CA Governor Orders Layoffs, Pay Cuts
Submitted by
CalculatedRisk on Thu, 07/31/2008 - 12:36pm (247 comments)
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it's just posturing to get the congress to approve his budget
Wow, these folks are going to have problems paying their mortgages.
First?
Pass A-1. This steak is done.
Oh, the humanity!
When do the mini paychecks start - Aug 1st?
haha, budgets, and the effort spent producing them in the times we now live in are folly.
preservation of capital is not.
I would go long tents.
We should all go buy a lottery ticket to help out California.
Did the gov cut his pay too?
"Such workers would get regular pay plus back pay once a new budget is approved."
So the cuts are BS as always. You don't save money by putting off bills into the future.
My wife's friend's (recent) ex-husband, is a deadbeat. He has a CC that he was in default on, for $24k. He contacted the CC company and he said take $3K or I file BK. They took it. He has other debts he intends to renegotiate, similarly, from a position of strength, given the desperate situation at lenders.
GOOD TIMES!
My wife's friend's (recent) ex-husband, is a deadbeat. He has a CC that he was in default on, for $24k. He contacted the CC company and he said take $3K or I file BK. They took it. He has other debts he intends to renegotiate, similarly, from a position of strength, given the desperate situation at lenders.
GOOD TIMES!
From Arnold (pronounced AHHHNOLT):
Just in case YOU weren't having any trouble paying YOUR mortgage yet, howsabout a steep pay cut????
Will the Fed starting accepting IOU's from Ca employess at their window?
Where is the bailout for CA???
Dubya is going to have to nationalize everything in the ownership society.
CR said "Many states are struggling, but California is in especially deep trouble because of rapidly falling house prices and a weakening economy."
Might I suggest replacing "... of rapidly falling house prices and a weakening economy with "...of politicians who are friggin' idiots."
Not discounting the former, but more accuracy in the latter.
It's a no-brainer that layoffs and reduced pay are necessary (not down to minimum wage, of course, but say somewhere below 6-figure salaries that too many pull in).
The ironic thing is that these moves will make matters worse in some ways...more unemployment claims, more pullback in spending by the affected workers.
There are painful feedback loops wherever I look!
But eventually, CA needs a government that's much smaller and more frugal.
You really have to wonder if this act by Arnold is not some type of retribution directed towards the Bush administration, via the Enron price fixing.
By cutting people's salaries, it will devastate so many families who will have to decide between putting "food on the family" [Bushism] and making mortgage payments.
When these people choose food over housing, FRE an FNM will simply collapse. Plain and simple.
Bush pulled the Enron scam when he entered office, Arnie may be pulling this off as a last act before Bush leaves office.
The state controller just said he will not follow this order (LAtimes.com)
It's a good thing that Americans have been saving for a rainy day, otherwise they might be in trouble.
One other thing - the State Controller, John Chiang, has already stated that he would not implement the payroll cuts, so for the moment, it's all political theater. That which Californians do best.
The state controller just said he will not follow this order (LAtimes.com)
I wonder if the controller's salary is about to reset to minimum wage.
MICHAEL L` writes:
"So the cuts are BS as always. You don't save money by putting off bills into the future."
But what if they take the money they save and buy lottery tickets? If they hit the big one, all of our problems are history.
I read that this doesn't take effect until Sept.
Hard to blame it particularly on Arnold, when the debt was unmanagable well before Arnold.
Might as well float more bonds...ya'll know it can be paid back later with cheaper dollars...at this point, even the interest rate might be irrelevant. Too big to pail.
Schwarzenegger is a typical republican clown - borrow and spend. And when the time comes to pay the bill, let the taxpayers pay it by cutting social programs and K-12 education.
Coming to schools in CA: 50 students per class.
Pass A-1. This steak is done.
Unfortunately, although the steak is done, the cook isn't. House prices are in freefall basically everywhere in the state now. The resulting foreclosure swarm has just started and is going to go on for a long time. By the time the cook is done, the steak will be an inedible cinder.
for God's sake, is there any way we can make this permanent? It's the first thing I've liked from Sacramento in years.
Feedback loops writ large...
energyecon, that was my thought. All though the pay cuts are fake, the layoffs appear real (even if they were part time workers). So this is a negative feedback loop from the housing bust.
Best to all
You can checkout but you can never leave.
I guess Arnold is threatening to bring the losses back onto the balance sheet?
Can't we just finance someone to buy all our debt at a discount, and resolve this once and for all?
(yes, I'm in a snarky mood today)
Back in the 1960s, the threat was to pay all state workers with IOUs until the budget was passed. Don't remember who was governor then, but it was before Jerry Brown. Once the deadline down to a minute or two away, they always managed to pass a budget and make payroll on time. This theater has been going on for a long time but I think the situation is a little tougher now. More bills (expenses) and less income.
Stop picking on Arnold. He's just being more honest than Corzine, Patterson, and most other governors. A lot of states are in deep financial trouble and will have to lay off people and hock all the toll roads, lotteries, permitting joints and schools.
I told you this was coming a long time ago. Some of you didn't believe me.
Eye ahm Ahnuld, Mastah of KalyFOURnya! Bow down befoah me or de conzeqwences vill be DIRE!
Just a big bicep-flex from the Master Poser.
As for salary cuts -- as has been said, they could lay off every single state employee and still have a deficit. The problem isn't at the state level. The problem is all the money the state pumps back to the localities. The problem is Prop 13.
When the voters voted in 13 back in '78, the legislature stepped in and shielded them from the impact by sending down state funds to make up for cuts in local property taxes; the state was running a surplus at the time.
30 years later, they're still doing it, and 30 years later, people still think they got a free lunch with Prop 13.
The real solution is one that Arnuld doesn't have the deltoids for: the state should stop supporting local government.
In other words, the state should release claim to any tax revenues in excess of what's needed to run state departments. Slash income tax accordingly, give the locals total control of locally-generated tax revenues, and let them spend it as they like.
Then Step back and watch the madness as everyone realizes that the problem is local, has always been local, and was never really a statewide problem. And that they can't run current local gov't with local revenue unless they drastically slash spending or raise taxes -- which Prop 13 makes very hard to do. They've have to make decisions. They'll have to reach consensus on what to keep, what to give up.
Uncomfortable times -- but making the voters comfy and protecting them from the consequences of their own folly has led California to the gridlock it now lives in.
