Tuesday, May 15, 2012

The California Mind Puzzler...

Good morning, grumpy pants!

California's Governor Jerry Brown has the unique position of presiding over the collapse of the Democrat-ruled Blue State model he helped to put together back in the 1970's, the last time he held the job.

Brown, of course, was the man who shoved through collective bargaining rights for the public employee unions back then, and now he's having to wallow in the mess he created.

California was thought to have a $9.2 billion deficit, but - surprise! - the state's actual deficit is a pulverizing $16 billion. Just a rounding error, right?

In order to cover just part of this marker, Governor Brown is using a  scare tactic very familiar to Californians. Either you vote to increase taxes or the schools will close, the police and fire departments will no longer function and the sky will fall!

Here's the real story.

Governor Brown went into a huddle with the powerful public employee unions, and the very very best he could get them to agree to is -wait for it - a work weekof 38 hours, worked over four days — a 5% cut in payroll costs.

California's public employees are among the highest paid in the country. This is a consequence of the wonderful Ponzi scheme worked in all Democrat ruled fiefdoms where the public employee unions supply the manpower and campaign funds to elect Democrats, and then these same union benefactors 'negotiate' with the same Democrat office holders for increased pay and benefits at the taxpayer's expense...a portion of which in turn gets kicked back to these same Democrats in the form of campaign contributions when it's election time again.

Is it any wonder all Governor Brown got people like the prison guards and the SEIU to agree with is two less hours of paid work per week?

Let's see...5% less in pay, but 20% less in commuting costs with gas at $4.50 a gallon, 20% less expenses during the workweek and three days off every week instead of two. Wouldn't a lot of people jump at that in a heartbeat? Actually, since the unions own Brown and the Democrats, he'll be lucky if he can get them to agree to any cuts at all, and Brown himself admits this isn't a done deal, that it's a maybe.

Instead, what Brown is trying to convince the people of California to do is to raise taxes - oh, just temporarily, so the story goes - on people with gross incomes of over $250,00 per year and to raise sales taxes again. Sales taxes in Los Angeles are already 10%, and range from 8.25% to 8.75 % in the Bay Area. Raising sales taxes to this level, of course, means that people either buy less or that they make deals under the table with sellers to avoid paying these exorbitant levies,which means the state gets less tax money in either scenario . A rise in sales taxes just increases this effect.

Of course the taxes won't be temporary, and people at that income level, which includes a lot of small business owners, will simply join the thousands of others who've already left the once Golden State, taking the jobs and economic activity with them.California already has an 11% plus official rate of unemployment, which means the actual U6 rate is between 15 and 17%.

Another thing the governor isn't telling anyone is that the state government is severely over leveraged. Aside from the budget deficit, the state has been appropriating money mandated to go to the state's municipal and county governments and the public schools and spending it, issuing IOU's to cover the 'debt'. What happens when the IOU's reach the point of no return, which is just about where they are now, is anyone's guess. The school districts are threatening to push the Democrat dominated legislature to enact an extra 'special assessment' in property taxes of $500 to $1,000 per parcel to cover their share of the action, and considering the muscle of the teacher's unions, there's no doubt they would get it.

Severe cuts in MediCal, higher college tuitions and cuts in other social services are also on the table, if California's voter refuse to go to the well one more time...and those cuts are likely even if they do.

Of course, there's one thing that isn't on the table, and never will be as long as the Democrats rule the state. In his proposals, it's noteworthy that Governor Brown said nothing about doing anything about the cost to California for social welfare benefits collected by illegal aliens, between $20 billion and $10.3 billion or so per year, depending on who's counting and how they're calculating.

In fairness, Governor Brown isn't alone in this mindset. His attitude is replicated in city, county and state politicians and in socialist apparatchniks on boards and bureaus throughout California.

The California mind puzzler....when does it all get to be too much, and what happens when you continue to believe too much isn't enough?

The answer? When California becomes Greece and the entire charade collapses.


Anonymous said...

What's bad is that the same folks who voted for these clowns will leave California and come to states like Texas and screw them up.We need a border fence around these Blue States!

Old School said...

California, according to my reading is a large part of the U.S. economy.

I wonder what effect a Greek style default would have?

louielouie said...

anon @ 1:48

looking for a thumbs up symbol.
can't find one.

old school, i believe the word you are looking for is Greecifornia.

note to ff, i'll leave a light on for 'ya.

Ducks Fan said...

Anonymous, that's exactly how Oregon became a Democrat State, we were Californicated.