Calif. sales tax revenue nosedives 33.5%

Aug. 14, 2012

By Chriss Street

We were severely criticized last week by the left and the right for publishing, “Calif. default risk turns Gov. Brown into a capitalist.” The report highlighted that Gov. Jerry Brown is steamrolling environmentalists and regulators to generate more state tax revenue by expediting approval of pro-business infrastructure.

But our detractors were stunned to learn from State Controller John Chiang that California’s July sales tax revenue was down 33.5 percent from that anticipated by the state budget approved in late June by the Legislature.  Even more ominously, the state’s $9.6 billion cash deficit that was rolled over from the June 30 fiscal year has catapulted to $18 billion last month.

The state has avoided default by temporarily borrowing from state trust funds, but those accounts will soon need their cash back to continue operating.  Today California quickly began trying to sell $10 billion in municipal bonds to fund the record $28 billion they need to keep the lights on.  With tax revenue plummeting and the state already having the second-lowest rated credit in the country, if the independent credit rating agencies downgrade the state to “junk bond,” California will be short up to $18 billion and default.

Brown used his line-item veto authority to strike $128.9 million in spending from the $91.3 billion California general fund before signing the state budget.  Brown’s cuts surprisingly hit Democrat priorities, such as spending for child care and preschool for low-income children, and closing 30 state parks.

But Republican Senator Tom Berryhill warned Brown: “This budget is a slow-motion train wreck, and you’re driving the bus.”  Berryhill criticized Democrats for failing to rein in public pensions and regulatory terrorism, and to and cap state spending. Those all are things Republicans say are needed to rescue state government.

But by agreeing to sign the fiscal year 2012-13 budget before the June 30 end of the fiscal year, Brown spared all the California legislators from losing their paychecks under a voter-approved initiative that blocks their pay if a budget is late.

The governor justified signing the budget based on the twin assumptions that the California economy was expanding and the voters would approve his Proposition 30 tax initiative in November, which would raise $8.5 billion.  Many analysts doubted the voters’ willingness to vote to raise sales tax on themselves, but we were virtually alone in warning California’s shallow economic recovery had peaked and the state was at risk for a double-dip recession.

State Controller John Chiang tried to rationalize that, even though California revenues were “disappointingly” down $475 million in July, “However, because spending appears to be tracking and the funds that the State depends on for liquidity are performing well, California’s cash outlook remains stable.”

That’s sort of like the pilot of a jumbo jet announcing to the passengers: “As a safety precaution, you may want to cross your arms over your calves and grab your ankles and to brace yourself for possible impact.”

Chriss Street will be in Studio with Paul Preston on
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  1. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 August, 2012, 17:04

    California’s July sales tax revenue was down 33.5 percent from that anticipated by the state budget approved in late June by the Legislature. Even more ominously, the state’s $9.6 billion cash deficit that was rolled over from the June 30 fiscal year has catapulted to $18 billion last month.

    And the CA hits keep on coming!……we’re done, there is not fixing the budget without DEEP cuts to gov employee’s current and future salary, current and future pensions and other expenses. Labor is 90% of this states costs-put it in check. The end has arrived. We are already short o the rosy budget ad this is before Prop 30 gets rejected.

    Start cutting progressively right now.

    Reply this comment
  2. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 August, 2012, 17:07

    The governor justified signing the budget based on the twin assumptions that the California economy was expanding and the voters would approve his Proposition 30 tax initiative in November

    Wrong twice.

    This is what happens when you put out BOGUS budget, not supported by realistuc income.

    Reply this comment
  3. Queeg
    Queeg 14 August, 2012, 17:15

    Life is tough. You must FINALLY recognize you lose elections by landslides…..all the time.

    You have the government people want even if civilization ends, accordingly.

    You have bad candidates who have no idea how to cost effectively help the millions and millions of needy service economy ravaged Californians.

    Reply this comment
  4. us citizen
    us citizen 14 August, 2012, 17:44

    Too BAD, Brown. You arent getting those tax increases if I can help it any. You are as stupid this time around as you were last time around. Cut the damn spending!! Get rid of the illegals. Now stop your whining and go do it.

    Reply this comment
  5. Tax Target
    Tax Target 14 August, 2012, 17:44

    Oh Queeg – bag it. We’re in this mess because of profligate spending – people wanting something for nothing. Get over it man. The bus is going to go over the cliff. There is so much inertia behind this failing Kalifornsky economic disaster its pathetic. I suggest you save your scheckels so that you can afford that bus trip out of the state to some other promised land.

    Reply this comment
  6. Queeg
    Queeg 14 August, 2012, 18:26

    Love the eloquence of prennial losers….if that’s all you got look for a bullet train from Amador Lake to Borreo Springs ..next!

