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  • #46
    i wanted to revive this long dead thread because of the following news:

    http://www.nytimes.com/2013/05/26/us...uch-money.html

    back in 2009 i argued the problem with california's budget was that it was too cyclical in nature, being so dependent on property taxes. others argued that it was systematic-- the result of liberalism run amuck.

    if you look at the state spending, it hasn't really gone up sharply as much as state receipts declined as a result of the recession. this argues that california needs a more stable tax structure. i'd actually favor a scheme in which property taxes are raised or lowered at a proportional level to property value, in return for an agreed upon freeze in social spending.
    well, now we have this piece of news, with jerry brown as governor/CA real estate booming, especially in the bay. so, whose interpretation was more accurate? :)

    -----

    California Faces a New Quandary, Too Much Money

    LOS ANGELES — After years of grueling battles over state budget deficits and spending cuts, California has a new challenge on its hands: too much money. An unexpected surplus is fueling an argument over how the state should respond to its turn of good fortune.

    The amount is a matter of debate, but by any measure significant: between $1.2 billion, projected by Gov. Jerry Brown, and $4.4 billion, the estimate of the Legislature’s independent financial analyst. The surplus comes barely three years after the state was facing a deficit of close to $60 billion.

    At first glance, the situation should be welcome news in a state overwhelmingly controlled by Democrats, who have spent much of their time slashing programs they support. After last November’s elections, the party has two-thirds majorities in the Assembly and the Senate, relegating Republicans almost completely to the sidelines.

    Instead, the surplus has set off a debate about the durability of new revenues, and whether the money should be used to reverse some of the spending cuts or set aside to guard against the inevitable next economic downturn.

    At least seven other states — among them Connecticut, Utah and Wisconsin — have reported budget surpluses in recent weeks, setting the stage for legislative battles that, if not as wrenching as the ones over cuts, promise to be no less pitched. Lawmakers are debating whether the new money should be used to restore programs cut during the recession, finance tax cuts or put into a rainy-day fund for future needs.

    The debate reflects uncertainty about whether the revenue is a one-time event, a result of state taxes on wealthy residents selling off investments at the end of last year to avoid increased costs as the Bush-era federal tax cuts expired. But it also illustrates philosophical differences about the role of government, about spending versus taxes and about the need, as Mr. Brown argued, to learn lessons from a decade in which many states saw the bottom fall out from their revenue collections.

    “We’re seeing a change in conversation in state legislatures this year,” said Todd Haggerty, a policy analyst with the National Conference of State Legislatures. “They’re not talking about how to close a budget gap anymore, which is a welcome relief after years of that during and after the Great Recession. Rather, states are having conversations about how to allocate increased revenues.”

    Nowhere does that battle promise to play out with more force and intricacy than in California, the state that underwent perhaps the most severe retrenchments in the country.

    Mr. Brown, a Democrat who has always had a fiscally conservative streak, is leading the don’t-pop-any-Champagne-corks brigade, saying that he would oppose significant increases in new spending and that the money should go into a rainy-day fund. His administration put out the lower $1.2 billion estimate.

    “A good deal of the surge of revenues that we have seen since the beginning of the year is the result of higher-income individuals being able to realize some of their gains at the end of 2012,” said H. D. Palmer, the director of external affairs for the California Department of Finance. “We don’t believe it is prudent to budget on the capital gains. It wasn’t that long ago when we had the same experience during the dot-com boom. We don’t want to see that movie again.”

    In one particularly revealing moment, the office of the independent legislative analyst — which has a history of scolding governors for unrealistically optimistic budget projections — dismissed Mr. Brown’s figure as pessimistic, saying extra revenue was closer to $4.4 billion. The report undercut Mr. Brown just as he and lawmakers moved into the final stages of budget negotiations, and it empowered Democrats and social service advocates eager to reverse budget cuts.

    “I support the governor’s call to pay down more debt aggressively, I support the notion of a rainy-day fund,” said Darrell Steinberg, the president pro tem of the Senate. “But I also believe that we have an obligation to make some limited but important investments in restoring some of what has been lost over the last four or five years.”

