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Saturday, December 15 , 2018, 3:55 pm | Fair 64º


The Daily Capitalist: California’s No. 1!

When it comes to fiscal mismanagement and dysfunction, the Golden State is a cut above the rest

This is going to be good. The election is just over and the fur is flying here in California.

Before last week’s special election Gov. Arnold Schwarzenegger said that anyone who thinks the $24 billion deficit can be fixed “with just cut doesn’t know math. And they should go back to Math 101. ... I despise tax increases, but mathematics is much more powerful than ideology.”

He did a quick 180. Arnold now says “This means cuts, cuts, cuts, and living within our means. That was the message of the people.”

Gov. Arnold Schwarzenegger and lawmakers scrambled Wednesday to avert a financial meltdown, and public officials across California braced for annihilating cuts on the day after voters trounced their leaders’ rescue plan for the state.
— Los Angeles Times, May 21, 2009

The problem is that our legislators in Sacramento have no idea how to not spend money. Every program has a constituency and is precious to someone who is on the receiving end. The media are stressing the “harshness” and “brutality” of the expected spending cuts. No surprise there. Our politicians are now threatening us. As one of our former legislators said:

“People are going to have to figure out: Do they want schools, do they want roads, do they want public safety, do they want to take care of the less fortunate?” said former state Senate President Pro Tem John Burton, D-San Francisco, who is now chairman of the California Democratic Party. “At some point, that’s going to happen.”

Our Democratic-controlled government has been spending and spending for years without regard to the well being of the state and its taxpayers. When the economy crashed it hit California hard and tax revenues declined. Legislators have done everything in their power to not cut spending and have used every accounting trick in the book to cover their tracks. They have borrowed from supposedly dedicated single-purpose tax funds, such as the highway fund, and have continued to borrow on the general credit of the state.

Now the voters have said we don’t want to be taxed further. I don’t believe that will stop them entirely. On Monday, the Los Angeles Times reported that we can expect a tax increase of $1.50 per pack of cigarettes. That would raise about $1.2 billion. Well, who cares about the damned smokers; it’s a health measure in their best interest.

Sacramento is also talking about “borrowing” the money it is supposed to give to local governments from the property taxes it collects. It also looks as if the rest of U.S. taxpayers will bail us out with another $6.8 promised by President Obama. I think we’ll still see more use taxes that do not require a vote of the people.

Here’s what they will have to do:

» Cut all programs across the board.

» Cut all salaries across the board.

» Eliminate programs.

» Lay off workers.

» Find ways to deliver services cheaper and more efficiently.

» Suspend or reduce pension benefits.

I have no clue as to how they are going to do this, but I will admit it’s fun to watch them scramble. The teachers, prison guards, police and fire, and service employees unions are very powerful in California and are big donors to the Democrats. The Republicans are mostly useless: permanently gerrymandered into the minority party.

Arnold came in surrounded by yes men/women, with visions of grandeur. Remember when the talk going around to change the U.S. Constitution so an immigrant could be president? We all know who that immigrant was.

His political sense is faulty. In 2005 he held a special election with four initiatives — curbing teacher tenure, reining in union dues, capping spending, and redrawing political districts. They were soundly rejected by voters. Why? Because he unwisely attacked the powerful unions that rallied their substantial forces to defeat all four propositions. If Arnold had just focused on redrawing political districts he might have won. If he had won that battle, we might have been able to undo the gerrymandering that resulted in a permanent Democratic majority. That may have led to reduced spending. But, alas, no.

Now California is the No. 1 state in unemployment. In April we lost 63,700 jobs, dwarfing Texas, which lost 39,500 jobs. With high taxes and restrictive business regulations it doesn’t look good for us.

Here’s Arnold’s new mantra: “I’ll be back — not.”

— Jeff Harding is a principal of Montecito Realty Investors LLC. A student of economics, he has a strong affinity for free-market economics. This commentary originally appeared on his blog, The Daily Capitalist.

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