IVN News

California Budget Crisis: Deficit Now Astronomical $16 Billion

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How much longer will California’s pretend-and-extend on the budget continue? Every year it’s the same tiresome fiscal train wreck, but nothing changes. The legislature continues its sleepwalking. No lasting solutions are found. The rot and dysfunction continues and worsens.

Californians may be startled to hear that those in other states increasingly view California as a laughingstock and the poster child for government dysfunction. Yes, things are that bad…and they just got much worse.

California Governor Jerry Brown announced huge spending cuts on Monday. California’s budget deficit is now $7 billion more than estimated and totals $16 billion. For some reason this huge increase, released as the “May Revise”, was deemed to be unexpected. Just like it is every year, Sacramento haphazardly attempted to balance the budget by making fictional estimates of projected income. But the projected income is a phantom, it doesn’t exist and never did. Now here we are a few months later, with the wet sandbag of reality whacking lawmakers upside the head. Sacramento is realizing it has yet another monumental deficit and no clue what to do.

If California was a private corporation and the Chief Financial Officer told the CEO that, whoopsie, my original estimates of a balanced budget were wrong and we are now massively in debt, he’d be fired. Yet California does this every year.

The governor’s budget cuts include four-day work weeks for state employees along with pay cuts, cutting Medi-Cal by $1.2 billion, and bludgeon-like cuts most everyplace else. Needless to say, it’s going to get very ugly.

“I am a buoyant optimist but this is the best I can do”, said  Gov. Jerry Brown on his Draconian budget cuts.

“There’s a fine line between being a ‘buoyant optimist’ and just plain delusional”, countered Howard Jarvis Taxpayers’ Association.

That’s a fun retort, but really, but Howard Jarvis and Prop 13 with its artificially low property taxes are what started California on its fiscal Highway to Hell. Hundreds of billions in underfunded state pensions are another massive problem, and much of that liability is off the books and not even included in the California budget! So, there’s blame aplenty, and on all sides too.

“Other states are seeing their tax revenue grow, while California struggles to balance a budget on shrinking tax revenues. The answer is not to increase tax rates, but to grow the economy,” said Dan Logue, North State Assemblyman and Chief Republican Whip. “Hounding job creators and trying to squeeze them for more money is not helping anyone; it is time for an attitude change in Sacramento.”

“Another year of austerity measures is not what Californians want,” said Senator Noreen Evans (D-Santa Rosa), chair of the Women’s Caucus. “Despite massive cuts across the board – falling disproportionately on children and women – we still have a $16 billion shortfall. We can no longer just cut services to dig the state out of deficits because our Republican colleagues won’t consider raising revenues. We all must share the responsibility to look at all budget solutions.”

As long as California legislators and politicians can demonize the other side (and raise money for their side by doing so) this calamitous state of affairs will continue, as they have no incentive to change. The political system in California is broken. What California really needs is a “cumbaya” moment, a coming together to resolve problems. If not, then in such circumstances, change is too often forced the participants by external events.