{"id":10251,"date":"2009-10-10T00:53:53","date_gmt":"2009-10-10T00:53:53","guid":{"rendered":""},"modified":"2009-10-10T00:53:53","modified_gmt":"2009-10-10T00:53:53","slug":"californias-economic-and-fiscal-death-spiral-continues","status":"publish","type":"post","link":"https:\/\/calitics.com\/index.php\/2009\/10\/10\/californias-economic-and-fiscal-death-spiral-continues\/","title":{"rendered":"California’s Economic and Fiscal Death Spiral Continues"},"content":{"rendered":"

Just a few months into the 2009-10 fiscal year, and after three excruciatingly painful rounds of budget cuts (September 2008, February 2009, and July 2009) we learned today from John Chiang that California’s budget is again in the red<\/a>:<\/p>\n

State revenue has already fallen more than $1 billion short of assumptions in the budget lawmakers passed less than three months ago, according to a new report from the state controller.<\/p>\n

Disappointing income tax receipts are the main culprit, falling 11% below what lawmakers and Gov. Arnold Schwarzenegger expected when they agreed on a patchwork budget during the summer, halting the state’s issuance of IOUs. Sales and corporate taxes have also slid below projections.<\/p>\n

“While there are encouraging signs that California’s economy is preparing for a comeback, the recession continues to drag state revenues down,” said Controller John Chiang in a statement. He called the new figures “a major blow to a budget that is barely 10 weeks old.”<\/p>\n

Even before the bad fiscal news, policymakers were bracing for a big budget deficit next year. The Department of Finance anticipates a $7.4-billion deficit in 2010-11. That’s a conservative estimate, because lawsuits have tied up or reversed some planned budget cuts.<\/p><\/blockquote>\n

As we’ve made quite clear here at Calitics, the previous budget deals did absolutely nothing to solve the state’s economic and fiscal crisis. Despite those who would have us believe the problem is somehow caused by “overspending,” we are actually seeing the effect of state budget cuts that have laid off thousands of workers, and caused them as well as those who remain to spend less money in the state. It was entirely predictable that the massive budget cuts would merely weaken the economy further and thereby exacerbate the cycle of decline in revenues.<\/p>\n

But it should come as no surprise to us that such an outcome has taken place. At no time during the present recession have legislators and the governor given any thought to how they will produce economic recovery. The dominant impulse in Sacramento is to cut, to cut for its own sake, to cut when it costs money to do so, to cut when it is illegal to to do, to cut when it further weakens an already disastrous economy.<\/p>\n

The last thing California needs are the further and deeper budget cuts that we’re likely to hear suggested in the wake of this news. California instead desperately needs jobs, particularly unionized, well-paid and high-benefit government jobs.<\/p>\n

Californians also need affordable health care. They need affordable transportation. They need also more educational options. As Paul Krugman pointed out today, the cuts to education are weakening our economy<\/a> and will cause permanent damage:<\/p>\n

For example, the Chronicle of Higher Education recently reported on the plight of California’s community college students. For generations, talented students from less affluent families have used those colleges as a stepping stone to the state’s public universities. But in the face of the state’s budget crisis those universities have been forced to slam the door on this year’s potential transfer students. One result, almost surely, will be lifetime damage to many students’ prospects – and a large, gratuitous waste of human potential.<\/p><\/blockquote>\n

Krugman calls for an emergency package of aid to state and local budgets, a call we at Calitics heartily second.<\/p>\n

But we must also work hard to stop the 121 Herbert Hoovers in Sacramento from doing further harm to an already stressed state. We’ve tried Republicans’ neo-Hooverite solution. Democrats have insisted we had no choice to go along with it, but they have instead caused untold suffering and pain to the people of California without gaining anything in return.<\/p>\n

As we prepare for the next budget battle, we need to also prepare to demand that Democrats abandon neo-Hooverism and stop embracing policies and budget deals that merely make the economic and fiscal crisis worse.<\/p>\n

Yes, our state has severe structural governance problems that make truly progressive solutions difficult. But the first step toward fixing those structural problems is to articulate a clear vision for a fairer, more prosperous, and more economically secure California. Only then will Californians be willing to dismantle the structural barriers that have strangled our state over these last 30 years.<\/p>\n","protected":false},"excerpt":{"rendered":"

