A 10% spending cut would bring the budget into its Constitutionally mandated balance. That the State was planning on overspending between $11 and $16 billion as a matter of course is the far more disturbing aspect. I'm thinking very roughly $97b in revenues and some $110b in expenditures for the next fiscal year. I'll go over the numbers and report back later.
One of the planks of the Governator's campaign was a permanent repeal of a vehicle tax. When times were good in the late 1980's, the legislature and then-Gov. Davis temporarily reduced the vehicle registration fee as a way of reducing the fiscal surplus. When times turned not so good, the tax was supposed to return to the level it had been since 1938, i.e. it was not an new tax and not an increase.Talk-radio driven howls of outraged protest later, we had a new governor, and a permanently lower fee. We also had a permanent $4 billion hole in the budget. Every year.
probert, well, that number is about a month old. lol
actually, I was in SD this past weekend. i hadn't been in a year or two. I could not believe the number of new condo highrises and the number still being built downtown!
oh, yeah, and back on topic: thank god for prop 13, eh?
CR - The percentage of short/forced sales on OC MLS is steadily growing. Lansner.
For all of OC it is 17.5%. Above 30% are Santa Ana, Anaheim and RSM. Above 20% are Buena Park, San Juan, Aliso Viejo, Garden Grove, Foothill Ranch, Laguna Hills and Lake Forest. The coastal areas are the best.
Huge chunks of CA get a double whammy because a lot of jobs were related to RE.
probert - stop that I am tired of cleanig the coffee off of my 'puter screen!!(lol)
Well lets re-visit Northern Rock. Business is reported to be down by 80%. So how do you sell a financial firm with a reputation, 25B in debt and declining business volume?
will you stop randomly quoting prices of san diego condos?
ROTFL
I'm hearing the writers strike has cut sales of $3M plus homes in half. True? Only the future stats will tell.
Maxedoutmamma said: Huge chunks of CA get a double whammy because a lot of jobs were related to RE.
Is that not true of most states right now? e.g., Florida, Arizona, Nevada? I don't even think California is the worst in terms of the fraction of "high income" earners who were REIC outside of the OC. Now the OC... sound the dive alarm.
"I don't want to hear any references to financial managements' response to the various banking "write-downs" as being compared to my frequent running off of mesas and buttes in the cartooned American west while chasing the elusive Roadrunner. In such events I don't begin to fall until I look down or am encouraged to look down.
So, comparing my reactions to financial big bank managements' reactions is wholly inappropriate and a slam against cartoon coyotes everywhere. Thank you."
Former Federal Reserve Chairman "Alan Greenspan said Tuesday that cutting excess home inventories in the United States is key to stabilize the financial system at home and the rest of the world."
interesting that he discussed it within the context of the rest of the world. So if the US RE cycle somehow reversed course then the world economy is great otherwise its watch out below.
Probert - no, MI and then FL were the first to go. FL is in deep now. Illinois, Minnesota, Nevada, and Kentucky have developing problems.
Ohio and NY state have increasing unemployment and it is worst in their major metro areas (UE +.7 & +.6 YoY), which normally presages further weakening.
NJ is in the middle of a budgetary crisis, but not officially in recession. I could not believe what I saw there in the summer on one of my drive arounds, though. I drove through this little town that borders the Delaware, and there was a stretch of mixed commercial and housing which was almost all for sale. I quartered a few municipalities in that county out of curiosity, and I saw signs FSBO and for Sale or Rent, which is a dead giveaway. It's related to their property taxation and demographics. There was a blatant correlation to commercial and private property taxation rates. They are chasing out their retirees but the younger cohorts don't have the money to buy the houses and pay the taxes. There will be a major home price collapse in NJ which will further aggravate their public financing problems.
The Fed has been in denial about the role of state/local employment, population demographics and public financing problems. State & local employment and wage increases are going to be constrained by budget problems in a number of states that look healthy in the stats now, and that places further pressure on private sector income gains. But private compensation has been declining in comparison to public compensation for a while now.
