De-Mystifying The California Budget Crisis
We enter 2008 with several ominous factors predicting rough waters ahead. We all know that foreclosures are up (by nearly 3,000%) and that unemployment is hitting new highs, while job growth, housing sales, and personal income growth all declined rapidly in 2007.
How did we get here?It seems so simple: The state is spending more than it’s taking in revenues. Revenue forecasts have been down by a total of $7.5 billion since 2006-2007. And spending is higher due to sluggish property taxes.
But much of what we call spending are actually tax cuts enacted back in the 90s. Case in point the $6.1 billion we lose every year due to the Vehicle License Fee (VLF) reduction of 1998.
What makes this year so different?The state has been using questionable tactics to balance the budget for more than a decade, even during economic slumps.
Well, those tricks are mostly exhausted. Through deficit-related borrowing, we have run our credit bills so high that California is not the most trusted borrower.
Added to this is an economic environment which puts pressure on consumers, causing losses in sales tax revenue and property taxes, not to mention jobs.
This is definitely a special budget year.
What is the solution?Nobody proposes to have a magic bullet which will kill this budget monster, and fend off all layoffs while balancing the budget perfectly.
But we can raise revenue by closing loopholes, raising tax revenue from big business (which has fallen by half since 1981), and eliminating some of the tax cuts which cost California $16 billion annually.
Let’s Lobby Sacramento!We need to take our ideas and solutions directly to the decision-makers in Sacramento. This budget can be balanced, but we’re going to have to rearrange our priorities. Is it worth cutting taxes to the wealthiest if it means demolishing our public services? Which is needed most by California, more Yachts or better education?
Click on this link to find out more about Sacramento Lobby visits!
For more in-depth analysis on the California Budget Crisis,
visit the California Budget Project Website:
http://www.cbp.org/