There are many ways that we can paint this picture. First of all, if history is any indication of the failures of the past, higher taxes do not raise revenues. It usually has the opposite effect. When Illinois passed a tax increase in last year, revenue went down faster than a roller coaster at Disneyland. There is only so much you can do to tax your way out of trouble. Business's and people have moved to neighboring states where the tax burden is lower and the business environment is pro-active. This is the exact same thing that has been happening in California for the past few years. Business's are leaving at the rate of five a week and this is not the worst of it. California has ranked at the bottom of the least friendly state to do business eight years running according to Chief Executive magazine. And as the taxes and regulatory burden increases more and more people are leaving the state for friendlier pastures. You know when things are getting worse when you see other states putting up billboards in your state.
With the election cycle in full swing and the threat of the democrats having complete control of both the State Senate and Assembly with a 2/3 thirds majority there are no shortages of doomsday scenarios permeating the political landscape including the repeal of Proposition 13. The City of Stockton has just declared the largest bankruptcy of any city on the United States and their are a number of others that could be close including the City of Los Angeles. It is no secret that the unions and pensions have played a major role in the growing deficits. The pension reform ballot initiative failed on a vote of 24-13 and republican lawmakers were blocked from bringing public pension reform up for a vote during this years budget negotiations. Current unfunded pension liabilities is approaching $600 billion and without reform we will continue to see spiking and double dipping of pension funds
While the state is drowning in debt with no viable solutions to reverse the trend, we continue to see a reluctance on the part of the democrats to rein in spending and cut taxes to spur economic growth. In December 2011 when Gov. Brown was signing the new bills that were passed by the democrat controlled legislature he commented that "just because a bill is useless doesn't mean I should veto it". In the midst of all this lunacy Assembly Speaker John Perez has been known to shut the microphones off of the opposing party during debate.
This years budget did not go without the theatrics that follows this state year after year. The legislature had until June 15 to pass a budget without losing any pay. And as in the past, a "Balanced" budget was passed to meet the deadline. There was more work to be done on the budget but politics instead of fiscal responsibility took center stage. And as always Gov. Brown did his best to downplay the disaster on the horizon by only cutting $192 million from a $92 billion budget. The cuts were token cuts at best to show everyone that he has the best interest of the voters. This is how it will be reported in the media that fiscal austerity is alive and well and living in California. If only the voters knew the truth and were not constantly being sold the same story year after year. If the people of California do not make the tough choices this November we will continue to see this bottomless sinkhole of irresponsibility and we will have no one but ourselves to blame.