There are THREE interrelated and immediate debt problems in the US. Consumer debt, commercial debt, and state and local debt related to demographics (i.e. overspending and inadequate pension/retiree medical benefit provisions). In about 4-5 more years the federal entitlement problem kicks in.
On top of budget shortfalls as far as the eye can see, we also have problems at the bond insurers. Sure hope all those muni bond fund owners are aware of, "what's in their wallet."
The vicious circle in CA is that they need to raise taxes, but that will only shrink the tax base (for obvious reasons) and create a need for yet higher tax rates. The solution is to cut spending, and they will, sometime in 2108.
If California were a country, its currency would be devaluing even against the dollar.
The cost of homes in Southern California have gone up so much, much more then the average worker's wage...how did they expect people to afford homes? If the home prices had remained parallel with wages people would have been able to afford homes. How did this happen? I don't know that the subprime mortgages were purchased by a large group of low income "poor" people who rushed to own a home...I believe they were the only vehicle available for the average family to purchase a home.... due to the high cost of homes.
MI and then FL were the first to go. FL is in deep now. Illinois, Minnesota, Nevada, and Kentucky have developing problems.
MOM, its the parts of Florida that were heavily overdeveloped (i.e. warm and/or beaches). The northern parts (outside of Jax and the far west panhandle) are not seeing near the problems of south Florida. The problems are primarily south of a line from Ocala to Daytona (plus Jax and Destin). Those areas contain the bulk of the population (and likewise the problems).
in other news... USD is now below 0.93 CAD... here come the snowbirds !
"The vicious circle in CA is that they need to raise taxes, but that will only shrink the tax base (for obvious reasons) and create a need for yet higher tax rates. The solution is to cut spending, and they will, sometime in 2108."
We've needed to raise taxes for a long time; that's why all the Governator's past budgets have been in the red, even though he talks endlessly of cuts. He will not get behind a tax increase of any kind. You need both cuts and taxes to get the budget in line.
I do not believe soaking the rich -- or removing tax preferences and exemptions to particular industries -- will send people fleeing the state.
One thing that would work wonders -- exempting commercial properties from the protections of Prop 13. That's politically doable, especially since the lawyers have developed ways of selling commercial building without actually "selling" them, thus avoiding property tax resets. Doing this might cushion the blow of sinking property valuations on tax collections, as some commercial buildings are mightily undervalued for tax purposes.
I predicted this, to my wife, one month ago, based on my read of the tax collections and remaining line of credit available to the state. I said that big budget cuts were just a few months away. So, this one came sooner than I had predicted.
Unfortunately, my more important prediction (for us), that the market would tank (and our SDS would go up) and that gold would come back to earth (when we would get back in again, 100%) is tardy.
So, with the market holding and gold up to $822, it appears that I will be sleeping in the dog house, tonight.
David - the vicious cycle you describe is being exacerbated by the aging population. A lot of boomers are now in early retirement through one mechanism or another (sometimes it is unwilling!).
By definition those being supported by the their own savings, pensions, investments or SS/public pensions have maximum mobility. The problem for states that have built up major public expense structures is that they will end up paying pensions to people who have moved to cheaper locations and supporting populations of really poor people who are advantaged by their social services. This is why I think Average Joe must worry about his pension. There is little reason for poorly paid private sector workers to continue to pay high taxes to support people that don't even live in their state. They will tend to go elsewhere - they will vote with their feet.
If you look at states like Idaho and the Carolinas, they are getting major influx from wealthier areas.
RayOnTheFarm - that's true, but here's another ugly truth - Florida's budget is not sustainable. They are taking such huge deficits in CIT and sales taxes that they may have to resort to an income tax.
--
As I have said before, Californicators didn't learn any lessons from the tech bubble burst that directly led to Davis's ouster when revenues collapsed.
God forbid that CA had housing bust and tech Scams bust. That would take the revenues below 2002 and a state govt. bankruptcy might be looming.