Why do the dems want a $10B tax package. Why can't they agree to a $10B cut in spending? F**king idiots.
This should really spike the foreclosure rate in coming months.
I feel bad for my relatives who insisted that nothing could beat California because of the weather, the parks, the beaches, etc...
"other jim writes:
Back in the 1960s, the threat was to pay all state workers with IOUs until the budget was passed. Don't remember who was governor then, but it was before Jerry Brown."
CA governators
1959-1967 Pat Brown
1967-1965 Ronald Reaga
Hmmm....the feedback loop from state employee income to lottery money is definately going to slow, somewhat.
Hey, I have an idea!
Pay everyone in California Lotto Tickets.
We can print those, right?
And we get to tax the proceeds, right?
What happens if you have a depression, but current government debt, increased borrowing costs and declining revenues all limit the government's ability to provide fiscal stimulus?
California might give the nation a little preview of the future.
Arnold Schwarzenegger returns as
THE TERMINATOR
cd
I don't see what the big deal is...
The county I live in has been insolvent for quite some time....the state is lagging behind, like always. Vallejo was just the warm up show...
Any of you folks buying municipal bonds still?
This is short-sighted thinking. Laying off 22,000 workers leaves 200,000 still on the payroll. Think about how much California could save it if laid them all off.
ACTUALLY,
if you do the math and fire everyone....there is still a deficit!!!!!
And yet, from Bloomberg we have this good news:
"California's Discount Foreclosure Sales Point to Housing Bottom"
California's Discount Foreclosure Sales Point to Housing Bottom - Bloomberg.com
Unfortulately, this wave of foreclosures is just the first. The second will be bigger, since it will include not only the type we've seen so far (payment resets), but those from mounting job losses.
I always thought California was screwed because of its mismanaged spending, misplaced priorities, and inability to enact any form of fiscal discipline, but hey, that's just my take. I'm sure plenty of states could nearly double tax revenue in 5 years and still manage to be in the hole.
150K for prison guards? You gotta be joking.
Why not hire prisoners? I'll bet they'd work for a lot less.
Reminds me of an old magazine cover - "Pass this budget or we'll kill this dog."
Please guys, this is theater.
My hub had a week or 2 without pay when Clinton had a snit with the congress. Only essential personell got paid and he wasn't considered essential.
He got reimbursed and all was well.
At the time everybody was very understanding of the situation. If this just goes on for a few weeks, then it will be a nothingburger. As to the part times who as getting permanently laid off, this is truely a disaster.
I suppose there are far more state employees than fed employess even in Space Coast Florida.
F Econ,
really crispy well done steak might be some kind of coal/oil alternative energy source..
I've seen figures of prison guards making > $200K (with overtime pay included).
What I don't understand is why folks get all fired up about the prison guards, but are sanguine about firefighter salaries. Which job would YOU rather do!?
" If this just goes on for a few weeks, then it will be a nothingburger."
For people tapped out on credit, those few weeks will break the proverbial camel's back. Moral to the story is that stories with morals are useless.
Is this the housing bottom?
(@)
Might as well float more bonds...
No way, he should consider walkaway on the bonds. I mean, EVERYONE is doing it, it's practically fashionable.
That'll get the financials going...
How many stores is SBUX closing in CA ? They may need to revisit their contraction plans.
Dirtiest. Punctuation. Ever.
Why don't they cut taxes? Supply side says cut taxes and the revenue will increase. Like magic. I'm surprised none of the voodoo economic guys have recommended that.
time to get rid of prop 13 once and for all and put this state back into solvency.
All our stores will be open 24/7! Look for our mobile units(Tumbrils) in your area.STOCK UP NOW!
.
Calculated Risk writes:
energyecon, that was my thought. All though the pay cuts are fake, the layoffs appear real (even if they were part time workers). So this is a negative feedback loop from the housing bust.
Tsk, Tsk - and after all the time I spent last week explaining the difference between negative and positive feedback loop. Postive feedback loops are the ones that are self-reinforcing, even if the results are negative.
Soemone last week suggested "adverse feedback loop" as the less confusing notation for postive feedback loops with negative results. I liked that.
WOW!!!
The neighbor is a retired prison guard. Collects $100K a year. He is 52.
But State Controller John Chiang sent the governor a letter today saying he would not comply with the order because "it is based on faulty legal and factual premises."
The governor said he will take the controller to court if necessary, but he hopes to resolve the state budget impasse with lawmakers within days, making such a battle unnecessary.
If the governor is successful in cutting the employees' income, they will receive their full back pay once a budget were signed.
Like rescinding Prop 13 would fix overspending?!?!?!? Yeah right.
Prop 13 came about because of
overspending....the solution is
not mo' money.
Analysis I've heard of the 'Governator's' move is that by making bold moves with state employee pay, he's putting pressure on the Democrats in the state congress, in particular, to work out the ongoing budget stalemate. The Dems are concerned with the workers unions while the Repubs don't give a hoot.
It's be a little more effective in forcing action if the benefits and pay to all congress members and their staffers and such were cut to min wage.
prop. 13 got voted in because property values were skyrockting. Not only were local governments collecting more revenue, they were increasing rates at the same time to fund more stuff. People on fixed incomes were in danger of losing their homes.
The courts have decided that fees for specific purposes can be collected in addition to property taxes. Hence, school impact fees, sewer, etc.
That time for Gov. (now saint) Reagan must have been 67-70something.
Lawyerliz writes:
Please guys, this is theater.
My hub had a week or 2 without pay when Clinton had a snit with the congress. Only essential personell got paid and he wasn't considered essential.
Seems that Newt Gingrich was the mastermind of that disaster. He was miffed that he didn't sit in the same cabin as Clinton for an overseas flight to attend a funeral. I guess Newt showed him.
Doesn't The Ahnold have a unitary executive? Can't he just decree stuff like The Deciderer?
"Schwarzenegger is a typical republican clown - borrow and spend. And when the time comes to pay the bill, let the taxpayers pay it by cutting social programs and K-12 education.
Coming to schools in CA: 50 students per class."
I had 47 in my class in the 80's and did just fine.
Want to save the state, cut teachers, cops and fire salaires by 50%... No, there won't be a shortage, just not a line 200K deep to become a fire fighter.
I guess you guys don't understand the whole California pension prison guard thing....it's got something to do with pensions being set relative to the 3 highest years of pay (overtime included). So pretty much every government employee who can, does a heavy rotation in the prison system shortly before retirement. I don't blame them, but there it is.
