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California’s Budgetary Folly

California today passed its new budget that included, amongst other things, a massive $14 Billion Dollar tax increase. Proponents of the increase justify it by claiming its only a temporary increase (two years) but fail to mention that California voters (who have never met a tax they didn’t love) get to vote to make it permanent next year.

 

In this budget the state continues to attack the tax payer, increasing the state sales-tax rate to 8.25 percent from 7.25 percent (It will be nearly 9 percent where I am at; boost vehicle license fees to 1.15 percent from 0.65 percent of the value of an automobile; reduce the dependent- care tax credit to $100 from $300 and increase the top bracket for income another quarter of a point.

 

To put this in realistic terms it means that the top tax tier payer will contribute nearly 10% of their income to the central fund. It will mean that the top 5% of taxpayers, who already fund 80% of the California budget will be asked to pay even more of their share so that the state can continue down its path towards (if it is not already there) of socialization.

 

Yet, this time, not only the top taxpayers are asked to bear the burden. Car registration will double. Sales tax will increase; taxes across the board will go up for most (unless you a. don’t already pay tax…b. Are a Hollywood filmmaker). A climate that was already hostile towards business and individuals who fuel the economy has just gotten worse.

 

The opposition claims that the cuts to the budget are more harmful than these increases, but I disagree. California has a bloated infrastructure that stresses the system. Advocates of higher taxes will decry the $8B cuts to education, yet, they fail to recognize the problems within the system that make it ripe for not only that much of a decrease, but more. It’s a system that defines redundancy, waste, and exploitation.

 

While ranking 48th in spending per pupil, California teacher pay is ranked second in the country. It’s very hard to justify this, especially in times of budgetary crisis. The crux of the problem is the number of students actually attending school. Currently there are over 8 million students in the lower educational system, and vast numbers in community colleges and state universities. Few people outside of California can understand the vast number of college opportunities that are available to California residents, at a price that is by far the lowest in the nation.

 

Lets take the Community College system here in California. The current rate is $18 per unit (compared to Ivy League intuitions that charge in excess of $1300 a unit). Yet when the new rate was announced there were virtual riots on community college campuses in the state protesting the restrictive rates that were being charged. The claim was limiting access to education. Nowhere in this country can you go full time to college for $500 a semester. The burden has to fall somewhere, and where it does is almost exclusively on the back of the taxpayer.

 

Now, higher education is a key to long term success as an adult, so learning needs to be fostered, unfortunately all one needs to do is visit one of these community colleges on the first day of the semester/quarter to see what your tax dollars are really working for. The financial aid offices are inundated with “students” who are trying to get their federal and state aid that will “fund” their living for the quarter/semester. Junior Colleges here have turned into the latest, and most efficient, way to scam the government into providing tax dollars for those who refuse to work.

 

This is not to say that all JC students are involved in this, and that the JC system should go away. I, in fact availed myself of the system, but, there needs to be put in place a system to stop allowing people who have no intention on completing a four year degree, who rarely attend class, or when they do, accomplish nothing other than to fill space in the room and drain resources from students who want and need them.

 

The Governor is right to start by cutting the educational budget because it’s both inefficient and ineffective. We need to reduce the number of student who take advantage of the system. We need to reduce the number of students who populate the system yet are in the country illegally, getting a free ride at the expense of the California taxpayer. We need to institute a system that fires teachers for poor performance. We need to cut upper management from a bloated bureaucracy that retards the learning of our students by spending money that should be directed to them on redundant and unnecessary administrators.

 

This is only the beginning.

 

We have to stop taxing those who fund all of California’s follies. We need to stop driving the revenue generators out of the state. We see decreasing revenues year after year and wonder why. The answer it so facile that it boggles the mind as to why the leaders in Sacramento cant come to the same conclusion. Stop taxing and regulating business away. The Corporate tax in the state is suffering; the regulations on business are stifling. The business climate is so negative in the state that it not only discourages new business, it drives away old businesses to states that are more supportive.

 

The idea of suspending income tax for business has been bantered about on the federal level, if one program made sense for California its that one. Suspend all income tax for businesses, suspend many of the regulations surrounding new business and the state will see an explosion of new business growth. New business growth means new jobs. New jobs mean new sales tax revenue from spending. New business growth sees new revenue from State income tax.

 

This combined with cuts and streamlining education, cutting services to all illegals (medical, educational, and social), stop funding unnecessary programs (like the silly anti-smoking campaign) and this will provide a temporary stopgap to the budgetary problem. Yet, here in California we need to address the long-term problem.

 

That is the Referendum system. California has a system where, with a certain number of signatures, anyone can get anything put up for referendum to the California voters. While good in concept (let the people decide how the state is run) it’s a failure in practice. The proposition system is one of the most egregious contributing factors (along with business stifling restrictions and taxes) for the budget problems, and will continue to be. In California a tremendous amount of the budgetary spending is MANDATED by and through referendums (Propositions). The Legislature is bound to spend a certain amount by law each year, which given the nature of Sacramento to spend at will on non-mandated items, leads and will continue to lead the state towards financial doom. This was not the first and will not be the last time this state faces a financial crisis as long as it continues to be held hostage by proposition mandated spending, act as a safe haven for illegals and attack Business.

 

The system needs to be reformed from top down in order for the state to continue to not thrive, but just survive.

 

 

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