I wonder if this will be the final stake in the heart of the so far unsuccessful negotiations for a health care compromise between Gov. Arnold and the Dems.
I haven't been following it closely, but did I read that the idea in CA was to mandate blanket coverage by forcing employers to provide coverage and tax the hell out of them to provide the funds. That old standby of raising cigarette taxes was also floated. As if that well won't run dry someday.
This is a crummy idea that will just drive more small businesses out of the state, creating more revenue problems. Better hope it withers on the vine before next year's presidential election and the prospect of nationwide Hillary-care reemerges.
It is. Total unmitigated disaster out here. Once the latest tech bubble bursts there will be not much left.
Now, if someone can explain to me how the ninth largest economy in the world can go into a severe recession without dragging the rest of the US with it I'm all ears.
Neil - what's about to kick into high gear is a function of basic economics and demographics. The reality is that for the last two decades, private sector wages and benefits have been depressed by ballooning illegal and legal immigration. Public sector wages and benefits have risen steadily, in part because of political realities - public sector unions swing a lot of elections.
In any state that was wealthy and developed a high tax structure but cannot now generate reasonably high private sector wage and income growth, the economy will now go downhill.
What's important is less the overall wealth of a population than the income distribution within that population, public/private wage and retirement difference, and the age distribution of wealth. States which have wealth skewed heavily toward retirement and near retirement age individuals, plus big public taxation, plus large cohorts of very poor younger populations will not be able to raise taxation on the middle group of the population. They will move. If you try to increase corporate taxes heavily, you suppress corporate growth.
CA actually has better prospects than many other states if it can get its act together.
We've got our own Master Liquidity Enhancement Conduit here on the Peninsula: GOOG. 2% per day, every day. I don't see why that should ever stop or reverse itself.
We've needed to raise taxes for a long time; that's why all the Governator's past budgets have been in the red, even though he talks endlessly of cuts. He will not get behind a tax increase of any kind. You need both cuts and taxes to get the budget in line.
I don't know how many times I've been forced to debunk this assertion. California does not have a revenue problem, California has a spending problem. Period. California has more taxes and those among the highest of all the States and then allows signficant local and special taxes and fees on top. California even levies sales taxes on the State and Federal excise taxes on gasoline.
If you look at states like Idaho and the Carolinas, they are getting major influx from wealthier areas.
Even within the same state... here in Minnesota retired folks are leaving the urban ring to move outstate where housing & general COL is way lower. Property taxes too.
I talked to folks who watch the trends and they told me almost all the job growth was 'outstate' not Twin Cities and in services (food service & health care). That is way different from years past where outstate was emptied out... except on weekends.
Meanwhile the inner ring is facing many of the pressures you read about in Cali & East Coast - lack of affordable housing and shaky loans for those 'forced to afford'. Folks are stretched.
A lot of the job growth in the Twin Cities was RE related too - good grief there was a lot of commercial building going on, not just residential... especially in the NW corner. The increase in UE rate is starting to tell that story.
I think we'll have a far bigger hit from a CRE collapse than the coasts do - we just don't have the population to support that many stores & office parks.
Robert's correct, of course -- California collects plenty of money, they just spend more. The things they spend money on rival the federal government for stupidity.
Wonder how long it'll be before Arnold goes searching for the next 10%...
Sorry, but disagree re CA's PR economy or pulling out easily.
Yearly CA Budget has been in debt
@$7-8B for past several years. Bonds were issued to cover up & paste together the yearly Budget. Yes, you read that right. Bonds issued to cover yearly Budget deficits in CA.
What CA Economy?
Hollywood millionaires, maybe. Genuine productive sectors and export chain has been driven out of state, largely due to land and water costs. State produces about zero. Insane free tax gains escalated housing prices to the sky in La La Land.
Public pension debt tsunami created by collusion of politicos and all the govt. employee pensions across this country can not be paid off...nor should their lush thieving be paid off. Federal on down will have declare a public pension a fiscal emergency and slice to Soc. Sec. levels.
