?
 
  • #14
Vanadium 50 said:
A federal bailout of California would have to be done on incredibly punishing terms. Otherwise every state would spend as much as they wanted, tax as little as they wanted, and would let their neighbors (through the feds) pay for it. It would also be an enormous transfer of wealth from red states to the bluest of blue states - and from the poor to the wealthy. (California has the 9th highest median household income)

However it was done, it would have to be so bad that the other 49 states would be scared off. However painful living within their means would be, this would have to be worse. How bad? I suspect you would find people looking at Reconstruction as the closest historical parallel.

That's one of the most plausible and frightening things I've heard in a very very long time.
 
  • #15
What's plausible? That California will default? Or that the reaction by the rest of the country will be as I described?
 
  • #16
Vanadium 50 said:
What's plausible? That California will default? Or that the reaction by the rest of the country will be as I described?

The latter.
 
  • #17
I haven't had a chance to wade through all of this yet - just thought I'd share.

http://www.ebudget.ca.gov/StateAgencyBudgets/4000/4270/department.html
 
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  • #18
It seems the worst case is California can not sell bonds and it must cut spending to match income. When that happens I want to move to California. They will have a realistic budget. Of course they will need to pro-rate pension payment to say 50% on the dollar. They might also want to consider capping pension payments to no more than $80,000 per year.
 
  • #19
PhilKravitz said:
It seems the worst case is California can not sell bonds and it must cut spending to match income. When that happens I want to move to California. They will have a realistic budget. Of course they will need to pro-rate pension payment to say 50% on the dollar. They might also want to consider capping pension payments to no more than $80,000 per year.

They should, but it seems they have some kind of economic suicide pact with themselves. Maybe they took that Tool song to literally and tried to hasten the process. The whole endeavor of California is kind of ridiculous at this point actually, but nature has such direct answers to our problems. Shake shake shake... shake shake shake... shake your faultline, dooba doop dooba dooby!
 
  • #20
nismaratwork said:
They should, but it seems they have some kind of economic suicide pact with themselves. Maybe they took that Tool song to literally and tried to hasten the process. The whole endeavor of California is kind of ridiculous at this point actually, but nature has such direct answers to our problems. Shake shake shake... shake shake shake... shake your faultline, dooba doop dooba dooby!

Perhaps they should offer Mexico 10% of their total prisons budget (a 90% savings would be very helpful) to take all of their prisoners - then take 10% of the savings and (add some beds and curtains) redevelop the prison properties into Medicaid-only hospitals - staffed with med students and interns?
 
  • #21
WhoWee said:
Perhaps they should offer Mexico 10% of their total prisons budget (a 90% savings would be very helpful) to take all of their prisoners - then take 10% of the savings and (add some beds and curtains) redevelop the prison properties into Medicaid-only hospitals - staffed with med students and interns?

...

That...
...

I don't honestly know, but especially the notion of a teaching environment and the rest... It wouldn't pass, but would it work? I kind of like the notion... I really like it actually. You'd need a FEW attendings, but not many. Bam, Michael Moore can have his "utopia". *gag*
 
  • #22
WhoWee said:
Perhaps they should offer Mexico 10% of their total prisons budget (a 90% savings would be very helpful) to take all of their prisoners - then take 10% of the savings and (add some beds and curtains) redevelop the prison properties into Medicaid-only hospitals - staffed with med students and interns?

I think you are onto something here. They could outsource to Mexico prisons and all people on welfare and pensions. They could cut much of their spending 90%. If they can get past the unions they can bring in H1B visa folks to teach and do all state work at a 50% savings. I think we have it solved.
 
  • #23
PhilKravitz said:
I think you are onto something here. They could outsource to Mexico prisons and all people on welfare and pensions. They could cut much of their spending 90%. If they can get past the unions they can bring in H1B visa folks to teach and do all state work at a 50% savings. I think we have it solved.

Given the state of that state, I'm not sure that it wouldn't be a positive change all around...
 