"1967-1965 Ronald Reagan"
The only California governor who could bend time!
Agree cut FF's pay ASAP!
it's a typical stunt by a governor who doesn't show much enthusiasm for the job anymore except when he gets to fly around the state and hang out with firefighters, he hasn't played much of a role in brokering a budget settlement, doesn't really want to, and needs to do something to create the illusion that he's doing something while continuing to do all the other cool things he'd rather do
meanwhile, his staff is composed of a lot of the same folks, like Susan Kennedy, who screwed everything up for Gray Davis, yes, that's right, the same Gray Davis that Arnold pushed to the curb, and they have never seen the state bureaucracy as anything other than something that gets in the way of their bizarre policy notions and patronage schemes
a contemptible group of people all the way around, targeting state workers as scapegoats for their own incompetence, firing lowly paid student assistants, because, after all, that's one of their perquisites of power, stepping of the vulnerable and the powerless as a form of ego gratification
apparently, Arnold's plan is to parachute into the next administration as a means of seeking relief from a job he now finds tedious, as he has openly commented about serving under either McCain or Obama, and he does have both ends covered, through his endorsement of McCain and Maria's of Obama
100K salary doesn't sound unreasonable when home prices are averaging 500K. How do you retain teachers / firefighters etc when the cost of living is so high?
totally OT, but ELN got crushed again... -40% AH
Yup, the pay cuts are a nothingburger. They'll be tied up in litigation for weeks. Even if they ever happen, my understanding is that the affected employees can take out quite reasonable loans against the guaranteed back pay that will come later.
"How do you retain teachers / firefighters etc when the cost of living is so high?"
Pay enough people less and prices come down. Prices rise to the maximum ability to pay ~25% of gross(current bubble excluded)
.
AO writes:
"other jim writes:
CA governators
1959-1967 Pat Brown
1967-1965 Ronald Reagan
Brilliant! that's the fix: Arnold goes back in time (he's already done that, too!) and warns everybody that if they keep spending too much...oh wait....
OK, Arnold goes back in time and un-passes prop 13?
OK, Arnold goes back in time and kills Angelo Mozillo, George Bush, Dancing Chucky Prince, Stanley O'Neal, Alan Greenspan, Phil Gramm.....geez, this list is getting long!
The problem isn't too little revenues, the problem is simply too much spending.
Why don't we outsource the prison system?
Hangtown writes:
The neighbor is a retired prison guard. Collects $100K a year. He is 52.
Hangtown | 07.31.08 - 5:39 pm | #
I know of several guys that ran their company out of business and got to walk away with $40 million, plus or minus $5 million. Nice job if you can get it. Those are the people we should be pissed at, not the lowly state worker.
Did the gov cut his pay too?
In his defense, he doesn't take the salary, never has.
That state controller's a Democrat, too.
Personally, I think he's serious, and I hope he sticks to his guns. CA has gone for months without a budget in much better times; might as well put some real pressure on them.
"100K salary doesn't sound unreasonable when home prices are averaging 500K. How do you retain teachers / firefighters etc when the cost of living is so high?"
Frame this another way, why is the cost of living so high?... because of the rediculus raises all these profession have received over the last decade.
Teachers in other high cost areas like Boston, NY/NJ, Chicago, etc don't make near as much as the lower cost areas in CA.
I don't think you will find anyone that argues these professions shouldn't get above the median wage, but when you have 28yr old cops, no college edu making 120K/yr +pension and super benefits in a low crime area, there's something not quite right.
I guess the state employees will be learning about a new kind of shrinkage...
YouTube -
The fact he takes no salary is no defense, he doesn't need the money. A more honerable solution would be for him to put up enough of his personal money to cover the budget.
From what I have read CA's budget problem is not related to declining prop tax revenue. This is because most houses are assessed significantly below market and were (and will continue to be)increased at the prop 13 2% max rate per year.
The real issue is a lack of spending control and declining sales, corporate, and individual income tax revenue.
Been a long long time since anyone has seen a politician who's willing to cut anything....what do they call it? Fiscally Conse...nah, that ain't it...Political Suicide?
Yeah, that's it.
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the Public Treasury. From that moment on, the majority always votes for the candidate promising the most benefits from the Public Treasury with the result that a democracy always collapses over loose fiscal policy always followed by dictatorship."
-- Alexander Fraser Tyler
18th century Scottish historian, The Decline and Fall of the Athenian Republic
Where is Ahead of the Curve - ELAN IS TANKING AGAIN!!
rebear-up thread I as a citizen of California the outsource...prev thread I ment'd that someone smart in the state should approach mexican president with 15K per illegal alien prisoner per year to hold in their prisons..I doubt you would see to many early releases..
1/3 of california prisoners are illegal aliens....
5-6 billion in savings right there a year...
Nothing to worry about, just heard a rumor that Buffett if going to buy California, so all is well
We have no more money? What? Why, get some more. What do you mean, we have to live within our means? Why? Get more money! Bad dog!
OT: From Fortune Magazine online today:
"Tosca stake boosts WaMu
Washington Mutual (WM) jumped Thursday after a U.K.-based hedge fund said it had a 6% stake in the Seattle thrift. The Toscafund said in a filing with the Securities and Exchange Commission that it owned 105 million shares in the struggling mortgage lender as of July 16, making it the firms second-biggest shareholder. Shares of WaMu, which have plunged over the past year as the bank has added $12 billion to its loan loss reserves to brace for losses tied to the housing bust, surged 20% in midafternoon to their highest level in more than a week, as Wall Street took the filing as a sign that WaMu investors havent lost hope.
Not everyone is impressed, of course. Hedge fund manager Doug Kass told CNBC hes shorting WaMu, noting that Tosca has long had an interest in the bank. In fact, Tosca approached WaMu earlier this year and expressed interest in being part of any group that helped to recapitalize the company. WaMu raised $7 billion in April through the sale of common and preferred stock to a group led by private equity firm TPG - a deal that made WaMus biggest shareholder. Toscafund, for its part, owned 60 million shares as of April 17, according to an earlier WaMu filing. WaMu shares rose 71 cents to $5.44."
Everybody feel better about WAMU now?
It's going to be like the grapes of wrath in reverse: people will be migrating out of CA!
The arguments about high salaries driving up the cost of living don't make much sense. The money raising their salaries is coming out of the pockets of other California residents. Basically a wash, with some dead weight loss.
