California- Plunge in state revenue dashes hopes

Legislators were hoping revenue would continue to exceed projections, forestalling deeper cuts and further tax hikes. But April's total was 30% below what was expected, leaving them with few options.


By Shane Goldmacher, Los Angeles Times
May 4, 2010
Reporting from Sacramento
State tax collections plummeted unexpectedly in April, wiping out months of steady gains that legislators hoped would ease their budget troubles and restore California's economy faster than experts predicted.

Such hope is now fading fast.

Revenue for April, the biggest revenue month because it is when most Californians pay their taxes, lagged projections by nearly 30% — roughly $3 billion, according to state officials. The drop was steep enough to erase improvements recorded in each of the four previous months.


Economists and finance officials are scurrying to analyze the data to determine what caused the April swoon. Some suspect it sprang from new laws that changed the rhythm of tax payments. It could also reflect the growth in unemployed residents eligible for refunds.

The April collections came almost entirely from personal income taxes. Most corporate and sales taxes have not yet been reported. If they, too, come in below projections, the state's budget problem would grow worse.

The decline sets Sacramento back as next month's deadline for passing a budget approaches. Lawmakers face a deficit of $18.6 billion — about 20% of general fund spending — with no easy options left for addressing it, as they have already cut state services severely and temporarily raised income, sales and vehicle taxes.

more

http://www.latimes.com/news/local/la-me-state-budget-20100504,0,680610.story

They've been avoiding responsible budget practices for decades.

continually voting propositions that tie the Assembly's hands. They'll approve multibillion dollar bonds, then prohibit the Assembly from raising taxes to pay off the bonds. I'd never go into State politics in California.

Voted debt is immune from prop 13 but it takes a super majority to pass.

What does not change is the Gann Limit, AKA Prop 4, which is much the limiting factor for CA government

:hi:

I expect the people I vote for to be able to say "No" when a proposal does not include sound financing.

i want names.

Vote out all incumbents.

i guess i understand the appeal. :eyes:

I have my doubts whether you know a single thing about any legislator in the state of California.

You've never mentioned one by name.

You continually rail against legislative decisions but basically don't name any that require any knowledge.

I'm calling your bluff.

That's where their $20B is, unpaid real estate taxes on trillions in assets, held for generations.

OTOH, the always fearful sheeple will bleat and cry over the $270 that their property taxes will go up. It would be funny if so many weren't suffering so much because of this blind panic.
:kick: & R

Where did you get that figure?

Last time I checked, the population of California was about 37 million. If every individual contributed equally to raise $20 billion, that would be about $540 for every man, woman, and child regardless of what tax was imposed to raise it.

I think I pay plenty in property tax - Almost $2,000 per year, which is guaranteed to increase by 2% annually for as long as I live, and I haven't had kids in school for more than 12 years. I make very little use of state-provided services that aren't covered by other kinds of taxes, like the high income, sales, and fuel taxes I pay.

The root reason for the passage of Proposition 13 still exists. I voted for it in 1978, and I'd vote for it again.

That's what Prop. 13 did.

It doesn't need to be as high as $540 per person in the state if the tax were simply more fair and that requires changing Prop. 13.

They are capped by a process that allows ownership to be passed on from one entity to another without a reassessment.

figured out, or simply don't care, that the crumb you enjoy costs the entire population more than they can pay and has repeatedly bankrupt the state, all so that extremely wealthy parasites don't have to pay the price for living in the most desirable place on earth.

"I've got mine, fuck everybody else".
:eyes:

The problem is irresponsible spending by decades of legislatures that won't pass a proper budget that includes saving during rich times. The state spends more money than it brings in, no matter how much it brings in.

was minor in comparison.

If there is a silver lining...

State income taxes are likely way down because state incomes are way down. Add the decrease in sales taxes because people without jobs, or with lower-paying ones, aren't spending the way they used to, and of course there's going to be a shortfall.

A few months ago, The Economist ran an article about the California budget crisis and placed the blame on a voter-passed proposition: the 3 Strikes bill. They cited the massive and continuing increases in spending on prisons and prison guards, backed by the politically influential Prison Guards Union, as the single biggest drain on the state's budget.

In the proposed 2010 budget, K-12 education, higher education, and health/human services account for 66% of spending. Prison and parole supervision is the 5th largest line item in the pie chart I looked at. It certainly seems wierd that parole and prison supervision, at (6.8%), is approaching the higher education budget (10.6%).

http://www.ebudget.ca.gov/pdf/BudgetSummary/SummaryCharts.pdf

From my perspective, the death spiral looks something like this: you slash the property tax ( the infamous proposition 13 ). That leaves income tax and sales tax as the state's revenue stream. It stops paying attention to manufacturing ( it can't tax the factory property any more ) and encourages development of retail, because that will boost the sales tax stream ... except that retail jobs don't pay well, so you start losing income tax revenue, and then of course the sales tax revenues fall into the tank because nobody's got discretionary income, and now you're really, really hosed.

Since the legislature's hands are tied ( and it would be totally dysfunctional even if its hands were untied ), I suspect the only way out of this crisis is by initiative, in which the urban parts of the state pass measures to relieve their own pain by virtue of sheer numbers ( not a lot of people
in Imperial county. )

J.

There is, it's just that the rate of increase is capped, and I can assure you that it goes up the the maximum legally allowed amount every year - at least mine does.

It's convenient to blame Prop 13, but it's not the sole reason for the state's current mess. There's a lot of blame to go around, much of it having to do with unfunded mandates since 13 was passed. Most people are in favor of smaller classrooms: the state reduced elementary school classes from around 30 when Prop 13 was passed to 22 children today. Sounds good, but it costs money: more space, more teachers. New construction standards mean infrastructure has to be updated to meet them, and those pesky earthquakes make building stuff that has a good chance of holding up more expensive. I've lost track of how many well-intended ballot measures have passed since 1978 without any provisions for funding them - the 3 strikes one has had the most impact so far.

I don't think the decline of manufacturing in California is connected with Prop 13 - that should have been good for manufacturers - but is part of an overall decline in manufacturing throughout the US. However, the state is losing another big industry, film and TV production, to locations that are providing better incentives and perks. Maybe we need a requirement for some percentage of "California content", like Canada does.

California is one of the states that subsidizes the redder parts of the country: I think we're down in the getting $.70 in federal monies for every dollar we pay in. Maybe if we could keep a few more cents here we could fund some more federal mandates.

We're not the only state with problems, though; most others are facing similar cuts especially in education and they don't have the equivalent of Prop 13 to blame - I wonder what excuse they're using? I think it's just a matter of California being out in the forefront again.

For what it's worth, yesterday my town passed an extension of our parcel tax (in addition to regular property taxes, which go into the state general fund) specifically earmarked for local schools.

which become a larger portion of the budget.