my state (calif) is going to fiscal hell in a handbasket.

[ourbluenation]

Schwarzenegger declares state fiscal emergency

By JULIET WILLIAMS
Associated Press Writer

Published: Monday, December 1, 2008 at 2:07 p.m.
Last Modified: Monday, December 1, 2008 at 2:08 p.m.

SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger declared a fiscal emergency Monday and called lawmakers into a special session to address California's $11.2 billion deficit.

The state's revenue gap is expected to hit $28 billion over the next 19 months without bold action. The emergency declaration authorizes the governor and lawmakers to change the existing budget within 45 days.

The state is likely to run out of cash in February.

"Without immediate action, our state is headed for a fiscal disaster, and that is why ... I am wasting no time in calling a fiscal emergency special session," Schwarzenegger said in prepared remarks.

The Republican governor and Democratic lawmakers have proposed a combination of tax increases and spending cuts, but Republican lawmakers steadfastly refuse to raise taxes.

snip

Democrats don't have the two-thirds majority in either the Assembly or Senate that is required to pass tax increases or a state budget.

During last month's session, Democrats proposed $8.2 billion in spending cuts and $8.2 billion in tax increases. Republicans rejected it and instead sought an economic stimulus program.

Schwarzenegger asked for both, offering essentially the same plan rejected last month.

His proposal includes raising the state sales tax by 1.5 percentage points - or 1 1/2 pennies on the dollar - for three years, generating $3.5 billion in the current fiscal year. He also seeks to increase the annual fee for registering vehicles.

The stimulus would focus on loan modifications to prevent more home foreclosures and saving an unemployment insurance fund from insolvency by raising taxes employers pay into the pool and slightly reducing benefits.

Schwarzenegger enacted the fiscal emergency under a voter-approved initiative. If the Legislature fails to address the current-year budget deficit within 45 days, the initiative prevents them from acting on any other bills until it's resolved.

http://www.pressdemocrat.com/article/20081201/NEWS/812010259/1350?Title=Schwarzenegger_declares_state_fiscal_emergency_

[mike_c]

1. I think der Schvarze is lighting a political time bomb...

...and he probably won't have enough sense to get out of the way when it blows. Putting the CALIFORNIA LEGISLATURE in a legal bind over the budget is just off-the-scale dumb, IMO. Upper case to emphasize the absurdity of trying to do this in California, where the budget process is just about the most dysfunctional annual legislative monster of all. :rofl:

[tjwash]

5. Well...in all fairness, the guv has to make do with the deficit that's been placed in front of him.

For years, hell DECADES, they have been putting things like tax increases to pay for state run programs to an up or down vote to the people that live here. And they hit the ballots in the form of Props. Prop 13 and prop 87 are just a couple of disasters for the state budget that got put in front of voters. That's supposed to be why we elect people to run government; to decide where the money from the budget comes from, and how to spend it. Instead we keep leaving it up to mob mentality.

The people here that vote, want things. Higher salaries for cops and fire fighters, better roads, better schools, higher teacher pay; but no one ever wants to have their taxes increased to pay for them. They just keep voting for bonds to pay for it all, that the state then has to pay interest on.

So...this one can be laid at the feet of cali voters.

[mike_c]

6. oh I totally agree....

Prop 13 should have been the warning that using ballot initiatives to resolve budget and revenue issues is not a good idea-- and as you say, it undermines the whole point in having government in the first place. Sometimes an outside force needs to make decisions because people acting in their self interests don't act for the collective good. California is reaping the effects of that today. Has been ever since Prop 13.

[rvablue]

19. I lived in CA for more than a decade and until CA overturns

Proposition 13 this is not going to end. Not that it's going to solve ALL of the problems but it is nontheless a necessity to curb these insane short falls.

((And, you forgot to add the prison guards union to your list. They make close to $150,000 a year and only need a high school degree to qualify......crazy! I'm most definitely not anti-union, but this salary defies reason))

[Parche]

2. so shwarzenegger cant do it either

that is what they recalled Davis for, those fukwads....:grr: :grr: :grr:

[Art_from_Ark]

18. That's what they *ostensibly* recalled Davis for

I have a feeling that the real reason that Davis was ousted was that he wanted to investigate the California energy scam.

[DJ13]

3. raising the state sales tax by 1.5 percentage points ...for three years

How many times have we seen "temporary" sales tax increases actually be temporary?