The massive freeways are used to carry imported goods from China, Japan, S.Korea or trucked in products
warehoused in NV or goods made in Mexico by various foreign cos.
Klownifornia's secular economic troubles are deep, self-inflicted and intractable. We have a state government dominated by corrupt incumbents (mostly Democrats) in virtually every corner, and endlessly re-elected by myopic bonehead voters. The problem is, people here are conditioned to wanting (and getting) something for nothing.
Your typical Klownifornian is a NIMBYists that doesn't want "development", especially of the working-class affordable kind, but DOES want McMansions built in every fire-prone canyon and every flood-prone floodplain. He doesn't want "growth" or "overcrowding", but refuses to contain illegal immigration, which he considers to be "racist". He decries "poverty" but refuses to "give his house away" for less than $600/sft. He decries political corruption, but refuses to demand a full accounting of tax money already being spent, or vote for a different party. He wants more government entitlements, but wants someone else to pay for it --preferably his own children and grandchildren (see Prop. 13 and tens of $billions in new bond measures).
Illegals in CA cost @$10B+ per year (plus taxpayers and their kids have to put up with the overcrowding in their schools, hospitals,etc. and all kinds of extra crimes on population & courts/prison costs) All you taxpayers across the nation out there are paying too for their medical care (when someone in your own town cannot get or pay for), Sect.8 housing (at rate costs in CA), etc.
For the sake of those interested I've continued the discussion at my blog where we might even hold a contest for a new State Motto. "Persistent Lack of Reason."
California has high state taxes because we send all of our federal tax dollars to states with low state taxes, folks. Is the state well run, no. But we do send $50B dollars or so more in federal taxes than we get back in federal expenditures each year.
$96.80
First...to go into recessio
The economics of loan servicing. I suspect as more homeowners have trouble this noise will only get louder:
Dubious Fees Hit Borrowers In Foreclosures - NY Times
You forgot to add "the joys of Prop 13" and "a charlatan as governor".
A 10% spending cut would bring the budget into its Constitutionally mandated balance. That the State was planning on overspending between $11 and $16 billion as a matter of course is the far more disturbing aspect. I'm thinking very roughly $97b in revenues and some $110b in expenditures for the next fiscal year. I'll go over the numbers and report back later.
I suppose we won't be getting all the Okies coming this time from far off lands east of the Mississippi River.
Instead we'll be sending our own Klownies (from Klownifornia) eastward.
One of the planks of the Governator's campaign was a permanent repeal of a vehicle tax. When times were good in the late 1980's, the legislature and then-Gov. Davis temporarily reduced the vehicle registration fee as a way of reducing the fiscal surplus. When times turned not so good, the tax was supposed to return to the level it had been since 1938, i.e. it was not an new tax and not an increase.Talk-radio driven howls of outraged protest later, we had a new governor, and a permanently lower fee. We also had a permanent $4 billion hole in the budget. Every year.
ac,
will you stop randomly quoting prices of san diego condos?
So goes California, so goes the nation.
This is potentially a vicious downward spiral, as government spending falls into an economic slowdown.
probert, well, that number is about a month old. lol
actually, I was in SD this past weekend. i hadn't been in a year or two. I could not believe the number of new condo highrises and the number still being built downtown!
oh, yeah, and back on topic: thank god for prop 13, eh?
CR - The percentage of short/forced sales on OC MLS is steadily growing. Lansner.
For all of OC it is 17.5%. Above 30% are Santa Ana, Anaheim and RSM. Above 20% are Buena Park, San Juan, Aliso Viejo, Garden Grove, Foothill Ranch, Laguna Hills and Lake Forest. The coastal areas are the best.
Huge chunks of CA get a double whammy because a lot of jobs were related to RE.
California is demographic hell.