One thing is a certainty...folks are going to be learning to do more with less, because there ain't no more no more.
cd writes:
rebear-up thread I as a citizen of California the outsource...prev thread I ment'd that someone smart in the state should approach mexican president with 15K per illegal alien prisoner per year to hold in their prisons..I doubt you would see to many early releases..
1/3 of california prisoners are illegal aliens....
5-6 billion in savings right there a year...
cd | 07.31.08 - 5:58 pm | #
Why stop at illegals?
Outsource the whole lot and save 15 to 18 billion.
Coming to schools in CA: 50 students per class.
Speed | 07.31.08 - 5:07 pm | #
In India they go way bigger and I'd take their worst students over our honor society ones....
It not the size of the dog in the fight but the size of the fight in the dog.....
At this point America is equivalent to a well mannered 150lb. St. Bernard....
............
Did Arnold cut his own pay?
Did millionaire actor Arnold join with his own important effort and cut his own overblown unneeded salary--?
Precedents, people. Watch out for unequal precedents being set by new would-be rulers. Top-dog politicians Arnold should go down with the ship: otherwise our ships will keep sinking.
"California knows how to party, California really knows how to party..." - Dr. Dre
25 And Screwed writes:
Nothing to worry about, just heard a rumor that Buffett if going to buy California, so all is well
LOL ! ! !
Warren rumors are my favorite!
..............
JR:
Actually the Governator has forfited any pay, yes, from his first day in office in fact.
This is a deal done in the dead of nite. Why would WAMU not make an anouncement of the deal? I thought I heard from CNBC that Toscafund paid $10 a share. For a $5 stock? Something fishy here. As I recall if WAMU sells shares for under $8.75 they owe TPG, a prior investor, an additional fee. I guess we will find out the truth some day.
Anonymous,
I actually read that as much to do about nothing, Toscafund was already heavily invested, they have just invested even more now. Not sure why this was posted on CNN/Fortune. That's what was funny about it to me as it sounds like Toscafund have been buying up shares on the open market so where is the real news here? That Toscafund's is made up of morons?
How will California retain professionals with huge pay cuts and constant layoffs? They aren't and won't.
The arguments about high salaries driving up the cost of living don't make much sense. The money raising their salaries is coming out of the pockets of other California residents. Basically a wash, with some dead weight loss.
You don't think that money magically borrowed out of thin air by CA might have had some effect too? A billion here and a billion there, pretty soon living standards are up.
Hmm, made me start thinking about the U.S. in general.
tranches of lunacy,
So high taxes have no impact on cost of living? What part of your anatomy did you pull that gem out of?
I don't think any state employees will see $6.55/hr paychecks. They get paid once a month near the end of the month, and payday was yesterday at full pay. I suspect Arnold is trying to force the legislators to pass a budget before next month's checks are cut.
Vader,
Ahnold doesn't take a paycheck for being governator.
How much is Arnold making?
Does this impact pension funds and muni bonds??
will this impact foreclosure feedback loop?
"The problem is Prop 13. "
Yep. This whole thing was inevitable. Still, lots of folks who still don't get it and really desperately want to stay blind.
"So high taxes have no impact on cost of living?"
"Cost of living" is a largely subjective measure. The price of toothpaste might be higher in Sweden, for instance, but the cost of healthcare (if you're a Swede) is not. In that case higher taxation results in lower overall healthcare costs per capita.
It really goes back to what a given society deems important. We would rather have cheap stuff here in the US than an educated and healthy populace, apparently.
Now, MLMs point is spot on. I should have noted the debt issue.
Look, the minimum wage thing is just a red herring to get the damn budget done. The deeper reason for this threat is to prepare all for some painful cuts and then some even more painful cuts on the next budget and then some even more...
So many here are management--and don't appreciate the value of labor. Easy to mock the jailer and the teacher--well, as you all understand, they're people--most working hard under less than optimal conditions. They're not the destroyers, they're the clean up crew. If their unions had the appropriate cajones, they'd call a statewide strike--all those deemed minimum wage.
If the state breaks the contract, it's not so much a strike as a natural reaction. The larger issues are less important to the worker than the fact that he was lied to and will eventually lose his house--and then go bankrupt.
Arnold should threaten sale of state assets before screwing with worker's lives. The system loves to blame the victim--sure, cut taxes, but fund my kid's school.
"I guess you guys don't understand the whole California pension prison guard thing....it's got something to do with pensions being set relative to the 3 highest years of pay (overtime included). So pretty much every government employee who can, does a heavy rotation in the prison system shortly before retirement. I don't blame them, but there it is."
It's a wonder CALPERS isn't BK. Or is it?
CA pensions vs. golden parachutes.
A lot of couch quater-backs here. Arnold takes $1.00 salary and donates it.
The problems we have and have had in Cali --especially SoCal are huge.
I agree with one poster here about the state and local municipalities. We simply spend too much and do not take in enough. Simple.
We can not continue to take care of our brothers from the South any longer -but no politician has the blls to put a stop to it. I am with saving humanity but we can not save others if we can not save ourselves.
RE writes:
"The problem is Prop 13. "
Yep. This whole thing was inevitable. Still, lots of folks who still don't get it and really desperately want to stay blind.
California has managed to get its revenues as a percentage of money earned in the state back up to where they were before prop 13. While prop 13 made taxes in California less equitable and encouraged lots of horrible thing, the problem with the budget isn't a lack of revenue. It's that the state spends far too much on prisons and health care. Here's a hint boys and girls, if you have to take out TV ads to encourage illegal immigrants to sign up for free healthcare, you might have some fat in your budget.
Many states are struggling, but California is in especially deep trouble because of rapidly falling house prices and a weakening economy.
Hmmmm. Something tells me the rapidly falling house prices and weakening economy may be more of a symptom than a cause.
CalPERS is nowhere near bankrupt, it's been around for decades and made huge amounts of money. I know that's painful for privatizers to hear, but that's how it is, they've done a good job.
Mel is right, the unions ought to call a major job action, because Arnold has also ordered his labor negotiators to stall on contract negotiations for months, so that almost all state employees are now without a contract.
But, don't worry, they won't.
"...the problem is local, has always been local, and was never really a statewide problem."
Bob Dobbs | Homepage | 07.31.08 - 5:17 pm | #
Sorry, Bob. While there is some fiscal incest between state and local governments, their respective revenue sources are quite distinct. Further, the State actually borrows from cities, usually against their will.
