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Christopher K's Blog



No more IOU's!! But is the state budget problem really solved??

So the knuckleheads we call our state legislators apparently got something done last night and reached an agreement which attempts to re-balance the piece of crap budget they passed back in February. Schwarzenegger and the legislators declared at the time what a great job they had done to reach the deal, and how both parties really came together and solved the budget problem.  Ummm, not so fast.  Here we are in July, just 5 months later, realizing what a joke that previous deal was, so much so it needed a complete re-working because it WAY over-estimated how much money California would be making via taxes. Enter last night's agreement. While it may be better than February's lame excuse for a budget deal, to me it looks like another piece of crap!  What do I mean by piece of crap, you ask?  Well, we've been told that we'll be $26 BILLION dollars short of making the previous budget work (which is in effect until June of 2010).  But the new deal only makes $15.5 billion in cuts!  You do the math. It doesn't quite add up. The other $10 billion was just glossed over with smoke and mirrors (dishonest accounting tricks and attempted borrowing from California cities and counties, like they have any extra money lying around!). Sadly, the knuckleheads regularly pull these kinds of monetary manipulations, which is one of the reasons the budget seems to always be in crisis mode. The politicians constantly chip away at the problem, yet always leave a ticking time-bomb ready to explode during the next year's budget. Which it inevitably does. So once again, despite last night's apparent deal and forthcoming congratulations the politicians will undoubtedly slap each other on the back with, the entire deficit problem is not really solved, but instead pushed into the future yet again with more lame accounting tricks.  Shameful!! Here's a little perspective... it doesn't take a rocket scientist to realize that a state is going to take in more money in taxes during years when lots and lots of people are buying houses and the economy is generally good.  That was a few years ago.  The problem is, our state government got greedy and spent all that increased revenue, instead of realizing it was going to be a short-lived windfall and perhaps SAVING some of it for future lean times.  Of course, this is not how governments work.  It's all about the right now for these politicians, and how much money can they get away with spending so their constituents will vote them back in the next election?  Even worse than simply wasting all that excess income with those bloated budgets of the past couple years, is the fact that the programs and agencies that got all the extra money are of course continuing to expect to receive those funds moving forward, and then crying foul when the legislators dare cut into their gravy train.  And there lies the problem California has gotten itself into. Let's bring this into our world with a scenario that could happen in our lives.  Say that you have a job which pays you $40,000 a year.  Then for a couple years your company does very well, so it gives you some nice bonuses.  Maybe you make $60,000 for a couple of years because of this.  With all of this extra money coming in, you start spending lots more on things you don't necessarily need, like a faster internet connection, more expensive data plan for your cell phone, or maybe all of the movie channels for your television viewing pleasure.  Unfortunately, a year or two later the economy worsens, and your company's business goes south.  Maybe they even have to furlough you a day or two a month, so now you're only going to make $35,000 this year.  The problem is, you're used to spending all that extra money you used to be getting on your paychecks every other week, so what do you do?  This is exactly where our state is.  Making much less money, but stubbornly unwilling to STOP SPENDING MONEY IT DOESN'T HAVE!!  This time around, it solved about half the problem.  My prediction- by the end of this year or early 2010, we'll be right back where we were before last night's agreement, OUT OF MONEY!  So for now, the embarrassing IOU payments will cease, but rest assured, the state's budget problem is nowhere near solved, and will rear its ugly head again in the not-too-distant future.

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07/21/2009 12:53PM
No more IOU's!! But is the state budget problem really solved??
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