I had a very good reason for leaving 11 years ago.
probert - stop that I am tired of cleanig the coffee off of my 'puter screen!!(lol)
Well lets re-visit Northern Rock. Business is reported to be down by 80%. So how do you sell a financial firm with a reputation, 25B in debt and declining business volume?
Northern Rock mortgage trade collapses
FT.com / Companies / UK companies - Northern Rock mortgage trade collapses
Oh, and "potentially harmfal writer's strike" (per TJ in another thread).
CR, you forgot the last part of the bumper sticker. It goes like this, "Welcome to California. Now go home."
will you stop randomly quoting prices of san diego condos?
ROTFL
I'm hearing the writers strike has cut sales of $3M plus homes in half. True? Only the future stats will tell.
Maxedoutmamma said:
Huge chunks of CA get a double whammy because a lot of jobs were related to RE.
Is that not true of most states right now? e.g., Florida, Arizona, Nevada? I don't even think California is the worst in terms of the fraction of "high income" earners who were REIC outside of the OC. Now the OC... sound the dive alarm.
Got popcorn?
Neil
ac,
will you stop randomly quoting prices of san diego condos?
Condo prices are up to $97.00 now.
Yeah, declining nominal revenue. This chart should make peoples' hair stand on end.
INO Equities Stocks Indexes - U.S $ INDEX (NYBOT:DX) Price Chart and Quote
Cheers,
And this for states/munis and the bonds they issue:
FT.com / US & Canada - Judges shy away from bond market shake-up
"Welcome to California."
Don't you mean "Welcome to Clownifornia"?
[ Oh, and "potentially harmfal writer's strike" ]
To be followed in short order by the DGA (directors) and SAG (actors) strikes. Those are pretty much baked in the cake for the next year.
Indy is forcasting a 9.2% decline in home values. Non-performing construction loans are up 153% in the last Q.
Wiley responds to writedowns at dealbreaker.com:
"I don't want to hear any references to financial managements' response to the various banking "write-downs" as being compared to my frequent running off of mesas and buttes in the cartooned American west while chasing the elusive Roadrunner. In such events I don't begin to fall until I look down or am encouraged to look down.
So, comparing my reactions to financial big bank managements' reactions is wholly inappropriate and a slam against cartoon coyotes everywhere. Thank you."
Posted by: Wile E. Coyote
Former Federal Reserve Chairman "Alan Greenspan said Tuesday that cutting excess home inventories in the United States is key to stabilize the financial system at home and the rest of the world."
interesting that he discussed it within the context of the rest of the world. So if the US RE cycle somehow reversed course then the world economy is great otherwise its watch out below.
Hi
You forgot our other season when it rains, House Races. I still wouldn't live any were else in the US
jo6pac
City of Chula Vista (San Diego county's top bubble market) is questioning if it can stay solvent without major labor give backs.
New building permits 1/6th of bubble peak.
http://www.voiceofsandiego.com/articles/2007/11/06/opinion/slop/452chula110507.txt
Probert - no, MI and then FL were the first to go. FL is in deep now. Illinois, Minnesota, Nevada, and Kentucky have developing problems.
Ohio and NY state have increasing unemployment and it is worst in their major metro areas (UE +.7 & +.6 YoY), which normally presages further weakening.
NJ is in the middle of a budgetary crisis, but not officially in recession. I could not believe what I saw there in the summer on one of my drive arounds, though. I drove through this little town that borders the Delaware, and there was a stretch of mixed commercial and housing which was almost all for sale. I quartered a few municipalities in that county out of curiosity, and I saw signs FSBO and for Sale or Rent, which is a dead giveaway. It's related to their property taxation and demographics. There was a blatant correlation to commercial and private property taxation rates. They are chasing out their retirees but the younger cohorts don't have the money to buy the houses and pay the taxes. There will be a major home price collapse in NJ which will further aggravate their public financing problems.
The Fed has been in denial about the role of state/local employment, population demographics and public financing problems. State & local employment and wage increases are going to be constrained by budget problems in a number of states that look healthy in the stats now, and that places further pressure on private sector income gains. But private compensation has been declining in comparison to public compensation for a while now.
