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A Further Perspective
Linings: Silver and Not So
Once again California leads the way — and it’s the state’s Democrats who’ll have to rise to the occasion.
Lost in the coverage of the Republicans’ Congressional gains on November 2 was the fact that the party won some 675 state legislative seats across the country, its best showing since 1928.
Along with several newly elected governors, the GOP snatched 20 legislative houses from the Democrats. Going into the every-ten-year redistricting cycle next year, they will fully control the process in 13 states with a total of 165 House of Representatives districts, while Democrats will control only four with 40 districts.
A favorable redistricting climate may yield more Republican seats down the road. Meanwhile, however, many of these states are facing dire budget problems and the new power of the Republicans means they will have to make choices that cause politicians to wince: slash spending or raise taxes.
Two fully “blue” states, California and New York, probably face the most serious fiscal difficulties. In California, for example, the Republicans won not a single statewide constitutional office and actually lost one legislative seat from their minority delegations. Nevertheless, there are rays of hope coming through that dark cloud.
For four decades, the Democrats have controlled the California legislature. Back when Jerry Brown was first governor in the late 1970s, he signed an executive order permitting state employee unions to engage in collective bargaining. Thus began an era of growing clout for these unions and they are now the state’s most powerful special interest. Many Democrat lawmakers owe their electoral success to the deep pockets of these unions. The result has been very generous pension plans and comfy salary increases for the union workers. The cost of these form a major part of the state’s precarious financial position.
Over the years, the only thing the Republican minority could do was to play boy-with-his-finger-in-dike over passage of the annual state budget. The constitution required a two-thirds vote of both houses for passage. Republicans had just enough members to hold up budgets to prevent balancing by way of new taxes in a state with already high ones.
This changed with the November election. A successful ballot initiative measure replaced the two-thirds vote with a simple majority. At first glance, it looked as if Democrats, who are especially averse to reducing costs, could envision quick passage of the next budget by means of new taxes and accounting gimmicks.
Yet here is the silver lining in the cloud that looked so dark for fiscal conservatives:
Although the budget may now be passed by a simple majority vote, Proposition 26 — also successful — still requires a two-thirds vote on any new taxes that are involved.
In a state where, for years, too many demands have been chasing too few dollars, the legislative majority has found it tempting to say “yes” to all of the demands. Two ways the state has managed to pay for this has been to withhold or snatch back county and city funds, on the one hand, and calling new taxes “user fees,” on the other. No more, Proposition 22 — another successful ballot measure — prevents the state from snatching local funds. And, under Prop. 26, taxes may no longer be disguised as “user fees.”
With iron-clad majorities in both houses of the legislature and all the elected statewide offices, the Democrats now have full responsibility for balancing the budget — and on time (or their pay is docked). Is this the bucket of cold water the once Golden State’s legislature has needed? It could be and if it succeeds it may be a harbinger for other spendthrift states.
About the Author
Peter Hannaford was closely associated for a number of years with the late President Reagan, beginning in the California Governor’s office. His latest book is Presidential Retreats.
Letter to the Editor View all comments (33) | Leave a comment
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Melvin| 11.30.10 @ 7:37AM
California and New York will not control their spending as long as they know that they will get a bailout from the Federal Sugar Daddies.
Tom| 11.30.10 @ 11:17AM
Prediction: There will be no federal bailouts of the states.
Louis Jenkins| 11.30.10 @ 8:25AM
It is time for California to wake up and realize the old Demo-Blue way of doing things will not work. Will they? Doubt it. Far better to let La Raza have the state. Cut it out of the herd, and let the illegals have it. Forty nine states. We won't miss it too much.
Harry the Horrible| 11.30.10 @ 8:48AM
They are NOT going to wake up.
Talked to an "Economist" over the weekend. Mind you he teaches this stuff. He's a professor of economics.
To the economist, the only way out of the current recession is "SPEND, SPEND, SPEND." Apparently, he believes that we need to take money from folks who earn it and give it to the least productive and least responsible people so that they'll spend it. Likewise he thinks (if I may use that term) the government needs to keep spending like crazy. Responsible folks who try to save or invest are anathema to him.
Aside from the moral issues (I don't think economists care much about moral issues like "Its NOT their money"), he misses the fact that a lot of that money is going oversea rather than working here because of the huge amount of consumers goods made overseas. In other words, the spending doesn't do a whole bunch of good.
He also clings to the delusion that the deficit is "money we owe to ourselves."
I am firmly convinced that a significant portion of academia is stark raving mad.