Local governments have their own challenges. This IS a State problem.
Biggs v. Wilson and Parr v. State of California. Those cases hold that if the State fails to pay full wages on payday to employees who have worked overtime, the State may have to pay damages in an amount equal to each late paycheck. Governor Wilson settled the Parr case by paying significant unearned annual leave credits to tens of thousands of State workers who had received IOUs instead of paychecks. Thus, the Governors high-risk strategy to save California money is likely to result in little if any savings (because all the employees are entitled, eventually, to their full salary) and to risk tens or hundreds of millions of dollars in penalties.
Another self-defeating aspect of the Governors plan involves what will happen to high-salaried administrative, executive or professional employees who are exempt from overtime. They routinely work more than forty hours per week and if they continue to do so they will suddenly have to be paid overtime. This is because the Governors plan will make them minimum-wage workers, and thus they will (temporarily) no longer be exempt. So if they are required to work overtime in a pay period, the State will have to pay their full wages and overtime just like any other non-exempt worker, and possibly damages for late payments.
Effectively borrowing from state employees is pretty ugly. They need the cash to live. Many states did this in the thirties by registering state warrants. Brought Capitol cities to their knees!
Start firing those freeloading clowns and don't stop until the damn thing is balanced.
Anonymous writes:
Start firing those freeloading clowns and don't stop until the damn thing is balanced.
Who are talking about? The fireman, the jailer, the teacher, the attorney,..? Simplistic statement to a serious situation--you must still support the W.
I am one of these state workers making 6.55 today. It's not really a big deal for me since I will get paid back, have savings and rent. That's assuming I ever see the cut, since I get paid once per month and just got paid.
I don't know the statistics on whether we are overpaid or not. I know I am not when I compare the work I do to other agencies doing similar work at the federal and local level. In fact I don't get cost of living raises so most likely I will get a pay again this year due to inflation.
Also, you can search state salaries here by name:
State Salaries - Sacramento News - Local and Breaking Sacramento News | Sacramento Bee
I haven't messed with it much but if you put in an agency it gives a list of names, positions, pay, etc. Not sure if this includes everyone.
I think there is a lot of hype over overpaid state workers when it seems a minority of people are overpaid (mostly law enforcement and medical related).
The real benefit is the fact that I only need to work 40 hrs per week and get decent benefits.
Oh and we have been paid in IOU's I hear (before my time). I heard the banks took them like cash. I would be more worried about the money after I deposit it in the bank.
Arnie should be first.
RESIGN!!!!
What a turd.
California just needs to stop paying healthcare and education costs for illegals. The system is broken and immigration laws will have to be followed. No more open door policy for illegal immigrants! We can no longer afford it.
How much does a fireman make anyway?
I know in Wa there are "workers" on ferries that make well over 4100K a year for pointing a finger at a lane and then walking around for 40 minutes, point a finger..
rc writes:
California just needs to stop paying healthcare and education costs for illegals. The system is broken and immigration laws will have to be followed. No more open door policy for illegal immigrants! We can no longer afford it.
Maybe you should worry less about the "illegals" and worry more about the sovereigns buying up the banks.
Yes, I'm pissed. Having to send my eldest out of state to U of A because of the impacts already to UC schools.
Cutting education was the WORST thing to do. Cut off the future for the sake of past mistakes just when the largest number of kids in 20 years are hitting the universities, and they have NO jobs. Dumb, dumb, DUMB.
"Anonymous writes:
How much does a fireman make anyway?
I know in Wa there are "workers" on ferries that make well over 4100K a year for pointing a finger at a lane and then walking around for 40 minutes, point a finger.."
Bullshit.
As a Californian, I think Arnold has started on the right track. The State of California needs massive layoffs, an end to Proposition 13, and court enforcement of Proposition 187.
Hardball In Vallejo, No Balls In D.C.
Mish's Global Economic Trend Analysis: Hardball In Vallejo, No Balls In D.C.
Vallejo spends 74 percent of its $80 million general fund budget on public safety salaries, significantly higher than the state average. The generous contracts are the result of deals struck in the 1970s, following a police strike that left the city in turmoil.
My Comment: If I was a Vallejo taxpayer, this is what I would be asking: What special talents does the firefighter and police force in Vallejo have that merit "significantly higher than the state average" wages and benefits?
JMS: Not to be nit-picky, but that was Tupac featuring Dr. Dre.
The cop retirement plans in Ca. are crazy. I know many retired LA County cops who get between 8000-10000/mo with full healthcare for themselves and their spouses for life.
Sure, they paid into these plans, but they were also exempted from Social Security deductions while cops. After they retire, they take gigs to rack up the needed Social Security credits so they can get SS AND their pension checks. Some will take jobs in their respective Unions and make another 100k on top of their pensions.
The newer retirement plans aren't as generous though.
when you have 28yr old cops, no college edu making 120K/yr +pension and super benefits in a low crime area, there's something not quite right.
westparker | 07.31.08 - 5:54 pm | #
You won't know until you've walked a mile in their shoes.
Richard Estes,
Meanwhile, all of the CALPERS upper management has abandoned ship in droves and where there's smoke there's fire. I also understand that CALPERS was heavy into CDO and other questionable mortgage backed securities, and more recently has large investments in the (collapsing?) commodity bubble. Hmmm...haven't heard the writeoff/writedown confessional yet. The last number I heard from CALPERS was $141K for every retiree in the system. Even if you believe their numbers, that's not going to be near enough.
Yeah, heckuva job CALPERS.
Some here don't complain when halliburton steals tax money, but the cop, he's your main villain. Strange priorities--maybe if you channeled your anger appropriately, the country wouldn't being going bankrupt.
Feckless: When you ask most cops about their job, they will tell you "it's the best job in the world." It is their identity, not just how they earn a check. I've never heard one say that they were just doing it for the loot. Bottom line: those who do it would do it for less. In most parts of the country, they do it for a lot less right now.
Mish has an interesting (and more surgical) approach to the CA budget crises that doesn't involve slashing 10% across the board.
Mish's Global Economic Trend Analysis: Mish's California Budget Proposal
my eldest out of state to U of A because of the impacts already to UC schools.
At least it's not Cal State Tempe... a.k.a. ASU
badger boy writes:
my eldest out of state to U of A because of the impacts already to UC schools.
