On-time budget full of holes, games, gimmicks

June 16, 2012

By Katy Grimes

SACRAMENTO — The Legislature met its constitutional budget deadline, which means legislators will not be docked their pay this year. However, claims by legislative leadership that this budget really is a balanced, honest budget, free of gimmicks and accounting tricks were met with guffaws, anger and stiff verbal sparring on the floor of the Senate and Assembly Friday.

When pigs fly this budget will be considered honest and balanced.

Last year’s budget was $86 billion; the budget just approved Friday is $92.1 billion, and largely relies on passage of Gov. Jerry Brown’s tax initiative in November.

In what world is budgeting done using wishful thinking and hoping for future revenue?

Without passage of the income and sales tax increases Brown is proposing, massive cuts will be triggered, primarily to education.

“I finally realized that education really is the Democrats’ priority… for cuts,” Assemblywoman Shannon Grove said Friday. Of the $6 billion in trigger cuts, $5.9 billion will be cuts to education.

Grove stirred up emotions in the Assembly when she dared to direct a question to the author of the budget bill.  “Let me get this right,” Grove said, directing her question to Assemblyman Bob Blumenfield, D-Los Angeles. “We just passed the budget bill, and now we are being asked to pass the budget bill junior because the first budget bill is already out of balance?”

Her question caused Assembly Speaker John Perez to appear out of nowhere like a ninja, and pound on the podium with the gavel with a force rarely heard in Assembly chambers. Perez and Assembly Majority Floor Leader Charles Calderon took Grove to task over the geographical direction of her question… apparently Perez wanted her question directed toward all of the Assembly members, and not just at the bill’s author.

Grove handled the dust up with aplomb, and made her point. And that was the point–she was pointing out that the budget bill is a sham. Democratic leadership didn’t want this in the record, and they tried to stop her.

Such childish antics from elected leaders.

Some budget details

The bottom line with the 2012-13 budget is that it will grow spending by nearly half a billion dollars more than the Governor’s May Revised Budget, amounting to a 6.2 percent increase in General Fund spending.

The budget includes hundreds of new special taxes and fees, including a permanent 1 percent increase on  lumber products, to be paid by consumers.

The budget relies on $900 million in nasty fund “shifts” from transportation, from the State Off-Highway Vehicle Trust Fund, and the Harbors and Watercraft Fund. This money will go right into the General Fund for payment of transportation-related bond debt service.

State Parks funding is going to increase by $55 million, thanks to the Off-Highway Vehicle Trust Fund, Motor Vehicle Account and new license plate revenue.

Spending on environmental protection programs will be ramped up as long as they are associated with the reduction of greenhouse gas emissions.

As occured in last year’s budget, the Democrats are authorizing a $313 million loan from the State Disability Fund to cover Unemployment Insurance interest expense, owed to the Federal Government, and due in September.

Future taxes pay for current spending

The Governor is counting on bringing in $45 billion with his tax increase, and says that this money is needed to keep up with state spending. But what he hasn’t admitted is that this money would go to pay current state expenses.

California politicians have made a mess of the state budget for many years. But this year is probably the worst.

Standard & Poor’s is threatening to downgrade California’s outlook if lawmakers don’t balance the budget without gimmicks. “We are  being disciplined by our lenders who will downgrade us for fudging,” said Assemblywoman Diane Harkey, R-Dana Point.”

Wall Street bankers are forcing California to clean up its financial mess in order to prevent a catastrophic economic tsunami.

California’s economy is nearly one-eighth of the entire country’s gross domestic product. It totals 30 percent of the debt carried by all 50 states, according to Gabriel Petek, an S&P analyst. Petek,interviewed by FOX Business, said that California is overly reliant  on personal income taxes, and that the state’s tax structure is behind the deficit because of this reliance.

While the budget has been declared as balanced, California is starting off the new budget year with $63 billion debt, including the record deficit, according to one financial analyst I spoke with.

S&P is not fooled any longer by California’s budget trickery. Gabriel Petek, and analyst with S&P reported, “for California to rely on capital gains tax revenue from things like the Facebook initial public offering is like looking for change in the seat cushions.”

In March, FOX Business reported that Brown was too optimistic in forecasting more than $2 billion in expected state capital gains revenue over five years from the Facebook IPO.

