Categorized | Politics, State

The Red Ink And Herrings Of Governor Brown’s Budget

Governor’s Tax Hikes and State Excesses Won’t Erase ‘Wall of Debt’

 

Skippy Massey
Humboldt Sentinel

 

The Governor means business by enacting his tough set of fiscal reforms.  He’s broken Sacramento’s legislative partisan gridlock and delivered the budget on time.  But the ink is still dripping– and curbing Mr. Toad’s Wild Ride is going to be a tough sell.

The compromise tax hike initiative supported by Governor Jerry Brown won’t raise enough revenue to eliminate California’s whopping $34 billion “wall of debt” in four years, according to a report from the state Department of Finance, the Sacramento Bee reported Monday.

The Bee’s report doesn’t paint a pretty picture for the Golden State.

The Sentinel has been following the State budget and the Governor’s attempts at reigning an out of bounds roller coaster ride back into fiscal balance.

 

Red Ink: Details of the ‘Wall of Debt’

Last year, Brown introduced the ‘wall of debt’ concept to illustrate various forms of borrowing by the state over the past few years.  Think of it as the opposite of Winco’s ‘wall of values.’  It’s bad, very bad, and it ain’t no bargain like two boxes of Kraft Mac ‘n Cheese for a buck.

According to the Department of Finance report, the wall of debt currently is at $34.2 billion and would drop to $8.9 billion by the end of fiscal year 2015-2016– that is, if voters pass the compromise tax hike plan in November.  The projection falls short of Brown’s goal to eliminate budget-based borrowing in four years with the approval of the tax hike, the Bee said. 

California’s borrowing from special fund accounts has already reached nearly $4.3 billion, more than five times the amount from June 2008.

 Details of the Compromise Tax Hike Plan

The compromise tax hike plan — developed by Brown and supporters of the “Millionaires Tax” to help balance the budget – would:

  • Increase the personal income tax by one percentage point for individuals who earn $250,000 annually or couples who earn $500,000 annually; and by two percentage points for individuals who earn $300,000 annually or couples who earn $600,000 annually.
  • Extend the income tax increases on wealthy residents from five to seven years.
  • Increase the sales tax by a quarter of a cent.  The sales tax hike would expire in four years.

The combination of taxes would raise an estimated $9 billion over the next fiscal year.

Last month, Brown signed the fiscal year 2012-2013 budget agreement, which factors in presumed revenue coming from the compromise tax hike plan.

 More Red Ink

We still have the Governor’s multi-billion-dollar building proposals for a high speed bullet train ($4.7 billion) and the massive twin water tunnels ($14.7 billion) for the southern portion of the state to contend with.  Together, those two projects will cost nearly $20 billion—and that’s just for starters.

The good news, perhaps to many, is that the Governor has promised he’ll apply a tight tourniquet to the ever-widening costs of public pensions with his serious reforms next year, cutting some of the flow of the State’s hemorrhaging red ink.

 Red Herrings

Bruce Anderson of the Anderson Valley Advertiser brought us the following gem regarding the State Parks fiasco the Sentinel reported on last week. 

You remember the scandalous story:  $54 million dollars was ‘found’ in two hidden funds, causing longtime State Parks Director Ruth Coleman to resign and her chief deputy, Michael Harris, to be fired after the missing money was discovered.

Mr. Anderson noted:

“Manuel Lopez, former deputy director of administrative services for the Department of Parks and Recreation, told the Sacramento Bee that he informed agency Director Ruth Coleman about a $20 million surplus in the Parks and Recreation Fund ‘at least five times over approximately a five-year span.’

“Nonprofit groups and local governments helped raise money and assumed responsibility to keep the 70 state parks open past a July 1 closure deadline.  The attorney general and state finance officials are investigating the scandal.  State lawmakers also are promising oversight hearings and plan to seek an independent audit of the department.  The state Finance Department also is reviewing all the state’s 560 special funds to make sure the actual fund balances match what has been reported to the administration and the state controller.

“State officials said Friday that the department had maintained the unreported money in its accounts for at least 12 years, including the entire time Coleman was director.  She served under three governors but said in her resignation that she was ‘personally appalled’ to learn of the hidden money.”

Right.  Got that.  But hang on, folks.  Our favorite Mendocino Muckraker torments us with yet another one of his irksome pearls here:

NOW IT’S $37 BILLION?  As California State government tries to explain how State Parks misplaced millions, we now learn that the State has no way of accounting for $37 billion in “special funds” squirreled away in some 500 accounts, relying, they say, on an “honor system” to keep track of the money.

No one checks to see that the money reported as being in these accounts actually matches the money on hand.  Only last week it was revealed that State Parks had sequestered $54 million in two special-fund accounts by not reporting them over the last 12 years.

 The Governor’s take on all this hoopla?  Last week he downplayed the scandal, saying it was the first time he’s seen the government get in trouble “for saving money.”

“When somebody comes and says, ‘Hey, guess what, we have some money over here,’ that’s better than saying, ‘Whoops, we don’t have the money,’ Governor Brown said.  “More money is better than less money,” the Governor quipped at a news conference.

Right.  And please let us know when pigs can fly through the smoke and mirrors.