At least it's not Cal State Tempe... a.k.a. ASU
As a Long Beach State alum, I fully support your decision.
This is budgetary chicken.
The run over pedestrians are pawns,
who deserve are sympathy, but are
largely not central to the problem,
which is expenditures exceeding
revenue for years.
We're going back home.We never liked it in Bakersfield anyway!
WSF FLEET EMPLOYEE COMPENSATION
http://www.wsdot.wa.gov/NR/rdonlyres/99AB29B2-BFC7-482B-B29A-00A9B79A3D90/0/WSFFLEETEMPLOYEECOMPENSATION.pdf
As directed by deck officers, OSs clean and supply restrooms, gear lockers and
passenger cabins. They solve or refer passenger problems to the Mate, maintain
cleanliness on the decks, and are responsible for WSF security in accordance with WSF
policies.
The straight-time hourly wage rate
for an OS is $19.11
In FY 2006, the total compensation
of the typical OS was:
$42,995 -- 2,159 hours (mean)
State of WashingtonMarine Employees Commission2008Salary SurveyReport
http://www.marineempcom.org/MEC_draft_final_06_13_08_1.pdf
2008 Base Salary Comparison is $22.73 for Ordinary Seaman
My mistake, a guy that points a finger at a car makes $49,000 without OT, but I hear they make a lot of OT, and as you work longer pointing a finger, you make more OT!
scripto,
The order also states "no overtime".
So they're also cops--maybe a peon to you--until there's a problem. Walk in someone's shoes before you ridicule, you might learn a thing or two.
Compensatory Time The allowance of time off at the rate of one and a half time in lieuof paid overtime
Premium Pay DataExtra pay earned by a worker in a specific classification. Includesextra pay for overtime; work on Saturday, Sunday or a holiday; handling of dirtyor hazardous materials, etc
Premium Pay: Overtime: Paid @ 200%
Overtime Paid on Holidays Paid @ 300%
Mel, I'd like to walk in the shoes of a WSF OS for a year or so. Love those ferry rides around the San Juans and to think you get paid for it.
California is so f'd because of cops, firefighters, prison guards, etc, that it's FUBAR.
Why the State Controller Will Pay Full Paychecks
PacoVilla Corrections blog...Paco has your back!: Why the State Controller Will Pay Full Paychecks
The Governor errs in relying on the Supreme Courts decision in the White v. Davis case to support his proposed reduction of State employee paychecks to the federal minimum wage in the absence of a state budget. Here is why.
In non-binding remarks, the Supreme Court cast some doubt on the Controllers impracticability argument; however, it remains a live issue that current Controller John Chiang can pursue, given that the State payroll system has not changed and will not have the capacity to timely adjust and segregate the employees who must be paid full salary from those who could legally be paid minimum wage.
I don't understand the logic of some folks here.
I know of several guys that ran their company out of business and got to walk away with $40 million, plus or minus $5 million... Those are the people we should be pissed at, not the lowly state worker.
So we should accept all the outrageous situations that exist, rather than address any of them individually?
Firefighters, prison guards, corporate raiders, whatever. It all needs to be fixed.
Honolulu revenue shortfall has city cutting spending
honoluluadvertiser.com | Honolulu | The Honolulu Advertiser
Note that house prices have not even started dropping in Honolulu. The median sales price to median household income ratio is about 11x.
The belief that cops do not need to be paid $120k is NOT the same thing as ridiculing cops. There is no need to "walk in their shoes" to believe this is more than needed.
Why don't we just pay them 500k and bump all our US Troops to $250k?
Sheesh.
A counterweight to Schwarzenegger taking no salary is that he runs his office out of LA rather than the state capitol, Sacramento.
I'm reasonably confident that the extra travel costs, etc, involved in that far outweigh the salary his has forsaken.
So.... how long before the state tries to pay people with IOUs? I'm serious. They did this in 1992. Banks were even willing to redeem them for cash for a couple of months.
Re: "save the state as much as $28.5 million a month,"
They aint even close with that attempt! That's about a quarter of the way there per month and that cut of temporary and seasonal workers is chicken feed, and obviously to get the pork, you need to go after the hogs at the top who are worth VERY little!
Come on pople, can't you see it, this is all about asphalt... WTF!
the order also permits Department heads to designate particular employees as essential to public safety and permit them to get full salary, an interesting notion during collective bargaining, let's just dispense with past practice, and negotiations and grant Secretaries arbitrary authority as to how much people get paid
this is the Keystone Kops mentality that permeates the Governor's Office
Anyhow yea, it's prop 13. Not just the property tax limitation, but the requirement of a 2/3 majority to pass a budget. When something over 1/3 of your legislature is modern American Republicans what can you expect but idiocy?
BTW the democrats already are proposing a half tax/half cut hole filling budget. The republicans, including Schwarzenegger, are really only unified in their insistence that there be no tax increases. Schwarzenegger has yet another scheme to borrow more money (against future lottery revenue this time) and kick the ball down the road for another few years, I'm not sure what the other republicans are proposing, if anything.
Is this 'it,' or is this bullshit?
It's all Schwarzenegger's fault. He was elected on a promise of fiscal reform, and then he flipped and became the biggest spender in state history.
mp: "This" is bullshizzle. But, in the larger scheme of things, yeah, man...this is totally "it."
Ca is toast until the next bubble(whatever and whenever than may be) Lets face it, the state is ungovernable with 30% illegal aliens. Add to that an economy topheavy with real estate. Add to the trillion + in lost home equity, all those high income realtors and mortgage brokers kaput.
The highest marginal income tax rate in California is already 10.3%, the highest of any state! The Democrats in the California state assembly and state senate will grab the tax increases, and then spend more money anyway. They've been doing that for years. The Democratic-controlled House in Washington when Reagan was president did the same thing.
Ok popel,
Did anyone see this reference today??
"some are calling a misrepresentation due to tinkering going on with the added unemployment extensions WSJ)"
Re: Furthermore, President Bush signed a bill last month that extends unemployment benefits to as much as 13 weeks for some. In an effort to notify hundreds of thousands of Americans about the extension, the Labor Department discovered many were eligible for initial unemployment claims - not just an extension of benefits.
The Labor Department said some of these people had intervening wages such as a temporary summer job that qualified them to reapply for jobless insurance benefits. As a result, the government said many valid claimants who did not previously know they were eligible applied for new benefits.
Jobless claims surge to 5-year high - Jul. 31, 2008
Huh, I don't get it, HELP!!
