Saturday, May 15, 2010

California Budget Crises, A Look into OUR Future?

The new fiscal (budget) year in California begins on July 1, 2010. Between now and when the Democratic controlled legislature agrees on a new plan, there is going to be a lot of public discussion about how the state government will close a deficit of $19.1 billion from a general fund budget of $83.4 billion. During the past year in the golden state we have already seen student protests over tuition increases with program cutbacks. To set the stage for understanding where they start from, the editorial board at the Seattle-Times summarized the California fiscal condition like this...

"California has a personal income tax. Its top tax rate of 9.3 percent kicks in at $47,055. California also has a statewide sales tax of 8.25 percent — and, in San Francisco, 9.5 percent. It has a property tax and a corporate income tax. It has the highest gas tax in the nation.
California has an entire medicine cabinet of taxes, and its economy is sicker than ours. Its unemployment rate is 12.6 percent, more than one-third higher than ours. Its bond rating, single-A-minus, is the lowest of any state. It is the Greece among states.
The Greeks can at least claim to be poor compared with the French and the Germans. California is not poor. It is not Mississippi. It is the Golden State, the home of two of the most golden industries on Earth, based in Silicon Valley and in Hollywood. California has the biggest military bases, the best farmland, the most fabulous fortunes. That it is also ground zero for the worst financial wreck among the 50 states is a singular accomplishment of its political class."

In the race to the bottom, California seems to be ahead by a mile. It's been said that as the eighth largest economy in the world, California leads the US down the path of economic change. Are you getting ready for this?