Unless you can print your own money, which would likely get you tossed into jail, you have probably always had to live within your means. When finances become tight, you may be faced with choices. Is going out to dinner more important than paying the mortgage? Is going to the movies more important than buying food? The chances are that you would answer “no” to both of those questions and that you would make the appropriate choice. That makes you a lot more responsible and better educated in the ways of the real world than the vast majority of politicians and political cronies running our country. And there is not better case in point than the financial woes faced by the State of California.
California is now the poster-child for how not to run a government or manage a budget. The state has been in a chronic state of deficit for years, and there is no end in sight. The state’s politicians will tell you that their financial woes were caused by Proposition 13; a state constitutional amendment that limits the amount of property taxes that can be charged. But the real reason for the state’s financial problems comes from two sources.
The first big problem faced by the state is the fact that the state legislature has spent every dime of tax payer dollars that they could collect. When those dollars were scarce, the state sold bonds to fund its spending. Although it was discussed, the legislature never set any money aside in a “rainy day fund”. But those responsible for appropriating the funds like nothing better than to blame the voters when those funds are mismanaged. That’s what has happened in this case.
Proposition 13 was passed by voters years ago because property taxes were rising so fast that many people were being forced to sell their homes simply because they couldn’t afford the taxes. They were literally being taxed right out of their homes. Voters were sending a clear message to Sacramento that the state needed to get its financial act in order.
Then last month, voters sent a similar message when they defeated a series of tax increases that the Arnold the Governator said he needed in order to eradicate the state’s deficit. Of all the measures on the ballot, the only one that passed made it illegal to give state legislators are pay raise in any year that the state runs a deficit. Even given these defeats, the spend-thrifts in the state capitol have had the audacity to very publicly call for a revision to state law which requires a two thirds majority of the legislature to impose new taxes. They want the ability to override the voters.
The second issue faced by the state is unfunded mandates that have been heaped upon the state by the federal government. This includes everything from mandating driver’s license standards, educational requirements and requiring the state to fund services for illegal aliens.
The Governor’s response to all of this has been less than impressive. He wants the state legislature to raid the coffers of local governments; essentially forcing them to make loans to the state. And he is threatening to shut the entire state’s government down; something I’m not sure that most taxpayers will miss anyway. But when a reporter for the Sacramento Bee asked him if he would end state funded services to illegal aliens, he said that he would not. Those services cost state taxpayers around $9 Billion annually according to the Center for Immigration Studies. That amounts to around 38% of the state’s deficit.
Schwarzenegger, who has turned out to be anything but conservative, is now calling for a state constitutional convention. No doubt, he wants to give voters less power to make changes to the state constitution. After all, those changes prevent the politicians from doing whatever they want. He is not a supporter of the two thirds requirement for tax increases. No doubt that a new constitution would eliminate that too.
If you are wondering what all of this has to do with the rest of the nation, what happens in California tends to get transported across the country. The state has set a number of trends for the entire country. Given the country’s financial woes, it is very likely that other states are going to face similar issues. And these issues are having an impact on the state in many ways.
California’s unemployment rate is over 10%. What was once the land of opportunity is now anything but. Employment experts within the state are actually now telling people that if they need a job, they should consider moving. And the tax issues – specifically high business taxes – are forcing business owners to rethink being located in California. In many cases, they could just as easily locate elsewhere and not face the same tax or regulator burdens.
It is time for all levels of government to start living within their means. Not doing so will mean higher taxes for everyone, lead to inflation and eventually bankrupt us all.
If you would like to see a rather enlightening interview with Schwarzenegger, the Sacramento Bee has posted their entire interview on their website. You can see it by clicking here.
Politics & Politicians 