There are THREE interrelated and immediate debt problems in the US. Consumer debt, commercial debt, and state and local debt related to demographics (i.e. overspending and inadequate pension/retiree medical benefit provisions). In about 4-5 more years the federal entitlement problem kicks in.
Robert, I am eagerly anticipating your numbers.
is'nt oklahoma west of the mighty mississippi
MoM,
On top of budget shortfalls as far as the eye can see, we also have problems at the bond insurers. Sure hope all those muni bond fund owners are aware of, "what's in their wallet."
The vicious circle in CA is that they need to raise taxes, but that will only shrink the tax base (for obvious reasons) and create a need for yet higher tax rates. The solution is to cut spending, and they will, sometime in 2108.
If California were a country, its currency would be devaluing even against the dollar.
And that's saying a lot.
How in the world does it work?
The cost of homes in Southern California have gone up so much, much more then the average worker's wage...how did they expect people to afford homes? If the home prices had remained parallel with wages people would have been able to afford homes. How did this happen? I don't know that the subprime mortgages were purchased by a large group of low income "poor" people who rushed to own a home...I believe they were the only vehicle available for the average family to purchase a home.... due to the high cost of homes.
MI and then FL were the first to go. FL is in deep now. Illinois, Minnesota, Nevada, and Kentucky have developing problems.
MOM, its the parts of Florida that were heavily overdeveloped (i.e. warm and/or beaches). The northern parts (outside of Jax and the far west panhandle) are not seeing near the problems of south Florida. The problems are primarily south of a line from Ocala to Daytona (plus Jax and Destin). Those areas contain the bulk of the population (and likewise the problems).
in other news... USD is now below 0.93 CAD... here come the snowbirds !
"The vicious circle in CA is that they need to raise taxes, but that will only shrink the tax base (for obvious reasons) and create a need for yet higher tax rates. The solution is to cut spending, and they will, sometime in 2108."
We've needed to raise taxes for a long time; that's why all the Governator's past budgets have been in the red, even though he talks endlessly of cuts. He will not get behind a tax increase of any kind. You need both cuts and taxes to get the budget in line.
I do not believe soaking the rich -- or removing tax preferences and exemptions to particular industries -- will send people fleeing the state.
One thing that would work wonders -- exempting commercial properties from the protections of Prop 13. That's politically doable, especially since the lawyers have developed ways of selling commercial building without actually "selling" them, thus avoiding property tax resets. Doing this might cushion the blow of sinking property valuations on tax collections, as some commercial buildings are mightily undervalued for tax purposes.
I predicted this, to my wife, one month ago, based on my read of the tax collections and remaining line of credit available to the state. I said that big budget cuts were just a few months away. So, this one came sooner than I had predicted.
Unfortunately, my more important prediction (for us), that the market would tank (and our SDS would go up) and that gold would come back to earth (when we would get back in again, 100%) is tardy.
So, with the market holding and gold up to $822, it appears that I will be sleeping in the dog house, tonight.
Scoot over, Spot!
David - the vicious cycle you describe is being exacerbated by the aging population. A lot of boomers are now in early retirement through one mechanism or another (sometimes it is unwilling!).
By definition those being supported by the their own savings, pensions, investments or SS/public pensions have maximum mobility. The problem for states that have built up major public expense structures is that they will end up paying pensions to people who have moved to cheaper locations and supporting populations of really poor people who are advantaged by their social services. This is why I think Average Joe must worry about his pension. There is little reason for poorly paid private sector workers to continue to pay high taxes to support people that don't even live in their state. They will tend to go elsewhere - they will vote with their feet.
If you look at states like Idaho and the Carolinas, they are getting major influx from wealthier areas.
but, but, but I thought we added 166K jobs. Unemployment went down, etc, etc.