“Even the state’s own legislative analysts told the governor’s office its forecast was too rosy — as investors could sit on the Facebook (FB: 30.01, +1.72, +6.09%) stock and not cash out, or simply move out of the state, among other things,” FOX Business reported.

“Already, California has seen a migration of upper bracket taxpayers out of the state. It has the worst credit rating out of all 50 states at single A minus.”

37 comments

Write a comment
  1. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 June, 2012, 09:53

    “Balanced Budget”….Hahahahahahahahahahaha….. no difference from the budgets of the last 20 years, over estimate revenue and under estimate expenses.

    Reply this comment
  2. Ulysses Uhaul
    Ulysses Uhaul 16 June, 2012, 10:40

    The budget had to be heavy lifting for Sacramento politicans.

    Only concern…if the the revenues
    do not go up…where does about 12 billion dollars come from…your looking at a minimum 10 percent cut in education, security, health/ welfare services mid fiscal year.

    Reply this comment
  3. Donkey
    Donkey 16 June, 2012, 10:42

    The Masters of the RAGWUS doing what they do best, fearing to look behind the curtain, they hide behind it, and then continue doing nothing that takes a modicum of honor, courage, integrity, and character. 🙂

    Reply this comment
  4. Donkey
    Donkey 16 June, 2012, 10:44

    Ulysses Uhaul, taxes are going down in the future as the people that do pay them leave in droves. 😉

    Reply this comment
  5. Merit Man
    Merit Man 16 June, 2012, 10:46

    People make fun of the Republicans because they have no voice in these budget decisions. But what they fail to see is that every single Republican, regardless of the myriad of different Republicans that there are in Sacramento, voted against the budget because it is a sham. It transfers more wealth to powerful labor unions, cuts emergency and social services at the expense of pet environmental projects to combat the disproven theory of Global Warming and passes the bill to our children.

    Republicans did the only job they have these days, they voted no.

    Reply this comment
  6. Ulysses Uhaul
    Ulysses Uhaul 16 June, 2012, 10:52

    Then children have less school days and obsolete books…criminals crawl into your bedrooms and wild fires burn and burn!

    There has to be sanity somehow.

    Reply this comment
  7. Donkey
    Donkey 16 June, 2012, 10:57

    Ulysses Uhaul, you are posting the same drivel the RAGWUS has always used to scare the uminformed taxpayer. The only criminals a citizen needs to worry about are the ones working for the RAGWUS!! 😉

    Reply this comment
  8. CalWatchdog
    CalWatchdog Author 16 June, 2012, 11:58

    Even some Democrats voted ‘no’ on this budget.

    Katy

    Reply this comment
  9. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 June, 2012, 12:59

    Then children have less school days and obsolete books…criminals crawl into your bedrooms and wild fires burn and burn!

    The SKY IS FALLING………….The SKY IS FALLING………….The SKY IS FALLING………….The SKY IS FALLING………….The SKY IS FALLING………….The SKY IS FALLING………….The SKY IS FALLING………….The SKY IS FALLING………….The SKY IS FALLING………….The SKY IS FALLING………….The SKY IS FALLING………….The SKY IS FALLING………….

    Reply this comment
  10. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 June, 2012, 13:00

    LOL….Teddy, you “slay” me 😉

    Reply this comment
  11. Ulysses Uhaul
    Ulysses Uhaul 16 June, 2012, 13:00

    Donkey…reality will set in…your party will be scattered to the winds in Nov……for even thinking about cutting the safety net!

    Reply this comment
  12. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 June, 2012, 14:22

    for even thinking about cutting the safety net!

    The safety net IS FALLING…………The safety net IS FALLING…………The safety net IS FALLING…………The safety net IS FALLING…………he safety net IS FALLING…………The safety net IS FALLING…………The safety net IS FALLING…………The safety net IS FALLING…………The SKY IS FALLING…………The SKY IS FALLING…………The SKY IS FALLING…………The SKY IS FALLING…………The SKY IS FALLING…………The SKY IS FALLING…………The safety net IS FALLING…………The SKY IS FALLING…………he SKY IS FALLING…………The safety net IS FALLING…………The SKY IS FALLING…………The SKY IS FALLING…………The SKY IS FALLING…………The safety net IS FALLING…………The SKY IS FALLING…………The safety net IS FALLING………… 😉 🙂 :0

    Reply this comment
  13. Donkey
    Donkey 16 June, 2012, 14:53

    It is not a “saftey net” Ted. What a trough feeding RAGWUS member calls a safety net is nothing short of a con put upon honest citizens. 🙂

    Reply this comment
  14. Rex the Wonder Dog!
    Rex the Wonder Dog! 16 June, 2012, 21:33

    excellent observation Donk!