    Vanessa Aramayo, the director of California Partnership, a group of organizations pushing for social service spending, said Mr. Brown was deliberately understating the state’s financial health.

    “The governor is attempting to leave a legacy of solving our state budget crisis,” she said. “But he’s doing so on the backs of poor people in the state.”

    Other Democrats said the Legislature should proceed with caution, given the history of financial gyrations in California and, no less important, concern that any perception that Democrats were on a spending spree could prove politically damaging to the party.

    John A. Pérez, the speaker of the Assembly, said that he supported putting revenues into a contingency fund, but that some of the money should go to increase spending on programs like college scholarships for middle-class students.

    “It is still uncertain how much of this is one-time money and how much is ongoing money,” he said. “Anything that is clearly one-time money we should treat as one-time money. What we’re mindful of is that historically in California, we have a greater degree of volatility than in other states.”

    A capital-gains tax windfall from investors aside, the state has erased its deficit as a result of improving housing and stock markets, a temporary sales and income tax increase approved by California voters and the cuts in spending.

    The debate over what to do next is not exclusive to California.

    In Connecticut, local government officials want the Legislature to use $150 million in new revenue to reverse a $93 million cut in aid to local governments. It has not been an easy argument.

    “We’re competing with hospitals and some social service programs for those surplus funds — along with the governor’s desire to put the money back into a rainy-day fund,” said James J. Finley Jr., the executive director of the Connecticut Conference of Municipalities.

    In Indiana, Gov. Mike Pence called for using any surplus to finance a 10 percent cut in income taxes. But fellow Republicans who control the Legislature, after initially supporting that notion, reduced the tax cut by half, reserving the money for other programs.

    “Coming off of a five-year recession, there were so many things that had been forgone during that period of time, like funding education and road infrastructure,” said State Senator Luke Kenley, the chairman of the Appropriations Committee. “The public and the leaders felt there were important things we needed to take care of first.”

    And in Wisconsin, Democrats have pushed the Republican-led Legislature to use as much as $2.1 billion in new revenue to undo cuts.

    “Last budget we had a deficit of $3.6 billion, and the talk was about shared sacrifice and targeting our public employees,” said State Senator Jennifer Shilling, a Democrat who is on the Budget Committee. “We need to invest any additional revenue back into our middle class.”

    The disagreement in California is between members of the same party. Assemblyman Bob Blumenfield, the chairman of the Budget Committee, disputed Mr. Brown’s projection of the extra revenue.

    “The only way the governor can possibly come up with his numbers is if you assume the worst on every single variable,” he said. “That’s just not going to happen.”

    “We’ve made some brutal cuts,” Mr. Blumenfield said. “There’s a lot of pain that’s been spread across California, and we can’t ignore that. But we have to be smart. We have finally clawed our way to stability, and we’re not going to squander it.”


    Ian Lovett contributed reporting.
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

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    • #47
      No cookies?
      No such thing as a good tax - Churchill

      To make mistakes is human. To blame someone else for your mistake, is strategic.

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      • #48
        Originally posted by astralis View Post
        back in 2009 i argued the problem with california's budget was that it was too cyclical in nature, being so dependent on property taxes. others argued that it was systematic-- the result of liberalism run amuck.
        It still took a fiscal conservative to set things aright. :whome:

        Mr. Brown, a Democrat who has always had a fiscally conservative streak, is leading the don’t-pop-any-Champagne-corks brigade, saying that he would oppose significant increases in new spending and that the money should go into a rainy-day fund. His administration put out the lower $1.2 billion estimate.
        Supporting or defending Donald Trump is such an unforgivable moral failing that it calls every bit of your judgement and character into question. Nothing about you should be trusted if you can look at this man and find redeemable value

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        • #49
          Originally posted by astralis View Post
          i wanted to revive this long dead thread because of the following news:

          http://www.nytimes.com/2013/05/26/us...uch-money.html

          back in 2009 i argued the problem with california's budget was that it was too cyclical in nature, being so dependent on property taxes. others argued that it was systematic-- the result of liberalism run amuck.



          well, now we have this piece of news, with jerry brown as governor/CA real estate booming, especially in the bay. so, whose interpretation was more accurate? :)
          California's money problem is both systemic AND cyclical. The systemic problem of up to $500 billion in unfunded pension liability over the next 30 years is systemic. That money has to come from somewhere, or the pension will need to be scaled back.