  • #24
This is a revealing, on the ground, tale from historian, author, and multi-generational California resident Victor David Hanson:

"[url[/URL][/I]

[QUOTE]The last three weeks I have traveled about, taking the pulse of the more forgotten areas of central California. I wanted to witness, even if superficially, what is happening to a state that has the highest sales and income taxes, the most lavish entitlements, the near-worst public schools (based on federal test scores), and the largest number of illegal aliens in the nation, along with an overregulated private sector, a stagnant and shrinking manufacturing base, and an elite environmental ethos that restricts commerce and productivity without curbing consumption.
[...]
In two supermarkets 50 miles apart, I was the only one in line who did not pay with a social-service plastic card (gone are the days when “food stamps” were embarrassing bulky coupons). But I did not see any relationship between the use of the card and poverty as we once knew it: The electrical appurtenances owned by the user and the car into which the groceries were loaded were indistinguishable from those of the upper middle class.

By that I mean that most consumers drove late-model Camrys, Accords, or Tauruses, had iPhones, Bluetooths, or BlackBerries, and bought everything in the store with public-assistance credit
[/QUOTE]
 
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  • #25
mheslep said:
This is a revealing, on the ground, tale from historian, author, and multi-generational California resident Victor David Hanson:

"[url[/URL][/I][/QUOTE]

And water...

Ever read the book: 'Cadillac Desert?'... good read.
 
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  • #26
  • #27
Vanadium 50 said:
A federal bailout of California would have to be done on incredibly punishing terms. Otherwise every state would spend as much as they wanted, tax as little as they wanted, and would let their neighbors (through the feds) pay for it. It would also be an enormous transfer of wealth from red states to the bluest of blue states - and from the poor to the wealthy. (California has the 9th highest median household income)

However it was done, it would have to be so bad that the other 49 states would be scared off. However painful living within their means would be, this would have to be worse. How bad? I suspect you would find people looking at Reconstruction as the closest historical parallel.
There is no political possibility what so ever, or none that I can imagine, that will allow a federal bailout of California with this Congress.

Vanadium 50 said:
It's never happened. Which laws apply is not a simple thing, though.
Sure it has, at least the default on their debts happened. No federal bailout was required or forthcoming either, though some form of default happened to most of the early 19th century states. It seems canal building frenzies took many of them down back in the day. http://online.wsj.com/article/SB10001424052748704835504576060193029215716.html" Yet they are all still there, did not drift off into the Atlantic.
 
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  • #28
California has about 5 years left I think. California, the home of the UC system, Stanford, Berkeley, and Silicon Valley, is full of morons. No one can even propose taxing the rich anymore because we do and even that hasn't really worked. I thought the most hilarious example of how the voters of california act was when we had a $50 million election to introduce 5 or 6 propositions that involved cost cutting or higher taxation measure. 0 passed. Effectively burning $50 million.

I'm a resident of california and have been all my life and even I can't wait for this state to burn. Honestly, Californians think we are better than all of you people. No joke.

What really annoys me is how the people in LA and the Bay Area pretty much enjoy their lifestyles on the back of poor people in the central valley. We can't grow food and farmers go bankrupt because we have severe water shortages since our water is sent to LA instead. Also, thank you San Francisco/Oakland for letting the jet stream push all your pollution into the central valley so you can enjoy such clean air.
 
  • #30
Pengwuino said:
Honestly, Californians think we are better than all of you people. No joke.

California reminds me of the UAW.

For years, we have our noses rubbed into the rhetoric of how superior CA is as a state and union workers are to other workers. Also, the CA economy is bigger than most countries and UAW workers make more when laid off than the average non-union worker, etc.

However, the truth is CA couldn't pay for it's eccentricities and the UAW bankrupt GM. Now both need the rest of us to save them- they feel entitled to the help - they're not thankful - and they're not willing to change.

GM should have gone through a Chapter 11 and have the UAW contracts thrown away. CA should be allowed to fail - then re-organized under very strict reform - including a serious judicial review of the environmental initiatives. People aren't allowed to commit suicide - states shouldn't be allowed to either.
 