They promised the increase from 5% to 6% was temporary.

Then they claimed the 6% to 6.5% increase was temporary.

Then it continued increasing up to the current 8.5% with the promise it was temporary.

Do the idiots in Sacramento know that temporary is supposed to mean its not permanent?

[happyslug]

12. He is asking for a 10% sales tax? He is into dangerous territory

One of the inherent problems with Sales taxes is the ability to cheat, i.e. pay for the item but not the tax. The general rule of thumb has been if the tax is below 10% it is more a nuisance then a "real cost" to the buyers, so the buyers pay the tax (i.e. it is NOT worth cheating the tax-man for the little tax you are saving). This changes at about a 10% Sales Tax rate.

Now most people buy things from National Chains today, but there are still a huge number of smaller business out there. Many will gladly report a "loss" instead of the "Sale". They get their profits, the buyer saves the taxes. In a cash transaction this is easy. Now with everyone going to national chains and their need for computerized sales transaction this is less of a threat, but it is out there (And if you are dealing with a franchise of a National Chain, the Franchisee may have even greater incentive NOT to report a sale).

Now in most states (I do NOT live in California so the details of California sales tax is unknown to me) the number source of Sales Tax revenue is the sale of Automobiles. In my home state of Pennsylvania you have to report the sales price even if it is between private parties so that the sales tax is paid. If the reported sales price is NOT close to "Book Value" of the vehicle the state will have to be told WHY (And the reason has to do with the car NOT your wish to sell it to a friend cheaply). Now I recently had to do this, but I reported that the car was sold for less then book value do to the various repairs that were needed to get it to pass a State Inspection and the fact I wanted to get rid of the car quickly. That seems to have been alright to the State of Pennsylvania (I have not heard from them in the year since I sold the Car, neither has the person I sold it to). I just bring it up to show that sales tax is a major factor in the sale of cars. AND that a 10% tax rate will force people to look at ways to avoid that tax (i.e. reporting a payment why less then what was actually paid and justifying it by the need to do major repairs, then say all receipts were lost by the time the state questions the transaction).

I can see other items being sold and the tax not reported, in fact it is possible that at 10% the sales tax may bring in less money then at the present 8.5% (There is a point where the tax will reduce transaction being reported, where that is no one knows today, but once that point is exceeded revenue will drop and studies have indicted that it seems to be in the 10% area).

My point is simple, 10% may to to high a rate to bring in the needed revenue, the better options would be a tax on land (I know about California problem in that regard but I do not believe the act extends to the State itself) or Income tax.

[Raksha]

15. And sales taxes are regressive, just by their nature.

They hurt the poor disproportionately. It's bad enough already, but a 10% sales tax is REALLY going to hurt.

[Warren Stupidity]

4. This too will spread.

State governments generally do not have the luxury of deficit financing that the fed has. Without massive financial intervention from Washington, huge layoffs will start rolling across state governments from coast to coast. Luckily we have that do nothing numbnut still in charge, who is going to do nothing, and then we can expect an exceptional amount of obstruction from the Senate Republicans. It should be a grand new year. Obama's plate is way past full.

[jaysunb]

7. Yes we are.

But, aren't we always....

I've lived here 40 years and it's been the same old song since prop 13. :evilfrown:

[LibDemAlways]

8. How ironic that Arnold now seeks to "increase the

annual fee for registering vehicles." His promise to lower it was one of the main reasons he won election in the first place.

[bemildred]

9. I wonder if Ahnuld regrets displacing Davis yet? nt

[MindPilot]

10. "I ain't paying no taxes" should be our new state motto

Californians have become the most anti-tax bunch I've ever seen. People seem to think all this shit is free.

[dynasaw]

11. California Had a Surplus Under Davis

. . . this moron beefcake came along and, along with his friends like Enron, manage to commit high level theft.

[Canuckistanian]

13. Thank FSM you got rid of Gray Davis

That guy was a dangerous "tax-and-spender".

No, wait, spending is good because it's a "stimulus".

I'm so confused.

[proud patriot]

14. "He also seeks to increase the annual fee for registering vehicles"

ummmm wasn't his first action as Governator eliminating
a tax on registering new cars?

I wonder if he regrets that decision .

[ourbluenation]

16. omg - that's right. he made a big deal out of it.

[kentuck]

17. You have two choices.

Raise taxes or cut spending. There are no easy answers.