By MIKE ZAPLER

Gov. Arnold Schwarzenegger has been warning for months that California’s budget is hurtling toward the proverbial cliff — the point where the state cannot pay its bills.That time is about to arrive, and the fallout could be severe and far-reaching, particularly if the legislative budget stalemate lasts.

In February, state Controller John Chiang will suspend $3.7 billion in payments for at least 30 days. Further, IOUs in lieu of payments could be issued soon.

by David Goldman

You’ve probably noticed: The Obama administration and Congress are talking about spending an unprecedented sum of money to try to revive the economy.

President Obama and House Democrats laid down the marker with an $825 billion package of spending and tax cuts.

Dozens of proposals. Hundreds of pages of legislation. Billions of dollars.

What are some of the headline proposals, and what is the debate all about? The legislation is a work in progress, but here is an overview.

Voters may be asked to end state budget impasse

If Gov. Arnold Schwarzenegger calls a special election this year, California voters might be forced to make the hard choices on the budget and taxes that the Legislature won’t.

State Controller John Chiang said in an interview that he would support putting a tax increase package to voters in an effort to break the long-running legislative stalemate that has left California with a $42 billion deficit and weeks away from delaying refunds to taxpayers and grants to college students and low-income and disabled residents.

WHY do we keep re-electing these incompetents who can’t make the hard choices or compromise on anything??

The last special election cost the taxpayers of California about $50 million. If we have to pay a similar amount again how about taking it straight out of the legislature’s funding?

The commenters on the article at SFGate have some interesting ideas as well:

monet2u
If I have to vote to resolve these budget issues, then I want them to relinquish their titles, salaries, etc. Apparently, I could easily do their jobs.

bigwhitedog
So while we are voting on this mess, lets recall everyone of them and start over!

looktoplanb
I’d guess that the State of CA would be better served not having a special election. I’m no Carnac, but I think any tax increase proposal would go down to defeat by probably historic percentages. Save the money and work with the Republicans. It’s pretty obvious at this point that there needs to be severe cuts in benefits, workforce and programs on a permanent basis for California to survive and eventually prosper going forward.

lamont_cranston
We need to fire all these people. We keep re-electing them and then whine when we have the same results. Fire all of them, particularly if we have to pay for a special election to fix what we ‘hired’ them to.

drumstick
Why are we paying the members of the CA legislature when they pass their duties back to the voters!? I thought this country was a republic, not a democracy! Oh well, I can make the difficult decisions for you very quickly: Postpone rail, 20% pay cuts to state employees, stop payments to welfare recipients, raise the sales tax by 1%, raise car registration fees, and fire the CA legislature. That wasn’t so hard, was it?

firstand3
Lets vote. And while we are at it also vote on making the legislature part-time and set their salary at minimum wage.

qawagstaff
Let’s bring back the poll tax! It isn’t that outrageous! The original purpose wasn’t to discriminate, that only came in the South post Civil War. The founders put it in the constitution as a protection against the populace voting themselves money and as a way of raising taxes. If you wanted to vote, you paid a tax, and the money the Government spent was from poll taxes and tariffs. Those Founders were pretty smart.

gojira
According to the nonpartisan California State Legislative Analysts’ Office, the state will spend on education in fiscal 2008-09, per K-12 pupil, $11,626. That’s really the elephant in the room. The past 20 years have seen a massive influx of immigrants, most of them poor and unskilled, and of rabbitlike fertility. But the children of those immigrants, the “anchor babies”, are citizens the second they pop out on U.S. soil — entitled to a free public education. And as soon as they are old enough to hit kindergarten, one of those anchor babies costs the rest of us more than eleven and a half grand per year, each. And will continue to cost that each year through 12th grade. There’s no way that the small amount of taxes their parents typically pay will ever come anywhere close to offsetting that huge educational bill. And if we don’t do something about this, the financial future of the state is pointed straight down the toilet.

fatboy_baxter
I am OK with deciding what to keep and what to cut. Just put every single budget line item on the ballot with its budget for 2008 right next to it. In my infinite uninformed wisdom, I’ll make the decisions the nincompoops we elected cannot. Of course, one of those budget lines will be for legislative salary expense. Hmmm, now how should I vote on that…..???

From DoctorHousingBubble we get a clear picture of California’s problem:

Total Revenues and Transfers - 2008-09
*Dollars in Millions

Personal Income Tax $58,023

Sales Tax $35,093

Corporation Tax $11,937

Other $11,490

Motor Vehicle Fees $5,966

Highway Users Taxes $3,565

Insurance Tax $2,276

Tobacco Taxes $1,096

Liquor Tax $341

Note item #1 - personal income tax. This is where the state gets most of its money…and that number is going to sink like a stone this year, as is item #2 because people are losing their jobs.