Just a few months into the 2009-10 fiscal year, and after three excruciatingly painful rounds of budget cuts (September 2008, February 2009, and July 2009) we learned today from John Chiang that California’s budget is again in the red<\/a>:<\/p>\n

State revenue has already fallen more than $1 billion short of assumptions in the budget lawmakers passed less than three months ago, according to a new report from the state controller.<\/p>\n

Disappointing income tax receipts are the main culprit, falling 11% below what lawmakers and Gov. Arnold Schwarzenegger expected when they agreed on a patchwork budget during the summer, halting the state’s issuance of IOUs. Sales and corporate taxes have also slid below projections.<\/p>\n

“While there are encouraging signs that California’s economy is preparing for a comeback, the recession continues to drag state revenues down,” said Controller John Chiang in a statement. He called the new figures “a major blow to a budget that is barely 10 weeks old.”<\/p>\n

Even before the bad fiscal news, policymakers were bracing for a big budget deficit next year. The Department of Finance anticipates a $7.4-billion deficit in 2010-11. That’s a conservative estimate, because lawsuits have tied up or reversed some planned budget cuts.<\/p><\/blockquote>\n

As we’ve made quite clear here at Calitics, the previous budget deals did absolutely nothing to solve the state’s economic and fiscal crisis. Despite those who would have us believe the problem is somehow caused by “overspending,” we are actually seeing the effect of state budget cuts that have laid off thousands of workers, and caused them as well as those who remain to spend less money in the state. It was entirely predictable that the massive budget cuts would merely weaken the economy further and thereby exacerbate the cycle of decline in revenues.<\/p>\n

But it should come as no surprise to us that such an outcome has taken place. At no time during the present recession have legislators and the governor given any thought to how they will produce economic recovery. The dominant impulse in Sacramento is to cut, to cut for its own sake, to cut when it costs money to do so, to cut when it is illegal to to do, to cut when it further weakens an already disastrous economy.<\/p>\n

The last thing California needs are the further and deeper budget cuts that we’re likely to hear suggested in the wake of this news. California instead desperately needs jobs, particularly unionized, well-paid and high-benefit government jobs.<\/p>\n

Californians also need affordable health care. They need affordable transportation. They need also more educational options. As Paul Krugman pointed out today, the cuts to education are weakening our economy<\/a> and will cause permanent damage:<\/p>\n

For example, the Chronicle of Higher Education recently reported on the plight of California’s community college students. For generations, talented students from less affluent families have used those colleges as a stepping stone to the state’s public universities. But in the face of the state’s budget crisis those universities have been forced to slam the door on this year’s potential transfer students. One result, almost surely, will be lifetime damage to many students’ prospects – and a large, gratuitous waste of human potential.<\/p><\/blockquote>\n

Krugman calls for an emergency package of aid to state and local budgets, a call we at Calitics heartily second.<\/p>\n

But we must also work hard to stop the 121 Herbert Hoovers in Sacramento from doing further harm to an already stressed state. We’ve tried Republicans’ neo-Hooverite solution. Democrats have insisted we had no choice to go along with it, but they have instead caused untold suffering and pain to the people of California without gaining anything in return.<\/p>\n

As we prepare for the next budget battle, we need to also prepare to demand that Democrats abandon neo-Hooverism and stop embracing policies and budget deals that merely make the economic and fiscal crisis worse.<\/p>\n

Yes, our state has severe structural governance problems that make truly progressive solutions difficult. But the first step toward fixing those structural problems is to articulate a clear vision for a fairer, more prosperous, and more economically secure California. Only then will Californians be willing to dismantle the structural barriers that have strangled our state over these last 30 years.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[],"tags":[],"class_list":["post-10251","post","type-post","status-publish","format-standard","hentry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack-related-posts":[],"jetpack_shortlink":"https:\/\/wp.me\/p6Pvhz-2Fl","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/posts\/10251","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/comments?post=10251"}],"version-history":[{"count":0,"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/posts\/10251\/revisions"}],"wp:attachment":[{"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/media?parent=10251"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/categories?post=10251"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/tags?post=10251"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}