Say Cheese!: CA Budget Battle

Friday, July 24, 2009

CA Budget Battle

Source: Bloomberg News, July 21

By the next morning, state lawmakers and various interest groups, armed with legions of supporters and millions in campaign dollars, began to voice displeasure... Enough to put the entire budget agreement in jeopardy.

California has found some people who want to pay more taxes. The Marijuana Policy Project bought TV time. Their 30 second ad says taxing the drug could help the state with its budget problems.

Just the latest pitch in the chronic campaign to legalize pot... Which drug enforcement officials in Fresno claimed to have siezed in such quantity it'd tip the scales at $1 billion dollars... But I wouldn't put any more stock in estimated street values than I'd put into California real estate values. Both trend toward the bogus.

A friend emailed a comparison of present day California to when it joined the United States in 1850:

The State had no money.

Almost everyone spoke Spanish.

There were gunfights in the streets.

So basically, it was just like California today.

And they're not the only state with problems. At the recent annual meeting of the National Governors Association, one of the hottest topics was how badly states have been hit by the economic downturn. This year, they've seen the steepest decline in tax revenues on record.

A New York state legislator has introduced a bill that would require wealthy New Yorkers convicted of crimes to pay the cost of their jail sentence. State officials estimate that housing inmates costs counties about $1 billion a year. The bill proposes a sliding scale: Convicts worth $200,000 or more would pay the entire tab; but those with a net worth of $40,000 or less could go to jail for free.

Other states are going after unused gift cards as revenue, The Wall Street Journal reported July 21 that about half the states have unclaimed property laws that can be applied to unused gift cards after 2-5 years... So use it or lose it!

And the other side is budget cuts... Would Gov. Schwarzenegger really close California's Poison Control System? Would Gov. Patrick really kill unwanted animals displaced by closing Boston's Franklin Park Zoo?

Now let's say you live in a state with its own problems, and lots of us do, why should you care what happens in California?

Ross DeVol, director of regional economics at the Milken Institute (a Southern California think tank founded in 1991 by Junk Bond King Michael Milken, best known for his conviction for securities fraud), believes the effort to solve the state's fiscal problems will push California's economy (by itself among the world's largest) in a direction exactly opposite of what the "stimulus" seeks to achieve nationally.