  • #31
WhoWee said:
California Governor Jerry Brown, faced with a $25 billion deficit has proposed over $12.5 billion in cuts, nearly across the board.

I feel for him, I really do! As a struggling freelance writer earning less than thirty grand, I "get it." Tightening one's belt isn't comfortable, but it's sometimes necessary.

When one is self-employed, however, doing so doesn't result in hundreds of departments complaining loudly in response!
 
  • #32
mugaliens said:
I feel for him, I really do! As a struggling freelance writer earning less than thirty grand, I "get it." Tightening one's belt isn't comfortable, but it's sometimes necessary.

When one is self-employed, however, doing so doesn't result in hundreds of departments complaining loudly in response!

Ah yes... the cheapest Ramen noodle base, bulk noodles, and bulk-powdered chicken stock for convenience food, and scrounging-creativity for the rest. I think we should send Turbo-1 to California and explain just what a joy pre-made noodles and such can be... I know his recollections have given me a new appreciation even for the times of bulk-noodle.
 
  • #33
skippy1729 said:
Where is he going to get the other $12.5 B. They are headed for the cliff and I can't imagine who wants their bonds. Maybe the State pension funds would like to buy them?

Skippy
The references provided here say Brown plans ~$12B cuts and another ~$12B increase from revenues to close the total $25B deficit.
 
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  • #34
mheslep said:
The references provided here say Brown plans ~$12B cuts and $12B increase from revenues to close the total $25B deficit.

I believe you, but... where the hell is he getting $12B? Is it possible he'll raise taxes and accept that he'll be a one-term governor?
 
  • #35
nismaratwork said:
I believe you, but... where the hell is he getting $12B? Is it possible he'll raise taxes and accept that he'll be a one-term governor?
Legalize drugs, build the largest meth lab in the history of the universe, then sell meth to the other 49 states and the rest of the world.
Hate it all you want but you know it would work :P
 
  • #36
ShawnD said:
Legalize drugs, build the largest meth lab in the history of the universe, then sell meth to the other 49 states and the rest of the world.
Hate it all you want but you know it would work :P

I think it would actually drive down the price of meth so much that in essence, it would be like flooding the market with diamonds... well... diamonds that do nasty things. That's the other problem; you're going to over-saturate the market with a drug that lasts for a very long time... no... this would be a failed economic policy.

I think an earthquake would be best... you know... something really profound; a kind of natural jettisoning of increasingly dead weight.
 
  • #37
Here's a short term solution - sell the topsoil - the environmental groups don't want any agribusiness anyway. Look at the money that could be saved on lawsuits over water.
 
  • #38
WhoWee said:
Here's a short term solution - sell the topsoil - the environmental groups don't want any agribusiness anyway. Look at the money that could be saved on lawsuits over water.

Have you lived in California??... you seem to really have a grip on the issues and the pathologies.

Yeah... actually, to just get honest with themselves, they should add gambling like Nevada and legalize marijuana HARD. Sell THAT, and reinvigorate their agricultural business... at least it's not meth! They can trade weed for water... I think that's sort of where they're going anyway... :biggrin:
 
  • #39
They have the most productive farm land in the country. What do they do to increase production - turn off the water?

Next, look at the prisons and Medi-cal - here's a glimpse at what happens when the paths of the two programs cross:

http://www.lao.ca.gov/handouts/crimjust/2010/Inmate_Medical_Care_03_18_10.pdf

"The revised budget for 2009-10 refl ects a total of about $1.8 billion
in General Fund support for adult inmate medical operations
under the control of the federal court-appointed Receiver. This is
an increase of about $424 million, or 32 percent, from the
enacted 2009-10 budget, based on the following adjustments:"

my bold
 
  • #40
Now Brown wants to cut $1.7 Billion by charging co-pays of up to $100.
http://californiawatch.org/dailyreport/how-brown-shaves-17-billion-medi-cal-budget-7971

"Gov. Jerry Brown is counting on fewer Medi-Cal users seeing the doctor, visiting the emergency room or spending the night in the hospital - by charging those low-income patients a co-pay of as much as $100.