Aquanomics| 11.30.10 @ 8:47PM
I happen to be an "Economist" with "Economist friends. None of us believes in spend,spend, spend. Rather, we'd prefer minimalist government at *all* levels along with minimal taxation. Economic history shows clearly that most, if not all economic panics, crashes and recessions were preceded by fiscal and montetary policy errors
WRTolkas| 11.30.10 @ 8:43AM
Dear Louis,
Thank you. My thoughts exactly. I'm going to sit back with a drink in hand in my easy-chair and with a smile on my face watch california implode.
Regards,
WRTolkas
Earl Richards| 11.30.10 @ 9:30AM
The Polluters Protection Act or PROP 26 is a treacherous, Big Oil rip-off, which "passes the buck" from oil corporation, clean-up fees to the taxpayer, who will pay the oil recycling fees, the toxic waste fees and other fees. Repeal Prop 26 and restore democracy. Solar power to the people. Big Oil snookered Californians with Prop 26.
dc| 11.30.10 @ 11:04AM
California is NOT going to wake up because of eco-communist jackasses like Earl Richards. Earl, do you own a car? A refrigerator? Use ziploc bags? Where do these and other modern products come from? Mainly, the Chevron refinery in Benicia (one of the few left on the left coast), without which oil isn't refined, gasoline and diesel fuel and propylenes aren't made, minerals don't get mined, and modern society shuts down. Or is that your goal? If so, at least don't insult us all by lying to us, just be honest. What are you willing to live without (and I assume you'll set the example yourself before begging for governments to shut the rest of us down and make us live like dirt hippies)?
One more question, what gives you the right to be the Rationer in Chief? Are you that much smarter and better than the rest of us?
Nobody here or anywhere is going to argue that oil companies are perfect. When they F up, they pay dearly, in the billions. But to the extent they operate within the law and are "allowed" (using your worldview) to make profits, they re-invest those profits in new products that neither you nor anyone else is FORCED to buy. On the other hand, the state of California basically invests only in more government stooges, who produce nothing, and do force people to not only fund their nothingness, but buy things they don't want to buy at great expense.
Which is why productive people are leaving the state in droves, and hippie drones like you are staying put. In most other states, you'd be mocked as the luddite fool that you are. In California, you're very mainstream. For shame.
Earl Richards| 11.30.10 @ 12:13PM
When the oil companies F up, as in the Gulf of Mexico, we pay dearly, not the oil companies. They pass their mistakes and negligence along to the consumer and the taxpayer.
Richard| 11.30.10 @ 1:42PM
What is this "us against them" foolishness? Oil companies produce a product we all need and which makes all of us healthy and prosperous. Indeed, oil is the blood of modern civilization. Try looking at the world in terms of gratitude and you might be happier.
Earl Richards| 11.30.10 @ 2:38PM
Oil does not make us healthy and prosperous. To understand the sleaze-side of Chevron, Google the USA Section of www.truecostofchevron.com.
UpChuck.Liberals| 11.30.10 @ 10:43PM
Earl, you never answered his questions. Also, do you buy food, clothing, heat/cool your house, have lights? I'm not a huge supporter of Big Oil or Big Government or much of Big anything, but until Kalifornia figures out that we need energy and it's NOT ever going to be coming from solar & wind we need oil.
Negro X| 11.30.10 @ 11:18PM
Hi, I'm Earl Richards and I am an eco -retard.
Eric Cartman| 11.30.10 @ 1:41PM
(Boooooooo!) Look, Earl! The oil companies are coming! (Ahhhhhhhh, clang, bump, Wooooooooo!) They are right outside! (Rustle, rustle) Looking through the window! (HA HA HA HA, WE ARE HERE EARL! LOOK AT OUR DRILL BITS!) Oh! My! God! LOOK! EARL! The Republicans are letting the oil companies drill off shore! And there! In Yellow Stone! AHHHHHHH! THE POOR MOOSE! Can ANWAR be far behind?! (OOOOoooooooooOOOOOOO!)
MikeD| 11.30.10 @ 9:33AM
Does anybody wonder why Economics is called "The Dismal Science", especially when it's really not a 'science' at all? Frankly, California and New York deserve what they get; I just don't want the rest of us to have to pay for their excesses. Here in Florida we are bombarded daily by commercials telling us that anybody on Medicaid can get a FREE CELL PHONE; one that can call MEXICO! Plus, we also get messages telling us that anybody who owes $10,000 or more on their credit cards can qualify for taxpayer's money. As usual, we reward bad behavior by penalizing good.
BTW, John F. Kennedy signed an executive order his first day in office giving federal employees the right to collective bargaining, so it goes back to 1961. Leave it to a Democrat, even one deified as 'moderate'. There is no such thing as a moderate democrat. All you 'old line dems' out there had better realize that your party has not only abandoned you, but they hate you and want you to die. Just look at obama$$hole's healthcare abomination.