Total Expenditures (Including Selected Bond Funds)
*Dollars in Millions

K-12 Education $43,710

Health and Human Services $35,687

Higher Education $14,567

Business Transportation & Housing $13,406

Corrections and Rehabilitation $10,290

General Government $7,749

Legislative, Judicial, Executive $6,358

Resources $5,707

Environmental Protection $1,582

State and Consumer Services $1,555

Labor and Workforce Development $427

Note item #1 - the biggest cut of our expenses goes to a failing public education system. A system that “educates” students who then need remedial classes just to attend community college. A system that educates all children, including illegal immigrants, at taxpayer expense. A system that fights school vouchers tooth and nail even though vouchers would ultimately save taxpayer money. A system that spends most of its resources on administration and not on students.

Note item #2 - the second biggest share of our taxes goes to welfare. In an economy where people are losing jobs and losing the health insurance that is tied to employment, that number is going to go UP.

What the hell is “general government” that it’s a separate category from the three legal branches, legislative, judicial and executive AND gets a bigger budget than the Big 3? Put together (as it should be, not divided up to move it farther down the list) government comes in at #4, just barely beat out by higher education. Can you say “bloated?”

Note the item dead last on the list - labor and workforce development. That which we need MOST right now is dead last.

Really, if they go forward with a special election I hope and pray that an initiative goes on it that kicks every last one of our state legislators out of office. We can carry the load until replacements are elected. We’re doing that anyway.

California’s budget deficit is well known by now, an estimated $40 billion dollars (yes, that’s billion, with a b). In spite of having known about this gap for months the state legislature and governor have failed to agree on a revised budget. This after a record-breaking late budget for this fiscal year in the first place - due by June 15, 2008 it was signed into law on September 23, 2008. Now, just a few months later, the state executive and legislative branches are haggling over the budget - again - and failing to reach an agreement - again. Meanwhile it is estimated that the state will run out of cash in late February.

The situation is so dire that the state controller has warned he will have to delay payments to taxpayers, businesses, social service programs and student aid to conserve money in the state’s checking account. Finance officials project the state will run out of cash in late February, but the state controller will have to make a decision by Feb. 1.

They ignore how their inaction could actually make the situation worse.

In just a few weeks, California is expected to begin issuing state refunds to more than 10 million taxpayers — a welcome injection of cash into the ailing economy.

There’s just one catch: The state may delay the checks or issue IOUs instead…

…According to the Franchise Tax Board, the state returned $10.7 billion to individuals and businesses last year. The average state refund was $853 for individuals and $13,284 for businesses.

Almost $11 billion that will NOT help revive the economy due to the inaction of politician. Politicians who don’t take unpaid furloughs to help ease the budget crunch or have to fear layoffs.

But it’s not just the governor and the legislators. California’s government is full of people who think that someone else should make the sacrifice:

After Schwarzenegger’s announcement of the furloughs, it took just one working day for six statewide elected officials to say the furloughs shouldn’t apply to their minions. Yep, six Democrats denounced the hardship it would create and said they didn’t have to abide by the governor’s order. They include Treasurer Bill Lockyer, Secretary of State Debra Bowen, Attorney General Jerry Brown, Lt. Gov. John Garamendi, Controller John Chiang and schools chief Jack O’Connell.

But there’s good news, if karma can be considered good news:

State Controller John Chiang has said the first group to receive IOUS is likely to include legislators.

Republished in full, from our email Inbox this morning. (All emphasis added, formatting for clarity only)

““““““““““““`
Abridged letter from Troy Clarke, President of General Motors - followed by a response from our son, Gregory Knox:

Dear Employee,

Next week, Congress and the current Administration will determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation’s history. Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis……………….

As an employee, you have a lot at stake and continue to be one of our most effective and passionate voices. I know GM can count on you to have your voice heard.

Thank you for your urgent action and ongoing support.

Troy Clarke President General Motors North America

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

From Gregory Knox,

In response to your request to call legislators and ask for a bailout for the United States automakers please consider the following, and please also pass this onto Troy Clark, the president of General Motors North America for me.

You are both infected with the same entitlement mentality that has bred like cancerous germs in UAW halls for the last countless decades, and whose plague is now sweeping the nation, awaiting our new “messiah” to wave his magical wand and make all our problems go away, while at the same time allowing our once great nation to keep “living the dream”.

The dream is over!

The dream that we can ignore the consumer for years while management myopically focuses on its personal rewards packages, at the same time that our factories have been filled with the worlds most overpaid, arrogant, ignorant and laziest entitlement minded “laborers”, without paying the price for these atrocities and dreaming that still the masses will line up to buy our products

Don’t tell me I’m wrong. Don’t accuse me of not knowing of what I speak. I have called on Ford, GM, Chrysler, TRW, Delphi, Kelsey Hayes, American Axle and countless other automotive OEM’s and Tier ones for 3 decades now throughout the Midwest and what I’ve seen over the years in these union shops can only be described as disgusting.

Mr Clark, the president of General Motors, states:

“There is widespread sentiment in this country, in our government, and especially in the media that the current crisis is completely the result of bad management. It is not.”

You’re right - it’s not JUST management. How about the electricians who walk around the plants like lords in feudal times, making people wait on them for countless hours while they drag ass so they can come in on the weekend and make double and triple time for a job they easily could have done within their normal 40-hour week?

