Pixel Tracker

Monday, February 18 , 2019, 11:35 am | Fair 55º

 
 
 

Harris Sherline: California’s Budget Mess

Legislators continue to spend more and save less, leaving residents to pay the price.

Why is it that when people spend public funds they often seem to lose touch with reality? How many times have we seen individuals we consider to be upright, responsible citizens, who normally live within their means, suddenly become spendthrifts with a public purse? What is there about holding elective office that somehow makes it acceptable for politicians to spend more money than we can afford or to run up bills for things they would never think of doing in their personal lives?

{mosimage}

The reflexive answer to a budget shortfall always seems to be to raise taxes. The politicians’ motto is to look for something to tax – anything – but whatever you do, don’t cut back. In the words of Ronald Reagan, “The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

Politicians raise taxes and expand the budget when the economy is healthy and generating more money than government needs, then raise them again to cover the shortfall when revenues decline. But they never curtail spending, nor give anything back to taxpayers if it can be avoided.

Witness the annual fiscal charade that invariably takes place in California. Even with the state facing a massive budget shortfall, legislators continue to receive raises. The Sacramento Bee observed (Dec. 3, 2007), “California pays legislators at least $30,000 more than any other state, but numerous city or county managers, auditors or school superintendents receive far higher paychecks."

Writing in Forbes.com (Sept. 1, 2003), Rich Karlgaard noted, “California took in 44 percent of its revenue from fewer than 10,000 capital gains tax payers in 2000. The state’s legislators insisted on basing the budget on what was clearly understood to be a temporary spike in tax revenues.  When the easy money flew off, so did the tax receipts."

Bill Leonard, a member of the California State Board of Equalization, observed: “When California raises taxes on people the liberals define as ‘wealthy,’ the actual collections do not meet expectations.  Back in 1991, Gov. Wilson bought into the liberal logic for a moment and raised taxes on the upper-income brackets.  The following two years, revenues were $1 billion short of forecast each year.  Currently, the top 1 percent of taxpayers in California contributes 40 percent of the state income tax, and the top 10 percent pay 70 percent of the tax. … Our tax system has gotten so hyper-progressive that a single taxpayer can affect revenue estimates.  Last year, a wealthy taxpayer settled his tax liability for $200 million. …What is clear is the state’s spending level is already overly dependent on a few wealthy individuals gaining financial windfalls, and then paying taxes on them. We are fast running out of Californians who can do this” (The Leonard Letter, May 5).

Furthermore, “… state spending has soared under Schwarzenegger even faster than it did under his predecessor.” His budget “spends 34 percent more than when he took office just four years ago. His spending plan was based on the fallacy that revenues would continue to pour into the state’s coffers” (ibdeditorials.com, Dec. 17, 2007).

Columnist Dan Walters noted, “The good news is that California politicians, who have sidestepped the state’s shameful and ever-worsening budget mess for six years, may finally face the music.  The bad news is that they really don’t have a clue how to close the chronic deficit, given its three-dimensional nature” (Sacramento Bee, Dec. 16, 2007).

“The widely followed UCLA California forecast took the state to task in its 2008 outlook for a budget ‘based on a combination of overly optimistic projections of revenue, wildly optimistic assumptions that spending would decrease on its own and a handful of accounting gimmicks to make up the difference.’ … Anyone with half a brain knew that soaring tax revenues were about to reverse, based on the housing crash, which has hit California harder than the rest of the U.S.” (ibdeditorials.com, Dec. 17, 2007).

Too many politicians think their job requires them to spend more money – and never to save.  No project seems to be too insignificant for them to fund. Whatever the cause, they invariably believe that it’s worth the cost.

If Californians don’t insist on controlling their government’s budgets, we can look for our politicians to borrow more money and/or raise taxes again to cover the shortfall. If that happens, more taxpayers will leave the state, especially businesses and the wealthy, while those who pay little or no taxes will continue to move in – a disastrous combination. It’s a serious mess!

Harris R. Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital who has lived in Santa Barbara County for more than 30 years. He stays active writing opinion columns and his own blog, Opinionfest.com.

Talk to Us!

Please take Noozhawk's audience survey to help us understand what you expect — and want — from us. It'll take you just a few minutes. Thank you!

Get Started >

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made using a credit card, Apple Pay or Google Pay, or click here for information on recurring credit-card payments and a mailing address for checks.

Thank you for your vital support.

Become a Noozhawk Supporter

First name
Last name
Email
Select your monthly membership
Or choose an annual membership
×

Payment Information

Membership Subscription

You are enrolling in . Thank you for joining the Hawks Club.

Payment Method

Pay by Credit Card:

Mastercard, Visa, American Express, Discover
One click only, please!

Pay with Apple Pay or Google Pay:

Noozhawk partners with Stripe to provide secure invoicing and payments processing.
You may cancel your membership at any time by sending an email to .(JavaScript must be enabled to view this email address).

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.