Ted| 11.30.10 @ 9:52AM
"Harry the Horrible| 11.30.10 @ 8:48AM
They are NOT going to wake up.
Talked to an "Economist" over the weekend. Mind you he teaches this stuff. He's a professor of economics.
To the economist, the only way out of the current recession is "SPEND, SPEND, SPEND." "
This is only true of economists of the pure Keynsian club. People like Paul Krugman. Next time try talking to an economist of the Austrian School. Professor Sowell or almost anyone from George Mason will do. And remember, just because someone is a professor, it doesn't make them smart or their ideas unimpeachable. Look at Obama. He taught Constitutional Law.
Citizen Jerry| 11.30.10 @ 10:27AM
California Democrats may have full responsibility to balance the budget, but that hasn't been done in years.
When the state becomes even more of an economic basket case, it will just go hat-in-hand to Washington for a bailout, paid for by the us.
Congress needs to tell California that elections have consequences and they need to clean up their own mess.
Think that will happen? Don't hold your breath.
Leon Stephens| 11.30.10 @ 11:48PM
Jerry Brown sold out to the unions in the 70's and now he gets to clean up his own mess.The rest of the country "gets it"...Old Jerry is about to get it. Oh and one other thing... where is the additional electricity going to come from to power up the new electric cars? Just a thought...giggle,giggle.
Scott| 11.30.10 @ 11:54AM
I live here in California and I can't wait to see how the Dems will cut billions from the state budget with no new taxes, no raised taxes, no "fees", no stealing from the counties, and no raiding the gas tax. The awful truth is that the Dems, and ONLY the Dems are going to have to cut the budget by billions and ONLY they will take the blame when the backlash starts. Sadly, the backlash will consist of demanding yet MORE "services" and "programs" to take care of everyone and everyone's problems.
The problem is simple: California has too many programs that spend too much money on too many people. That's it in a nutshell.
This is a rich state. San Francisco, where I work, has a per capita income of over $60,000 per year. Yet this city, like the state, is awash in deficits. SF has a city budget of $6.5 BILLION, larger than the budgets of 20 states, and SF has a population of 800,000. SF has 28,000 city employees. Contrast this with San Jose, with only 9,000 city employees and San Jose is larger.
SF is the heart of unionized California. Thousands of work classifications, work rules, high pay, high retirement costs. The city spends over $200 MILLION a year on "homeless services".
In the end, SF, like California, is going to have to realize that it can no longer afford some things, such as "the homeless". It will kill liberals to do this, but since there will be no federal bailout, they will have to kill these programs. It will tear this state apart.
I'm leaving as quickly as I can.
Steve P| 11.30.10 @ 1:17PM
California and New York will not get a Congressional bailout through legislation; HOWEVER, some type of loans or loan guarantees by the FED or the Treasury are LIKELY!
It is all about cash and confidence. As long as CA & NY can borrow money in the markets they certainly will continue to run deficits with BS accounting methods to cover up. When at some point one of them (or possibly IL) can not obtain new bond money then there will be a cash crisis that probably will affect ALL state and municipal bonding. At that point, the FED or Treasury will back their loans to "save the system". CA, IL & NY etc, will be "too big to fail".
RCV| 11.30.10 @ 2:12PM
We in California will come through this just fine, thank you. And as for federal bailouts, we've been paying far more into the federal treasury -- subsidizing all those "prudent" red states -- for the last twenty years, than we've ever received back. You can check the figures yourselves. California and New York have been the economic dynamos of this country and will continue to be so, because anyone with drive, ambition and talent ends up sooner or later.
Eric Cartman| 11.30.10 @ 2:49PM
Look! Different day, same old crap from RC! The only talent you have left is the talent to put your state is such a rotten position and the only ambition you have left is the ambition of Leftists aholes to steal money from the people unfortunate enough to be stuck there. It won't be long. Tick tock, RC. Another 40 million in debt today . . and again tomorrow . . . and again . . . . and again . . . Good luck with that.
RCV| 12.1.10 @ 4:38PM
Look! Different day, same old crap from Eric Cartman, the man who has not a nice, optimistic or positive thing to say about this country or its culture.
Mel Torme| 12.1.10 @ 5:28PM
I don't think Mr. Cartman was bad-mouthing his country or his culture. We was writing about Kalifornia.
