Wonderful News from the State of California!!!

Jul 22, 2009

NOTE: This piece was originally posted on the American Solutions Website on July 22, 2009

I am a resident of, and a taxpayer in the State of California, the 50th least likely state to declare bankruptcy, and in the last 24 hours I have learned something wonderful. The governor and the legislature just announced a budget deal to address the $26 billion deficit staring the state in the face. No, no, no, that’s not what’s “wonderful” – how they dealt with the impending deficit, and especially how we got here in the first place, are actually kind of depressing. What’s wonderful is that I actually figured out how they proposed to do it! From reading the newpapers! And it looks like lots of other citizens have figured it out, too. I am not being the least bit ironic here.

Now, I’m not going to dwell on all the nits and nats of the California state budget – there are far more knowledgeable people than I on that. And given the bizarre realities of California politics and civic life, it’s possible that Arnold and the 120 Dwarfs actually did the very best they could. I’ll focus on three tactics that together account for about $6 billion of the above $26 billion:
  1. Taking about $4 billion from county and municipal coffers. Now, the local governments are in no position to react by lowering their expenditures. So what the state is really doing is telling local governments that they should go raise the $4 billion in the municipal bond markets, backed by the promise to pay the bonds back when the state reimburses them for the $4 billion they took.
  2. Increasing withholding tax rates and requiring some other taxes to be paid sooner. This gets cash into the state coffers sooner, but in exchange the state sees less cash when taxpayers file their returns, or pays out bigger refunds. The total cash receipts for the State of California are unchanged.
  3. Deferring about $1 billion in state employee paychecks from June 30, 2010 to July 1, 2010 (which is the first day of the following fiscal year). This is the slimiest one of all. The state is claiming to “save” $1 billion by writing checks for that amount one day later. No, I am not making this up.
All three of these actions are incredibly schlocky. In fact, if a public company pulled a shenanigan like #3, they’d be breaking out the suits with the horizontal orange stripes.

But I have found a silver lining: I figured all this out by reading the newspaper, and it was a local newspaper at that. Perhaps I’ve been inhaling the air of northern California for too many years, but I could swear that I’ve never seen reportage this clear and succinct about the state’s fiscal machinations. And judging from listening to the talk on – what’s the term I’m looking for here? Oh, yes – NPR, I am not alone. There are lots of people who are deeply unimpressed, and we’re not talking Rush Limbaugh junkies here.

Call me a zany optimist, but is it possible that we’re starting to see a franker, less euphemistic discussion of the issues emerging? Perhaps we could demand the same about federal government finances. It’s got to start somewhere. I do see a few teensy glimmerings of candor on the Sunday morning nation news talk shows. Good government starts with demanding citizens. Demanding citizens start with awareness. Awareness starts with disclosure. I’ve think we’ve seen a little more disclosure today.

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