In other words, what's bad for the patient, might be good for the state budget.

The expected drop in "utilization" – budget code for people who fail to take advantage of government services because of various roadblocks - is just one of the ways that Brown expects to carve $1.7 billion from Medi-Cal, the state health insurance program for the needy."

He's planning to restrict access to medical care with a co-pay?:confused:
 
  • #41
How do thing compare north versus south in California?
 
  • #42
WhoWee said:
They have the most productive farm land in the country. What do they do to increase production - turn off the water?

Next, look at the prisons and Medi-cal - here's a glimpse at what happens when the paths of the two programs cross:

http://www.lao.ca.gov/handouts/crimjust/2010/Inmate_Medical_Care_03_18_10.pdf

"The revised budget for 2009-10 refl ects a total of about $1.8 billion
in General Fund support for adult inmate medical operations
under the control of the federal court-appointed Receiver. This is
an increase of about $424 million, or 32 percent, from the
enacted 2009-10 budget, based on the following adjustments:"

my bold

Wow... that's a HUUUUGE amount!

PhilKravitz: Historically the South has been wealthier, but water-poor, and the north (of LA and more) was typical pacific northwest.
 
  • #43
nismaratwork said:
I think it would actually drive down the price of meth so much that in essence, it would be like flooding the market with diamonds
I don't want to use diamonds as the example since that's a very complicated issue. Look at alcohol instead. According to this random website, alcohol is worth $280 billion per year in the US. Meth could very easily slip in there and take $24b. The budget problem could be fixed (pun intended) in 1 year.

But they won't listen to me. Instead, they'll probably jack the taxes on alcohol and cigarettes.The budget problem could probably be fixed with some basic common sense, but common sense is never as common as it should be. For example, prisons generally don't do anything to prevent prisoner-on-prisoner violence, but tax payers flip the bill to give medical treatment when it happens.
 
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  • #44
ShawnD said:
I don't want to use diamonds as the example since that's a very complicated issue. Look at alcohol instead. According to this random website, alcohol is worth $280 billion per year in the US. Meth could very easily slip in there and take $24b. The budget problem could be fixed (pun intended) in 1 year.

But they won't listen to me. Instead, they'll probably jack the taxes on alcohol and cigarettes.

Maybe they should just collect back taxes from all of the various convicted dealers - plus suspend all Medi-Cal benefits to prisoners (except for emergencies), and all benefits for "undocumented persons".
 
  • #45
The California thing seem over blown Brown is going to cut spending 10% and increase taxes 10%. Here in New York we have cities increase taxes by 43% Newburgh, NY and cutting services. The mayor has left office. School districts increasing their tax 14%. 10% is tame.
 
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  • #46
If you do not like the increased taxes work less (Laffer curve MIT).
 
  • #47
PhilKravitz said:
If you do not like the increased taxes work less (Laffer curve MIT).

How would you expect to pay your bills?
 
  • #48
WhoWee said:
How would you expect to pay your bills?

Of course your tax bills are lower. As far as property tax move to a smaller house in a cheaper neighborhood. As far as medical care use less bigger deductible, as far as food grow some. It is the new normal the system will not provide for us we must provide for our selves and our community.
 
  • #49
PhilKravitz said:
Of course your tax bills are lower. As far as property tax move to a smaller house in a cheaper neighborhood. As far as medical care use less bigger deductible, as far as food grow some. It is the new normal the system will not provide for us we must provide for our selves and our community.

You are basically specifying personal responsibility for tax paying citizens - in order for the state to continue to spend uncontrolled?
 
  • #50
WhoWee said:
You are basically specifying personal responsibility for tax paying citizens - in order for the state to continue to spend uncontrolled?

Good... I thought maybe I was misunderstanding him. Re-routing confiscation funds from the drug enforcement and back into the budget would allow for the dual forces of adding money to the budget, and shrinking the prison population and budget.

ShawnD: Meth is pretty nasty... I'd say stick with weed and sell it to the nation; it's already being done from California so why not tax it?
 

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