(yeah, OK, still "officially" part of America, but, not really.).
elizabeth Thompson| 12.1.10 @ 9:17PM
What have you been smoking RVC?! I live here in California too, and I don't know whether you have noticed or not, but we are in crisis here. Typical liberal drone, being positive and optimistic doesn't change the facts. No matter what you say, California is in serious trouble. The problem is that there are so many like you who just go along and believe that the democrats will save you. Too few like myself, who know that won't happen and am preparing for the day that it all goes to hell.
SPaquet| 11.30.10 @ 3:16PM
To RCV: When and if the "Dream Act" is passed durring this lame duck session, California will become a gated community like parts of the bigger cities in Brazil. People here in a supposedly good part of town have to paint their fences every other day when school is in session(graffiti) because our schools here are mandated to let the poorer anchor babies attend Santa Teresa High along with the robberies & store thefts(San Jose, CA) And those illegal mexican pay next to nothing in taxes and ship their ill-gotten-gains to the cesepool the left---it's the successfull ones who do, until the productive people get a clue---that are still left---leave and leave the 3rd worders behind. And that's too good for the liberal fascist left behind.
RCV| 12.1.10 @ 4:36PM
Yes, imagine what would happen if we gave citizenship to all those college graduates and people willing to serve in our armed forces!
MyGirlFriday | 11.30.10 @ 3:46PM
California's last bond issue was 10 billion dollars. For the first time ever they were only able to sell 6 billion dollars. This tells you that the writing is on the wall. In addition, much of California's income already comes from the Federal Government some of which is borrowing millions of dollars every week to cover unemployment "benefits." I do not believe, but I could be wrong, that the new 2011 Congress and conservative Senators looking to cut the deficit will not be loaning money to those states "unless" they guarantee and/or prove to make cuts to their public employee pensions. This of course is just one of the many reasons why California is in the mess it is in. It is going to be dog eat dog environment very soon in California. For those of us who are small independent business owners, the question is how much longer we can hold out. I don't believe we can tighten our belts any tighter. Something has to give and that first something is the California Public Employees and their pensions. While there are hundreds of other welfare programs in the state that need and must be reformed along the way, the foremost pig eating away at our public trough is the public employee unions. For all those that suck off the teat of the rest of us and then scream foul if they are asked to fund even a small portion of their health care or retirement.... their day of reckoning is near. If the unions won't come to the table and negotiate, perhaps we will need to amend our constitution to allow the state of California to file for bankruptcy. The people will then have the right to toss out all public unions once and for all. For the moment, I'm liking this idea best.
Pat| 11.30.10 @ 5:29PM
California’s unofficial state motto is: “Have our cake and eat it too, plus some of your cake when you’re not looking”. And yeah, as mottoes go, it’s very unmelodic but there you have it. And while we’re not proud of the fact, in all honesty Californians don’t give a “F…” about anyone but themselves. Selfish? Sure, but still quite a problem for our Democrats. Spend, spend, spend, but be very careful when raising our taxes. Why do you think we, as a state, go into such heavy debt and are constantly borrowing so irresponsibly? Raising taxes for the Democrats is like juggling nitroglycerin for you and me.
Some states have citizens who are willing to sacrifice their personal wealth now for the sake of future generations, but that’s not us. We don’t give a “F…” for future generations either. Sure, taxes are currently high but it’s a wonderful state to live in – it would be even better without the people. But there does come a point where levying even more taxes on us endangered species list taxpayers can be very hazardous to a politician’s health.
Consequently, if you’re looking for a state with civic virtue oozing from every pore, the Golden State isn’t for you. If you’re looking for communities where folks care about each other’s welfare and are willing to pay more in taxes to promote that welfare, you should try Texas or maybe Missouri. But if you’re looking for a state where folks are willing to let their politicians run the show so long as they don’t get too carried away, California could be just right for you.
Ask the dumb Schlub who was governor before ‘Ah-nold’ exactly what happens when you as a politician screw things up. Our Democrats are very wary of incurring the wrath of us lazy, laid back Californians - they know new taxes must be few and far between, plus heavily disguised whenever possible. And, like Admiral Yamamoto, they fear to wake the sleeping giant and fill him with a terrible wrath - over raising taxes.
In reality, it is California’s many creditors and you honest, hard working citizens in other states who should be worried about California’s financial problems – if you don’t believe that, go back to my first paragraph and re-read our state motto.
UpChuck.Liberals| 11.30.10 @ 10:50PM
I really wish that people would stop thinking that everyone in the Peoples Republik of Kalifornia is a left wing loon. We are doing our best to keep them confined but they keep slipping out. Maybe, just maybe we can push them a little further west, 10 miles off the coast would do it.
led display | 12.1.10 @ 3:54AM
I think so~