* * * * * * * *
Red ink and red herrings and billion-dollar projects.  We don’t know whether we’re coming or going in terms of revenue.  Money’s flying out the door.  Can it possibly get any worse—or better—for the Golden State?

If we didn’t have California as a case study of fiscal insanity, someone would have to invent it.

One Response to “The Red Ink And Herrings Of Governor Brown’s Budget”

  1. Charles Bean says:

    I was reading an article the other day, which spoke of a $50 billion debt owed to the State pension fund. It explained this was what the additional tax would pay, not as advertised. Just a bunch shell games with different pots of money, and though the State has got away with it, it will catch up with them.

Trackbacks/Pingbacks


Leave a Reply

HumSentinel on Twitter

RSS Progressive Review

  • US marriages at 90 year low
    The Census Bureau reported Thursday that the nation’s marriage rate is the lowest since 1920, and the first-time inclusion of same sex married couples did little to reverse the decline.According to Pew Research Center analysis, the marriage rate of Americans 18 and older hit a bottom of 50.3 percent in 2013, down from 50.5 percent in 2012. In 1920, the first […]
  • Arthur the polar bear suffers through climate change
    Daily Mail, UK - His shaggy white coat is perfectly ­suited to icy conditions as low as minus 40C in his Arctic circle habitat. But it is hell in this concrete enclosure at Argentina’s Mendoza Zoo, where the temperature can reach 40C (104F).Tragic Arturo – Spanish for Arthur – has been a sad tourist attraction at the zoo for around 20 years.He is thought to […]
  • Pocket paradigms
    Neo-liberal: Someone who thinks the Constitution's commerce clause is more important to defend and expand than the 1st or 4th Amendments. - Sam Smith […]
  • Word
    Contrary to common belief even among the educated, Huxley and Orwell did not prophesy the same thing. Orwell warns that we will be overcome by an externally imposed oppression. But in Huxley's vision, no Big Brother is required to deprive people of their autonomy, maturity and history. As he saw it, people will come to love their oppression, to adore th […]
  • Pocket paradigms
    Whatever the source, it now takes longer, requires more paper, and stirs up more intimations of liability to do almost anything worthwhile than it once did. While our rhetoric overflows with phrases like "entrepreneurship" and "risk-taking," the average enterprise of any magnitude is actually characterized by cringing caution with careful […]
  • !% get their own Facebook
    international Business Times - Are you a 1-percenter who needs a safe social media outlet to talk about your first-world problems, without the risk of alienating your commoner friends? Now you have an alternative to the impoverished unwashed masses of Facebook. Enter Netropolitan.club, an exclusive digital country club -- essentially, Facebook for rich peopl […]
  • Bringing justice down to the community
    LA Daily News - City Attorney Mike Feuer announced plans Friday for a pilot program to involve community members in punishing offenders on quality-of-life issues.“It is part of a restorative justice theory, where the community should have restored to it what was taken from it by a perpetrator — and the community should see the tangible impact on the street.” […]
  • How some states cheat minority voters
    Common Dreams - Lack of poll workers and low numbers of voting machines are key contributors to long voting lines, and precincts with more minorities experienced longer waits, according to a new study released today by the Brennan Center for Justice at NYU School of Law.Although many factors may contribute to long lines at the polls, little research has asse […]
  • Florida backs down on kindergarden testing
    Valerie Strauss, Washington Post - Last week I published a highly popular post that included a letter that kindergarten teacher Susan Bowles of Lawton Chiles Elementary School in Gainesville, Fla., posted on Facebook telling parents that she was refusing to administer the Florida Assessments for Instruction in Reading, or FAIR. She explained what she said we […]
  • Milton Friedman: Killing American softly with his song
    Sam Smith, 2002 - You'd never guess it from the sycophantic obituaries, but Milton Friedman did more damage to American democracy and culture than just about any figure in the 20th century. The sycophancy isn't surprising. Friedman was blessed with it from the start. For example, the supposedly liberal PBS starred him in a ten part series, "Fr […]
  • Department of Good Stuff: Journalists
    Dean Baker Russ Baker Richard Brenneman Dan Froomkin Amy Goodman Glenn GreenwaldChris Hedges George Monbiot Bill Moyers John Nichols Greg Palast Robert Reich James Ridgeway Jeremy Scahill Tim Shorrock Jeff Stein Jon Stewart David Swanson Matt Taibbi Mark Thompson Sarah Van Gelder   […]
  • Department of Good Stuff: Good news
    You can't do better than Yes Magazine […]
  • Real economics
     An increase in GDP doesn't pay the cable bill […]
  • UN secretary general to join climate demonstrators
    Ban Ki-Moon, UN Secretary General - The Climate Summit that I am convening one week from today has two goals: to mobilize political will for a universal and meaningful climate agreement next year in Paris; and second to generate ambitious steps to reduce greenhouse gas emissions and strengthen resilience. We are anticipating an impressive turnout of leaders […]
  • Obama telling us one thing about ground troops, his generals another
    Nation - President Obama has repeatedly declared there will be no combat troops on the ground in Iraq to fight the Islamic State of Iraq and the Levant. But a Senate hearing Tuesday with top US military officials revealed that pronouncement is on very shaky ground—there is now no question ground troops are under active consideration at the highest levels of […]