    Reply this comment
  15. Ulysses Uhaul
    Ulysses Uhaul 16 June, 2012, 21:50

    Are you proud of bagging the old, sick and helpless among us? Hope not.

    Reply this comment
  16. Barb
    Barb 17 June, 2012, 06:15

    Thanks for the update Ms.Grimes! I was wondering how this was all going to play out! And it looks like nothing has changed with a budget that relies on revenue which simply doesn’t exist and hoping the taxpayer will vote to pay more into the government coffers.

    I can already see it now, the CTA will be spending millions of union dues to push for the tax increase in this election cycle. The usual “save our education” TV Ads are probably in the works as we speak!

    When will the citizens of CA learn!

    Reply this comment
  17. Rex the Wonder Dog!
    Rex the Wonder Dog! 17 June, 2012, 12:08

    I can already see it now, the CTA will be spending millions of union dues to push for the tax increase in this election cycle. The usual “save our education” TV Ads are probably in the works as we speak!
    When will the citizens of CA learn!

    But it’s FOR THE CHILDREN Barb!!!

    Reply this comment
  18. Rex the Wonder Dog!
    Rex the Wonder Dog! 17 June, 2012, 12:08

    Love the pic in this one….pigs flying!

    Reply this comment
  19. Ulysses Uhaul
    Ulysses Uhaul 17 June, 2012, 14:18

    Wonder….it’s a holiday. Get out there to Jack in Box and enjoy!

    Reply this comment
  20. Rex the Wonder Dog!
    Rex the Wonder Dog! 17 June, 2012, 15:56

    Holiday????

    Reply this comment
  21. Barb
    Barb 17 June, 2012, 18:08

    HaHa Rex!

    Reply this comment
  22. Ulysses Uhaul
    Ulysses Uhaul 17 June, 2012, 18:54

    Yes…..Father’s day. And it’s always about the children.

    Reply this comment
  23. Rex the Wonder Dog!
    Rex the Wonder Dog! 17 June, 2012, 19:43

    Ted, “Fathers Day” is NOT a “holiday” you tin foiled hat wearing GED troughie 😉

    Reply this comment
  24. Ulysses Uhaul
    Ulysses Uhaul 17 June, 2012, 20:50

    Yeah…the insults are beneath you…can you find it in your heart to provide political discourse that admirably supports your side….

    The constant bashing of politicans, public servants and posters is disappointing, cruel and unwarranted.

    Reply this comment
  25. Donkey
    Donkey 17 June, 2012, 22:41

    Pointing out that the RAGWUS has set up a crooked scheme to steal from the private sector taxpayers is not “bashing” one bit my friend. The topic must continue to grow until the RAGWUS is distroyed and pay, perks, benefits, and pensions are brought down to resonable levels. 🙂

    Reply this comment
  26. Rex the Wonder Dog!
    Rex the Wonder Dog! 18 June, 2012, 00:29

    Pointing out that the RAGWUS has set up a crooked scheme to steal from the private sector taxpayers is not “bashing” one bit my friend.

    Excellent observation Donk, you are indeed a smart person.

    Reply this comment
  27. doug
    doug 18 June, 2012, 09:59

    like i mentioned earlier, they approved a budget so they will get their paycheck (from us).

    LAUSD approved cutting 5 days from school year again. bending at the work of the union.
    Gov. brown was banking on revenues this year and they came short due to businesses leaving the state. nothing shocking there.
    they plan to do it again.
    i dont understand how so many CA residents keep approving higher taxes.

    Reply this comment
  28. Hondo
    Hondo 18 June, 2012, 12:04

    The Democrats, who control all spending in Kalifornia, are going to cut all services to afford to pay the service workers and their huge pensions.
    They are shutting down schools to afford to pay the teachers in LA. Across the state they are shutting down the fire departments( who won’t even save a drowning man anymore)to afford to pay the firefighters. They are shutting down the police stations to afford to pay the cops pensions.
    And they are shutting down all private enterprise with their taxes and regulation. Don’t count on Romney for a bailout. Maybe Moonbeam can ask Greece for a loan.
    Hondo….

