So why is California out of $$? (and why you might have to make up for it)
by Chris K,posted Feb 17 2009 5:38PM
I'm about to tackle a pretty heavy issue here. Things are about to get much more expensive for all of us here in California, and I feel it's very important that we know why. I promise that I'll try to explain it in a way that makes sense for those of us who don't choose to follow these political topics regularly (which is most of us!). So here goes.
California is broke. How does a state as happenin' as ours run out of money you may wonder? I mean, c'mon, we're the state that all other states wish they could be, right? Beautiful beaches, snow-covered mountains, the movie industry, Disneyland, and a dynamic mix of ethnicities all contribute to the idea that is California. But lately that idea isn't working so well. You may remember having heard things like "budget crisis" in the past, but what does it really mean for you and me? The budget our state is operating under this year way over-estimated how much income we would have as a state. Because of this, California is spending significantly more money than it is currently bringing in. So much so that we will be $40 billion in the hole by the middle of next year! Yeah, that's a lot. It's gotten so bad that we've actually started paying people with IOU's (maybe your state income tax refund this year). Seriously. How did we end up $40 billion short? I'll put it in a way that makes sense to you and I. Let's say you made $50,000 last year. Being a typical American, you of course spent it all! You enjoyed everything you got for your money so much last year, you've planned to spend another $50k this year. But here comes the problem, suddenly you're now only going to make $30,000 this year. Oh no!! That leaves a difference of $20,000 you didn't plan on! What can you do? Well, you either have to find some other way to make that money, or you'll have to cut 20 grand out of your spending this year. For California, that $20,000 is actually $40 billion, and now you can see what all the fuss is about. Our state got used to spending the tons of money it made over the past few years when the economy was great, but is still budgeted to spend the same if not more this year when the amount of money coming in will be far less.
So California has two options, either find a way to bring in an extra $40 billion between now and next June, or spend $40 billion less. How does the state make money? By taxing us the people. Sales tax, income tax, property tax, and whatever else they can think of to get more money out of us residents. How can the state spend less money? Either have fewer state employees on the payroll, or spend less on things like welfare, state parks, schools, roads, prisons, you name it. Now enter our two political parties. Speaking very generally, the Democrats are in favor of raising taxes to make up the $40 billion difference, while the Republicans are in favor of cutting back the state's spending to make up the difference. Needless to say, they can't reach an agreement. The governor, just trying to get something done, has come up with a plan that is about 50/50 in raising taxes and cutting spending, and this is what is currently being debated by our legislators in the capitol. Normally a compromise sounds reasonable, right? Well, let's take a closer look at some of the new taxes being proposed in this plan.
The proposed new budget plan includes raising the tax on gas by 12 cents per gallon. Gas prices would immediately jump up those 12 cents, costing you an extra $2 or so every time you fill up. Sales tax would increase by a penny for each dollar, meaning you would now pay about 9 cents sales tax per dollar each time you purchase something. Buying a TV for $500 would now cost you about $44 in taxes, where before it would have been $39. Registering your car each year would now also cost more, and income tax rates would rise, so you would owe more money out of your paychecks to the state. All these things will take effect if the plan currently being debated is passed. So I pose the question to you... are you willing to pay all these extra taxes to help bail out your state? Remember, California is already among the top 10 highest taxing states even before any of these new taxes being proposed take effect.
Here's my take (I know you didn't necessarily ask for my opinion, so feel free to agree or disagree with me by leaving comments)... Why should we the people of California be penalized because our legislators can't stop spending our money? I'm sure lots of the programs the government spends our money on are worth-while efforts and are well intentioned, but when the money is not there, they've got to go. I hate to use a cliche, but the rest of the country is "tightening its belts," as evidenced by the high number of people that have lost jobs recently. Do our elected leaders feel they are so far above all of this that even while the rest of us cut back, they can just continue spending the way they always have, regardless of whether the money is there or not? I've got a big problem with that. Which is why I spent lots of time writing this blog, because in general I don't think many people our age worry too much about this stuff. And normally that's fine, but right now there are things going on in politics that will definitely affect your life and mine, and not necessarily for the better. So now you know. Should we take one for the team and each pay our part to get us out of this mess, or should the politicians be allowed to spend only the amount of money they'll actually be taking in each year. Pretty easy decision if you ask me.