Arnold Schwarzenegger ordered that 200,000 state workers receive the federal minimum wage.
John Chiang says he will issue regular paychecks to employees of the (not-so-great) State of California.
Looks like two elected officials will be heading to court to get an injunction allowing them to do what they say they will do.
Of course the State of California will have to pay two sets of lawyers to argue with each other.
Meanwhile, since the State took over trial court funding from the counties a couple years ago, whatever judge they get will be ruling on whether he or she is making the federal minimum wage.
So it looks like every judge in California will have to recuse him or herself from the case.
So no ruling.
FUBAR, baby.
Can he make the pay cuts, albeit deferred, stick?
I mean, are we going to see a bunch of $75K per annum guys getting $300 paychecks until this is sorted out?
Please, enlighten me.
I guess the proper way to put 'it' is: can he get away with deferring their compensation, and for how long?
Some here envy CA state employees, so why don't you quit your present occupation and try to get one of those plush jobs? It must be heavenly to hear your boss threaten you with minimum wage. Also, factor in local coat of living.
can he get away with deferring their compensation, and for how long?
mp, don't try to anticipate a ruling when they haven't even gone to court yet.
FY 2008-09 started on July 1.
The State Constitution requires that the Legislature pass and Governor sign a budget for the FY before the FY begins.
So they're all in violation of the State Constitution.
I'm still trying to figure out how the State can issue checks at all, regardless of amount or purpose.
Re: bullshizzle
Thank you CSC aka Cannabis for toning down the rhetoric, as some children may be here.
"This is short-sighted thinking. Laying off 22,000 workers leaves 200,000 still on the payroll. Think about how much California could save it if laid them all off."
Think of how much California would be better off if they're all laid off permanently....
Some state workers rake in 6-figure OT checks
Im in for a plush State job.
A nurse at a state prison in Monterey County collected $198,000 in overtime last year - bringing her total pay to more than $310,000.
$141,000!!
Overtime earned by correctional Lt. Darvin Diede, who works at the Sierra Conservation Center in Jamestown (Tuolumne County), in addition to $99,000 in regular pay
NOTE: I'm not ridiculing here. These people are valuable. You can still overpay valuable people.
Overtime wouldn't be necessary if they hired the correct number of employees. A case of penny wise, dollar foolish.
We still have checks in the checkbook...so what's the problem?
Back when I pretended to know law, I always looked for enabling words or clauses which give a mechanism for action, i.e, why does a budget have to be balanced?
Mel writes:
Overtime wouldn't be necessary if they hired the correct number of employees. A case of penny wise, dollar foolish.
Absolutely. Although some overtime could be eliminated with a reallocation of resources. LA County has done a bit of this with the addition of civilian Custody Assistants in the jails. But more could be done. Too often, the line cops are neglected while the desk jobs are cushioned nicely. Look at the crappy radios and paper ventilation masks that are still in use in most metropolitan areas.
Additional bodies would also reduce the stress level, I believe. This would be good for the public employees as well as the folks they serve.
You lucky bastards, you get some FREE history:
Part 1:
In the May 2003 Revision to the 2003-04 Governor's Budget, the
cumulative budget shortfall increased to $38.2 billion, due principally to delay
in recognizing revenues from tobacco securitization bonds, legislative refusal
to make cuts as deep as the Governor requested, and higher than expected
caseloads for certain health and social services and correctional programs.
In June 2003, Governor Davis announced that as of October 1, 2003, the
State would no longer offset taxpayers' obligations to pay the Vehicle License
Fee (VLF), a revenue stream dedicated to local governments equal to 2% of the
depreciated market value of vehicles. Local governments include cities,
counties, special districts and redevelopment agencies. Since 1998, the State
reduced the VLF for taxpaying vehicle owners and paid local governments the
difference between the reduced rate and the statutory 2% rate, a practice known
as "backfilling." While the State's offset obligations officially terminated as
of October 1, 2003, the State discontinued backfill payments to local
governments immediately as of June 20, 2003. During the interval between June
and October 2003, a $1.3 billion gap opened up between the State's offset
obligations and the receipts of local governments. Pursuant to a statute passed
in 2003, the $1.6 billion will be paid to local entities in August 2006.
2003 Budget Act.
Governor Davis's 2003-04 Budget was enacted on August 2, 2003 (the
"2003 Budget Act"). The 2003 Budget Act provided for a deficit-financing bond of
approximately $10.7 billion to help cover the cumulated budget deficit. Under
the 2003 Budget Act, General Fund revenues were projected to increase 3.3
percent, including a 4 percent increase in State tax revenues. General Fund
expenditures were estimated to drop 9 percent, from $78.1 billion in 2002-03 to
$71.1 billion in 2003-04, due to the suspension of the VLF backfill payments,
the receipt of $1.9 billion in pension obligation bonds to cover all of the
State's quarterly pension contributions for 2003-04, and a one-time shift of
Medi-Cal accounting from accrual to cash basis ($930 million), among other
things.
The 2003 Budget Act was enacted under the shadow of a recall election.
In February 2003, a campaign to recall Governor Davis began gathering signatures
to support a petition. On July 23, 2003, the California Secretary of State
announced that sufficient signatures had been gathered to support the recall
petition. A special election was scheduled for October 7, 2003.
Subsequent Developments. 2b cont>>>
"time to get rid of prop 13 once and for all and put this state back into solvency"
No, time to sell the whole sorry mess to China for $10 trillion and put the rest of the U.S. back into solvency. The Chinese run very efficient prisons. Guards will work for $6 day. And a thriving market for "recycled" prisoner organs, will mean no overcrowded prisons in Chinafornia.
The terminator should get tough for a change and terminate the illegal immigrants in that state. Without them, the housing boom would have never been so profitable for companies like Richmond American Homes, who's daughter company, American Home Mortgage wrote thousands of loans to ITIN number holders (illegal aliens) and sub-prime borrowers, and immediately sold them off to companies like Countrywide. AHM has been bankrupt for over a year now, but it's like a "who cares" to Richmond American because they made their buck and laughed all the way to the bank. I watched them employ literally hundreds of illegals in my neighborhood alone, so they were 1) breaking the law, 2) ripping people off by artificially inflating prices (10k every month for over 1 year), because 3) THEY were writing mortgages to people who should have never qualified, AND 4) they were writing mortgages to people without SS numbers at at time when Bush was allowing about 1 million illegal across the border each year. It was the scheme of all schemes. Home builders should never be allowed to write mortgages or have any dealings whatsoever with the loan process except for the price paid.