          The cyclical problem is that a huge chunk of California's tax is reliant upon the rich and upper middle class. Those who make $1 million or more pays a marginal rate of 13% now. The next bracket down is $50k or so. The rich could just "vacation" here for less than half the year and escape CA income tax. The upper middle class has more means to move to another state to sell their trade.

          The housing price is a bubble. This surge is only along the coastal area. I was priced out of the market in literally one month. Housing prices in HB and Costa Mesa area went up by 15% almost over night. You can say the price won't come down, but that's what happened the last time we had a bubble.

          Brown is just trying to show that he did something for the state. The fundamental problems still exist: the pension tsunami, overly reliant on the rich and the upper middle class for money, over-taxed (fees included) and over-regulated economy, and last but not least, the $100 billion medium speed train that links LA and SF with many stops in between that has a projected ridership higher than that of the busiest line in Japan.
          Last edited by gunnut; 03 Jun 13,, 21:10.
          "Only Nixon can go to China." -- Old Vulcan proverb.

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          • #50
            Things are far from "stable" in California.

            Already the idiots in the Assembly are frothing at the mouth to start up new programs that will have to be annually funded .

            Guess where the funding for these new start up programs will come from when their isn't a "surplus" next year.

            Can you say "higher taxes"?

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            • #51
              Btw....welcome back gunnut.

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              • #52
                TH,

                It still took a fiscal conservative to set things aright.
                still a Dem...

                in any case, what i'm saying here was that this recovery came only partly because the state actively did something, but also because of things like the housing market stirring again. this type of boom-bust cycle for california's finances is absolutely terrible for planning.
                There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                Comment


                • #53
                  gunnut,

                  California's money problem is both systemic AND cyclical. The systemic problem of up to $500 billion in unfunded pension liability over the next 30 years is systemic. That money has to come from somewhere, or the pension will need to be scaled back.
                  the short/medium-term problem is cylical, while the long-term problem is systemic.

                  and the systemic problem, too, is an artifact by both parties, not just the dems.

                  these issues are interconnected. the boom-bust cycle of property taxes makes fiscal planning a nightmare for california, and worsens the long-term systemic issue. the smart thing to do is to de-emphasize/reduce the property tax while raising other, more regular forms of taxation. in this case, HOW california pulls in revenue is almost as important as how much.

                  The rich could just "vacation" here for less than half the year and escape CA income tax. The upper middle class has more means to move to another state to sell their trade.
                  no, the upper middle class is largely sticky in terms of where they live (the difference between middle class and the wealthy-- even the UPPER middle class and the wealthy-- is that the former relies on an income). it's hard to replicate the node of silicon valley elsewhere, for instance.

                  as for the wealthy, one of the good things about the property tax is that for the truly wealthy the amount is trivial, and is offset by the things CA is famous for. weather, scenery, etc. that's why la jolla, for example, pretty much went through the entire recession without blinking. there will be some movement among the less wealthy, the $1-5 million bracket, but after that, no.

                  reforming the system where you have lower property taxes but greater income/sales taxes would make the system much more stable. i agree with you the long-term issue is that of the pensions, and i think ultimately both sides will have to bite the bullet. last year's pension reform plan will probably need further work.

                  either way, though, CA is not going down the tubes.
                  There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                  Comment


                  • #54
                    Originally posted by astralis View Post
                    gunnut,



                    the short/medium-term problem is cylical, while the long-term problem is systemic.

                    and the systemic problem, too, is an artifact by both parties, not just the dems.

                    these issues are interconnected. the boom-bust cycle of property taxes makes fiscal planning a nightmare for california, and worsens the long-term systemic issue. the smart thing to do is to de-emphasize/reduce the property tax while raising other, more regular forms of taxation. in this case, HOW california pulls in revenue is almost as important as how much.