How about the line workers who threaten newbies with all kinds of scare tactics for putting out too many parts on a shift and for being too productive (mustn’t expose the lazy bums who have been getting overpaid for decades for their horrific underproduction, must we)? Do you really not know about this stuff?

How about this great sentiment abridged from Mr. Clarke’s sad plea:

“Over the last few years, we have closed the quality and efficiency gaps with our competitors.”

What the hell has Detroit been doing for the last 40 years?!?

Did we really JUST wake up to the gaps in quality and efficiency between us and them?

The K car vs. the Accord?

The Pinto vs. the Civic?

Do I need to go on?

We are living through the inevitable outcome of the actions of the United States auto industry for decades.

Time to pay for your sins, Detroit …

I attended an economic summit last week where a brilliant economist, Alan Beaulieu surprised the crowd when he said he would not have given the banks a penny of “bailout money”. Yes, he said, this would cause short term problems, but despite what people like George Bush and Troy Clark would have us believe, the sun would in fact rise the next day. And something else would happen. Where there had been greedy and sloppy banks new efficient ones would pop up. That is how a free market system works. It does work . . . .if we would let it work.
But for some reason we are now deciding that the rest of the world is right and that capitalism doesn’t work - that we need the government to step in and “save us”. Save us? Hell, we’re nationalizing. And unfortunately, too many of this once fine nation’s citizens don’t even have a clue that this is what’s really happening. But they sure can tell you the stats on their favorite sports teams. Yeah - THAT’S important.

Does it occur to ANYONE that the “competition” has been producing vehicles, EXTREMELY PROFITABLY, for decades now in this country?….

How can that be???

Let’s see:

* Fuel efficient

* Listening to customers

* Investing in the proper tooling and automation for the long haul

* Not being too complacent or arrogant to listen to Dr W Edwards Deming four decades ago

* Ever-increasing productivity through quality, learning and six-sigma plans

* Treating vendors like strategic partners, rather than like “the enemy”

* Efficient front and back offices

* Non-union environment.

Again, I could go on and on but I really wouldn’t be telling anyone anything they really don’t already know in their hearts. I have six children, so I am not unfamiliar with the concept of wanting someone to bail you out of a mess that you have gotten yourself into - my children do this on a weekly, if not daily basis, as I did at their age. I do for them what my parents did for me (one of their greatest gifts, by the way) - I make them stand on their own two feet and accept the consequences of their actions and work them through. Radical concept, huh.

Am I there for them in the wings? Of course - but only until such time as they can be fully on their own as adults. I don’t want to oversimplify a complex situation, but there certainly are unmistakable parallels here between the proper role of parenting and government.

Detroit and the United States need to pay for their sins. Bad news people - it’s coming whether we like it or not

The newly elected Messiah really doesn’t have a magic wand big enough to “make it all go away”. I laughed as I heard Obama “reeling it back in” almost immediately after the vote count was tallied. “We might not do it in a year.or in four.” Where was that kind of talk when he was RUNNING for the office.

Stop trying to put off the inevitable. That house in Florida isn’t worth $750,000.

People who jump across a border really don’t deserve free health care and welfare benefits.

That job driving a forklift for the big 3 really isn’t worth $85,000 a year.

We really shouldn’t allow Wal-Mart to stock their shelves with products acquired from a country that unfairly manipulates their currency and has the most atrocious human rights infractions on the face of the globe.

That couple whose combined annual income is less than $50,000 really shouldn’t be living in that $485,000 home.

Let the market correct itself people - it will. Yes it will be painful, but it’s gonna be painful either way. And the bright side of my proposal is that on the other side of the pain is a nation that appreciates what it has, doesn’t live beyond its means, gets back to basics, and redevelops the work ethic that made it the greatest nation in the history of the world, and probably turns back to God.

Sorry - don’t cut my head off. I’m just the messenger sharing with you the “bad news”.

Gregory J Knox
President
Knox Machinery, Inc.
Franklin, Ohio 45005

By Patrick Healy

If you expect you’ll be getting a refund from California when you file your 2008 state income tax return, be prepared: you may instead receive a “registered warrant.” Translation: an IOU.

California is rapidly running out of money. Blame it on the state budget deficit that continues to bleed billions of dollars from California’s reserves. Facing inadequate credit to make up the difference, California’s Controller John Chiang warns that by the end of February, the nation’s most populous state may not be able to pay some of its debts, and instead be reduced to issuing those creditors IOUs.

Remember Hope for Homeowners? We didn’t think so. In July, Congress passes the only housing rescue to date: a plan to guarantee up to $300 billion worth of mortgages and prevent more than 300,000 foreclosures.

But to participate, banks must take steep losses — and doing so is voluntary. The anti-climactic upshot: A piddling 321 applications have been filed since the program’s Oct. 1 launch - and not one loan workout has been completed.

A year from now I’d like to see a report on how much of that $700 billion ends up in campaign coffers.