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Funny Business
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CNBC.com |
-A massive drought is now three years old.
-The state's destructive fire season, which usually starts in the fall, has started in May.
-A few small earthquakes have rattled Southern California this month.
-Salmon are disappearing off the coast for the second year in a row, with no known cause.
-Brand new homes are being destroyed because it's cheaper than finishing them.
-Some doctors believe the swine flu actually started here.
-Everything wrong in the nation is happening here to a worse degree: unemployment, home values, etc.
-Three months after "solving" a projected $42 billion budget deficit, the state is already $8 billion in the red, headed to $15 billion, and maybe even $21 billion. That's $600 for every man, woman, child here, legal or illegal.
The solution?
Next Tuesday, voters will decide on a slate of propositions meant to trim $6 billion from that deficit. So far, it looks like most of the initiatives will lose, despite the efforts of Governor Arnold Schwarzenegger and some unions to get them passed. The propositions would do the following:
-If the state ends up with excess revenues in any given year, those revenues would be put in a rainy day fund (after schools get their cut). However, voting for the "rainy day fund" also allows the state to extend new tax hikes for another three years.
-Issue bonds to borrow against future state lottery revenues.
-Transfer to the general fund nearly $1 billion in accounts sitting unused, funds currently designated for specific purposes based on previous voter-approved propositions.
-Deny pay raises to legislators in deficit years (this one may actually pass.)
The Howard Jarvis Taxpayers Association is leading the charge to defeat most of the propositions, claiming they are not real reform and only prolong the pain. But the Governor's not going down without a fight. "Miracles do happen," he says. This week he will detail two revised financial outlooks, one if the propositions pass, and one if they don't. If they don't, the Governor says he will cut state fire resources 10 percent, release 40,000 prisoners, cut $3.6 billion in education, and force local governments to give the state $2 billion, money the local governments don't have.
A scare tactic?
Gov. Schwarzenegger says it's a reality check, and he will respect whatever the voters decide. "People are angry at Sacramento, they're angry at the politicians," he says. "They should not let that anger out on killing those initiatives, because what they would do is hurt their local communities...Sacramento would not get hurt." He says legislators would still get paid, still get their "great, great golden healthcare plan," and they'd still have jobs.
But the odds are against him.
Voters ARE angry about recent tax hikes, and many are frustrated at a state which continues to base spending on faulty revenue estimates. In April alone, the State Controller says personal income tax revenues were more than $1 billion below budget estimates. That's a $1 billion miss for just one month. On top of that, the Obama administration is threatening to withhold $6.8 billion in stimulus funds to California if the state cuts the wages of one union to save money. All the more reason, the Governor argues, that the ballot initiatives must pass. "I will never give up."
Neither will the opposition.
Check these out on CNBC.com:
- Slideshow: Companies at Greatest Risk for Default
- Slideshow: World's Biggest Debtor Nations
- Slideshow: What Does $1 Trillion Look Like?
- Slideshow: How Your Tax Dollars Are Spent
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