    Reply this comment
  29. Katy Grimes
    Katy Grimes 18 June, 2012, 12:44

    The $63 billion deficit amount is based on information from fiscal staff at the Capiitol, who say that the Governor and Democrats greatly understate the amount. And this does not include the half a trillion pension debt.

    Katy

    Reply this comment
  30. Katy Grimes
    Katy Grimes 18 June, 2012, 14:39

    As for the $63 billion figure, this number comes from Capitol fiscal staff based on deferrals, fund shifts, offsets and loans, as well as the budget deficit itself. I am told that Gov. Brown and Democrats greatly understate the state’s debt and obfuscate, hiding much of the debt behind things like offsets, fund shifts and deferrals, as well as unrealistic revenue expectations, and the Legislature’s failure to make cuts, while increasing education spending.

    The Gov understated the deficit in the January 2012 budget so much, by the time the May revise came out, it had grown substantially.

    2012-13 budget shows that by 2015-15, General Fund spending is expected to grow 28.8 percent. Since 2007-08, state spending is up more than $30 billion.

    Katy

    Reply this comment
  31. Donkey
    Donkey 18 June, 2012, 15:05

    Katy, I would venture to say that even the $63 billion figure is low based on the flawed math keeping of all the RAGWUS accountants. Many of these feeders are still claiming that the pensions are not a problem, though any 6th grader could crunch the numbers and see that they are unsustainable. 🙂

    Reply this comment
  32. Darth Chipmunk
    Darth Chipmunk 18 June, 2012, 18:29

    Thanks for the clarification on the $63B figure, Katy! Much appreciated.
    Regards.

    Reply this comment
  33. Carie
    Carie 28 June, 2012, 06:05

    Ok its REALLY time to stop blaming the unions ! WHAT IS A UNION ?( a group of ordinary people like yourselfs who got together and decided they needed livable wages , benefits, and retirement and fair treatment @ work .) SOMETHING every person who works WANTS . If you really need to throw blame somewhere how about throwing it the real problem ? the corporations who do not pay their fair share of taxes , how about gas exported out of calif . but does not have a export tax placed on it ( like every other gas producing state does ? ) and the list goes on and on . but really STOP! blaming ” organized ” workers for the states problems. did you ever stop to think , that those very same working class wage earners are the very same people who ARE still paying the HIGHEST taxes in California ? FOOD FOR THOUGHT I HOPE ….

    Reply this comment
  34. Michael
    Michael 28 June, 2012, 11:36

    It is surprising that there is almost no detail on where the spending occurs. How about the state prison budget? How about The University of California? How about the State University? How about public safety? And finally how about pensions? Why is it that almost all municipalities are confronting a pension albatross and the legislature doesn’t even discuss it?

    Reply this comment
  35. Debra Bryant
    Debra Bryant 8 August, 2012, 15:00

    Let them cut the budget for the schools. If they are not complying with the law, then people have remedies. Where does the good majority of our tax dollars go in the education system? Not to the citizens of this state, but rather to the departments that are ensuring the illegals are not left behind! Is the education your children are receiving so valuable that you fear your child will not be educated if they don’t do it? Seriously people.
    Put your brains in gear. No school, no property taxes. Let them cut welfare. Are we receiving it? The only ones receiving it is again the majority of illegals they are allowing to destroy our state..
    Let them cut everything they want to. Do not fall for their do or die tactics.
    It will all fall around them, watch and see.

    Reply this comment
  36. Debra Bryant
    Debra Bryant 8 August, 2012, 15:01

    Organized labor is part of the problem. If you cant see it, your probably in one of the organizations!

    Reply this comment
  37. Debra Bryant
    Debra Bryant 8 August, 2012, 15:02

    Google CAFR1

    Reply this comment

Write a Comment

Leave a Reply



Related Articles

CalWatchdog Morning Read – September 8

Assemblywoman Garcia is a rising powerbroker and queenmaker New education assessment system coming soon State split on views of policing

Bill would double monthly rent tax credit – from $20 to $40

State Sen. Steve Glazer, D-Orinda, and 16 co-sponsors have introduced legislation that sounds like a bold move to address the

New Rules For Amazon Tax

Katy Grimes: After biting debate today on the new Internet tax, the Board of Equalization decided that some rules of play were