    Queeg keeps you grounded!

    Reply this comment
  7. The Rt Rev Ted Steele
    The Rt Rev Ted Steele 14 August, 2012, 19:55

    amen Queegster grind on

    Reply this comment
  8. Hondo
    Hondo 14 August, 2012, 20:01

    It’s not as tho we didn’t see this train wreck coming. Going back to Grey Davis being thrown out, we all saw this coming.
    We are in a global economy and Europe is in a DEPRESSION. Spain, Greece, unemployment over 25%. The rest are not much better. Europe is our biggest economic client. Now, in huge numbers, they can’t buy our stuff or come to Kali for their vacations.
    In Illinois last year they had gigantic raises in taxes to pay for a gigantic deficit. This year they have another huge deficit and Quinn has drug the unwilling lawmakers back for a special session for pensions. I’m expecting them to break and RUN TO WISCONSIN to avoid doing their duty. No one there wants to do this in a presidential election year. No one there wants to run against the unions. But even Quinn sees there is no other choice.
    Now Facebook has collapsed on wall street. Moonbeam was expecting to get more than 5 billion in taxes from that IPO and now it may be around half a billion, if that, for they are in litigation for pumping up the stock price before it’s opening. Moonbeam has already spent that 5 billion.
    He has already spent the tax increase that hasn’t even been voted on yet.
    Our Kenyan presidents 800 billion stimulus has run out without pushing the unemployment rate down to his promised 6%. It is going up again.
    As a response to this crisis, the public unions have decided to ‘weaponize’ them selves. To extort their gigantic salaries and pensions from us taxpayers. They should read the above article.
    There is no more money left to steal.
    Hondo

    Reply this comment
  9. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 August, 2012, 23:29

    He has already spent the tax increase that hasn’t even been voted on yet.

    That shows you how out of touch and upside down this state and the elected officials are, Clown being the biggest joke there is. He has ALREADY spent the tax increase that has NOT yet passed and we are still $10 BILLION behind the 8-ball.

    And the pension problem is going to go ballistic exponentially. We are finally going off the cliff, no longer at the edgem, we have gone off the cliff.

    Reply this comment
  10. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 15 August, 2012, 07:55

    lol poodle— ahhhhhhhh off the cliff !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    Reply this comment
  11. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 15 August, 2012, 08:11

    Chrissssssssssssssssss— Great story but—- grabbing ones ankles isn’t part of the airplane impact protocal.

    hmmmmmmmmm

    Reply this comment
  12. BobA
    BobA 15 August, 2012, 10:40

    Rex:

    Yes, we’ve gone over the cliff and are in full free-fall now. Our state government has been stultified by its own arrogant conceit and foolishness to the point where it has now rendered itself into an alien pattern of nothingness; unrecognizable, unfathomable and incomprehensible.

    Reply this comment
  13. Queeg
    Queeg 15 August, 2012, 11:15

    Wow…..are we ever happy?

    Reply this comment
  14. Sean Morham
    Sean Morham 15 August, 2012, 13:06

    Berryhill is correct. Brown is driving the bus off the cliff. This thing is going to blow sky high. Overwhelming municipal defaults are coming, and they are coming fast. Taxes can t go up fast enough to feed the gov t beast. I feel for the illegals because there will be many pointing to them. They come here for opportunity and the safety net is appealing. EVERYONE has got to have skin in the game on this. I read where a school district is having competitions between schools to get the most students signed up for free food. “Hey, s*%t for brains, money is tight.”
    This is going to get UGLY. “Clockwork Orange” Cops will stop reporting to work in some towns, because it will be too dangerous.

    Reply this comment
  15. Queeg
    Queeg 15 August, 2012, 13:54

    Jerry is too old to drive the bus!

    The only thing to fear is fear itself!

    You can always move to Quarzite or Statside or Parker in Arizona.

    Most of your careers are dead enders…a change may help.

    Reply this comment
  16. Donkey
    Donkey 15 August, 2012, 18:01

    Logic nad Reason is lost on the RAGWUS feeders. Math will be their demise. 🙂

    Reply this comment
  17. John Steele
    John Steele 19 August, 2012, 07:08

    This has been coming for a long time and it’s NOT going to be fixed. We , I believer, are past the point of fixing it and now have to deal wot reality. Again, the Democrats, continue to publish completely bogus budgets and Brown signs off on it to keep the money flowing to his pals in direct violation of the ballot measure designed to force the trolls in Sacto to do their jobs. We are quickly approaching our Wisconsin moment when fiscal conservatives will finally get a REAL opportunity to fix Kalifornia. Vote no on all of the Jerry’s tax scams and make the the Democrats face reality

    Reply this comment

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