RayOnTheFarm - that's true, but here's another ugly truth - Florida's budget is not sustainable. They are taking such huge deficits in CIT and sales taxes that they may have to resort to an income tax.
--
As I have said before, Californicators didn't learn any lessons from the tech bubble burst that directly led to Davis's ouster when revenues collapsed.
God forbid that CA had housing bust and tech Scams bust. That would take the revenues below 2002 and a state govt. bankruptcy might be looming.
Jas
Don't forget earthquakes. We had a big one last week....
It was scareeee.
-
I wonder if this will be the final stake in the heart of the so far unsuccessful negotiations for a health care compromise between Gov. Arnold and the Dems.
I haven't been following it closely, but did I read that the idea in CA was to mandate blanket coverage by forcing employers to provide coverage and tax the hell out of them to provide the funds. That old standby of raising cigarette taxes was also floated. As if that well won't run dry someday.
This is a crummy idea that will just drive more small businesses out of the state, creating more revenue problems. Better hope it withers on the vine before next year's presidential election and the prospect of nationwide Hillary-care reemerges.
Shoot, C- must be fine, healthy, and liquid; they just pissed away another $8B:
Citigroup provided $7.6 billion to struggling SIVs
| Reuters
"bankruptcy might be looming"
It is. Total unmitigated disaster out here. Once the latest tech bubble bursts there will be not much left.
Now, if someone can explain to me how the ninth largest economy in the world can go into a severe recession without dragging the rest of the US with it I'm all ears.
CR- "Drought. Fires. And now recession. Welcome to California."
And earthquakes, as a previous commenter pointed out. Don't forget about earthquakes.
It was scareeee.
Awwww, c'mon. That was a sissy quake. Didn't even knock any pictures off our walls.
Cheers,
prat
Neil - what's about to kick into high gear is a function of basic economics and demographics. The reality is that for the last two decades, private sector wages and benefits have been depressed by ballooning illegal and legal immigration. Public sector wages and benefits have risen steadily, in part because of political realities - public sector unions swing a lot of elections.
In any state that was wealthy and developed a high tax structure but cannot now generate reasonably high private sector wage and income growth, the economy will now go downhill.
What's important is less the overall wealth of a population than the income distribution within that population, public/private wage and retirement difference, and the age distribution of wealth. States which have wealth skewed heavily toward retirement and near retirement age individuals, plus big public taxation, plus large cohorts of very poor younger populations will not be able to raise taxation on the middle group of the population. They will move. If you try to increase corporate taxes heavily, you suppress corporate growth.
CA actually has better prospects than many other states if it can get its act together.
It is. Total unmitigated disaster out here.
We've got our own Master Liquidity Enhancement Conduit here on the Peninsula: GOOG. 2% per day, every day. I don't see why that should ever stop or reverse itself.
Right?
Cheers,
prat
We've needed to raise taxes for a long time; that's why all the Governator's past budgets have been in the red, even though he talks endlessly of cuts. He will not get behind a tax increase of any kind. You need both cuts and taxes to get the budget in line.
I don't know how many times I've been forced to debunk this assertion. California does not have a revenue problem, California has a spending problem. Period. California has more taxes and those among the highest of all the States and then allows signficant local and special taxes and fees on top. California even levies sales taxes on the State and Federal excise taxes on gasoline.
If you look at states like Idaho and the Carolinas, they are getting major influx from wealthier areas.
Even within the same state... here in Minnesota retired folks are leaving the urban ring to move outstate where housing & general COL is way lower. Property taxes too.
I talked to folks who watch the trends and they told me almost all the job growth was 'outstate' not Twin Cities and in services (food service & health care). That is way different from years past where outstate was emptied out... except on weekends.
Meanwhile the inner ring is facing many of the pressures you read about in Cali & East Coast - lack of affordable housing and shaky loans for those 'forced to afford'. Folks are stretched.
A lot of the job growth in the Twin Cities was RE related too - good grief there was a lot of commercial building going on, not just residential... especially in the NW corner. The increase in UE rate is starting to tell that story.