                    no, the upper middle class is largely sticky in terms of where they live (the difference between middle class and the wealthy-- even the UPPER middle class and the wealthy-- is that the former relies on an income). it's hard to replicate the node of silicon valley elsewhere, for instance.

                    as for the wealthy, one of the good things about the property tax is that for the truly wealthy the amount is trivial, and is offset by the things CA is famous for. weather, scenery, etc. that's why la jolla, for example, pretty much went through the entire recession without blinking. there will be some movement among the less wealthy, the $1-5 million bracket, but after that, no.

                    reforming the system where you have lower property taxes but greater income/sales taxes would make the system much more stable. i agree with you the long-term issue is that of the pensions, and i think ultimately both sides will have to bite the bullet. last year's pension reform plan will probably need further work.

                    either way, though, CA is not going down the tubes.
                    Not both sides any more. Dems have super majority in both houses and control every single elected state office. The ball is in their court.
                    "Only Nixon can go to China." -- Old Vulcan proverb.

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                    • #55
                      gunnut,

                      Not both sides any more. Dems have super majority in both houses and control every single elected state office. The ball is in their court.
                      well, the problem AROSE from both sides. but yes, the voters have given the dems a mandate to solve this (among other) problems.

                      ---

                      on a bigger, policy note, i wish we'd have a system where each party acknowledges the general balance of power; ie if the dems win a slight victory, then let the government pursue a dem solution with significant republican compromises. or if the dems win big, then a dem solution with a bit of compromise for the republicans. vice versa, of course.

                      stalling things in committee or resisting with filibusters to the death all contribute, in its own small way, to unraveling the trust and compromising spirit that's necessary for a (small d) democratic system to work.
                      There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                      Comment


                      • #56
                        Originally posted by astralis View Post
                        on a bigger, policy note, i wish we'd have a system where each party acknowledges the general balance of power; ie if the dems win a slight victory, then let the government pursue a dem solution with significant republican compromises. or if the dems win big, then a dem solution with a bit of compromise for the republicans. vice versa, of course.
                        That's a whole new can of worms you are talking about. There are countless ways to manipulate and abuse this form of government, and all bad.

                        Originally posted by astralis View Post
                        stalling things in committee or resisting with filibusters to the death all contribute, in its own small way, to unraveling the trust and compromising spirit that's necessary for a (small d) democratic system to work.
                        I like the filibuster rule. I supported the democrats when they used it during the early years of the Bush administration, and support the republicans today for their use against the Obama administration.

                        I remember Sean Hannity screaming about how the democrats were bad losers in using the filibuster to stall Bush appointees. He said there should be a straight up or down vote. I disagreed with him. And sure enough, when the shoe is on the other foot, he didn't bother to call republicans names when they used filibuster against Obama.
                        "Only Nixon can go to China." -- Old Vulcan proverb.

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                        • #57
                          gunnut,

                          There are countless ways to manipulate and abuse this form of government, and all bad.
                          countless ways to abuse ANY form of government. the whole point of a winner-takes-all system vice a proportional system is that it was purposefully designed to give the majority the ability to DO something vice becoming paralyzed.

                          I like the filibuster rule. I supported the democrats when they used it during the early years of the Bush administration, and support the republicans today for their use against the Obama administration.

                          I remember Sean Hannity screaming about how the democrats were bad losers in using the filibuster to stall Bush appointees. He said there should be a straight up or down vote. I disagreed with him. And sure enough, when the shoe is on the other foot, he didn't bother to call republicans names when they used filibuster against Obama.
                          i actually view this exactly the opposite way. i thought dems were stupid to try to filibuster bush appointees to death. the republicans are doing it even harder right back to obama now. either way the current-day filibuster is badly abused; it goes from a weapon of the last resort to an everyday one, and in doing so destroys an institution that was (rightly or wrongly) based on traditions rather than strict law.

                          the way people are using it now turns things from simple majority to needing a supermajority to get anything done. this is the type of paralysis that destroys democratic governance.
                          There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

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