I think we'll have a far bigger hit from a CRE collapse than the coasts do - we just don't have the population to support that many stores & office parks.
Yep, Cali's toast.
Robert's correct, of course -- California collects plenty of money, they just spend more. The things they spend money on rival the federal government for stupidity.
Wonder how long it'll be before Arnold goes searching for the next 10%...
I agree 100% with RC that California's problems is one of too much spending, not lack of taxes.
Shoot, the state takes in $100B+ annually plus in taxes.
Quit funding in-state tuition for illegal, $200-300K salaries for university VPs, etc.
"Drought. Fires. And now recession. Welcome to California."
Since earthquakes have already been mentioned, floods after the fires are very damaging.
Californicators have sinned and they will live in a hellhole right here on earth. Diversity would prove to be deadly during the depression.
Jas
Sorry, but disagree re CA's PR economy or pulling out easily.
Yearly CA Budget has been in debt
@$7-8B for past several years. Bonds were issued to cover up & paste together the yearly Budget. Yes, you read that right. Bonds issued to cover yearly Budget deficits in CA.
What CA Economy?
Hollywood millionaires, maybe. Genuine productive sectors and export chain has been driven out of state, largely due to land and water costs. State produces about zero. Insane free tax gains escalated housing prices to the sky in La La Land.
Public pension debt tsunami created by collusion of politicos and all the govt. employee pensions across this country can not be paid off...nor should their lush thieving be paid off. Federal on down will have declare a public pension a fiscal emergency and slice to Soc. Sec. levels.
The massive freeways are used to carry imported goods from China, Japan, S.Korea or trucked in products
warehoused in NV or goods made in Mexico by various foreign cos.
Klownifornia's secular economic troubles are deep, self-inflicted and intractable. We have a state government dominated by corrupt incumbents (mostly Democrats) in virtually every corner, and endlessly re-elected by myopic bonehead voters. The problem is, people here are conditioned to wanting (and getting) something for nothing.
Your typical Klownifornian is a NIMBYists that doesn't want "development", especially of the working-class affordable kind, but DOES want McMansions built in every fire-prone canyon and every flood-prone floodplain. He doesn't want "growth" or "overcrowding", but refuses to contain illegal immigration, which he considers to be "racist". He decries "poverty" but refuses to "give his house away" for less than $600/sft. He decries political corruption, but refuses to demand a full accounting of tax money already being spent, or vote for a different party. He wants more government entitlements, but wants someone else to pay for it --preferably his own children and grandchildren (see Prop. 13 and tens of $billions in new bond measures).
We have seen the enemy and it is us.
Must add:
Illegals in CA cost @$10B+ per year (plus taxpayers and their kids have to put up with the overcrowding in their schools, hospitals,etc. and all kinds of extra crimes on population & courts/prison costs) All you taxpayers across the nation out there are paying too for their medical care (when someone in your own town cannot get or pay for), Sect.8 housing (at rate costs in CA), etc.
HARM,
Wow! Why don't you tell us what you really think of Califonians?
California has Term limits - not that it has helped.
"California has Term limits - not that it has helped."
Why would they? How could term limits stop stupid voters from electing stupid politicians?
"Drought. Fires. And now recession. Welcome to California"
Earthquake! Earthquake! where art thou Earthquake!
(To complete the cast of quattro horsemen)
Hayward fault is pregnant and long overdue...
Joe is optimistic because it is only CA.
For the sake of those interested I've continued the discussion at my blog where we might even hold a contest for a new State Motto. "Persistent Lack of Reason."
Hey, it's merely CA, MI, OH, and FL facing declining tax revenue. Only about 1/4 of the population of the country...
Nope, no recession coming! Move along folks. Nothing to see here. Go buy some GOOG.
California has high state taxes because we send all of our federal tax dollars to states with low state taxes, folks. Is the state well run, no. But we do send $50B dollars or so more in federal taxes than we get back in federal expenditures each year.