Just walk into an emergency room in Sacramento sometime- easily 95% illegals.
It's the whole truth and nothing but the truth so help me God.
CR is a place where long boring Ubernerd posts about mortgages delight the readers.
CR is missing a real bet here with an UberUber Nerd post about the California state budget and the state politics.
He could post pie charts and graphs for page after page and educate some of the posters here who seem to vent before they engage their brains. Professor Google is free for all to use. The state posts massive amounts of data about the state. Educate yourselves then vent your spleen and post links with some numbers to back up your spleen. It will be good for your soul.
Un-pass prop 13? Sure, if you want to see 20 million people riot. Prop 13 is probably the #2 reason why the state is in the crap hole. 1% of 500,000 is only 417/month. It's cheaper than an Escalade. High prices are affordable. Move that same house over to NY, and the taxes will be 3-4x that. The problem is that state workers in CA make way too much money. Check out the salaries sometime. Many professors easily make over 200k/year. Every state worker gets a sweet pension too.
State Salaries - Sacramento News - Local and Breaking Sacramento News | Sacramento Bee
But! But! How will they be able to afford to go party with Britney?...........
" Mel writes:
Overtime wouldn't be necessary if they hired the correct number of employees. A case of penny wise, dollar foolish.
Mel | 07.31.08 - 8:33 pm | # "
Heh, and what are they doing instead?
Laying off employees.
The terminator should get tough for a change and terminate the illegal immigrants in that state.
Are you talking about the 1492 immigrants or a latter vintage?........
"Are you talking about the 1492 immigrants or a latter vintage?........"
You mean something like the Aryan race law, right?
The level of misinformation here is scary. California does not have a revenue problem. Prop 13 is a stabilizing factor and generating more revenue than ever even with the housing bust. Want a 2008-2009 surplus? Easy, adopt the 2006-2007 budget line for line. California is in deep trouble because it doesn't let its productive citizens (and businesses) keep enough of their own money while giving way too much to the least productive. 9.3% income tax that kicks in at $43,000? 8.25% sales tax on most everything in many cities? The sad part is that the current tax structure is such that there is no reasonable mechanism to get more revenue that won't make things worse in short order.
Normally this is where I suggest breaking the State into 5-8 new States but that would leave at least 3 of them basket cases.
My Dad (i.e. born in '16) use to tell me how the money he saved on Prop. 13 payed for my college education. Then again even even 5 years later tuition at San Jose State was all of $ 500 a year. By 1992 as a member of the Board of Education for San Jose Public Schools I was reminded of how much of a train- wreck 13 was everytime we had one of our parcel measures shot-down (i.e. noting it cost us $ 250,000 of taxpayer money to put it on the ballot). Two-thirds of the vote is such a bitch!
Un-pass prop 13? Sure, if you want to see 20 million people riot. Prop 13 is probably the #2 reason why the state is in the crap hole. 1% of 500,000 is only 417/month. It's cheaper than an Escalade. High prices are affordable.
Proposition 13 is merely cannibalism. It makes young and new homeowners subsidize the old people who are sitting on years of appreciation. The worst is when they get to pass on the tax basis to their kids. So a set of generational leechers who feed of the young. The Howard Jarvis gang is one of the outright plutocratic gangs ever.
Many professors easily make over 200k/year.
Well, that's a competitive market. They can easily move to a private university and get more.
Cops, prison guards and firemen on the other hand are just feeding at the trough. If they try to hire and nobody shows up, then we'll agree that the salary is low. Not when there is a 2 mile line to be a cop.
oh and how the teachers at my middle-school would pump-us with anti-13 propaganda that always pissed my Dad off; probably explains in part why he encouraged me to drop-out of the 10th grade-and he was a Stanford Prof!
"Cops, prison guards and firemen on the other hand are just feeding at the trough."
Tell that to a cop the next time you dial 911.
School bonds need 55% not 2/3rds.
Prop 13 does not discriminate by age or any other factor. I ask any critic of Prop 13 if they would be willing to pay sales tax not on their item purchase prices but whatever highest price someone else pays for similar items.
America became great when it allowed large numbers of immigrants and had relatively high tax rates. Forget the rhetoric, pay as you go works--even if you have to pay 1950 tax rates. Our latino residents are mostly hard working and resourceful--as were their European predecessors. If we blockade the borders, and exempt the rich from fair tax burden, we will have doomed the great experiment.
Remember, Bush is a good beer drinking partner. If he's for something, it's probably wrong.
"Cops, prison guards and firemen on the other hand are just feeding at the trough."
This gets any worse and everything goes apeshit you will be glad to have Cops, prison guards and firemen.
Just walk into an emergency room in Sacramento sometime- easily 95% illegals.
I live here, and this is unadulterated BS. If people want to be xenophobes, fine, but spare us the made up nonsense.
Mel, that's nonsense. The great waves of American immigration happened before the US had an income tax, established in 1913 by the Sixteenth Amendment. The highest-tax rate period corresponds with very low immigration (1925-1960).
Part 2:
On October 7, 2003, California voters ousted Governor Davis and elected
Governor Arnold Schwarzenegger. After his election, Governor Schwarzenegger
restored the VLF offset at an expected
expense of $2.65 billion for 2003-04 and $4.06 billion in 2004-05. At the
Midyear Revision in December 2003, Governor Schwarzenegger proposed reductions
totaling $3.9 billion for fiscal years 2003-04 and 2004-05, including cuts in
Medi-Cal payments and the cancellation of a highway improvement project.
Governor Schwarzenegger, like ex-Governor Davis, planned to close the
2003-04 budget deficit by borrowing, but he was initially stalled by court
challenges. The $1 billion pension bond proposal was disapproved by a superior
court and the State settled with the plaintiffs before judgment was rendered on
appeal. The $10.7 billion deficit bonds were challenged on the grounds that the
California Constitution prohibits the State from borrowing to fund current
obligations without voter approval. In November 2003, Schwarzenegger repackaged
his deficit bond plan as a pair of ballot propositions.
Proposition 57 authorized $15 billion of economic recovery bonds
(ERBs). Proposition 58 featured a number of fiscal constraints: (a) a
prohibition on future use of many types of deficit bonds (notably excluding
short-term borrowing to cover cash shortfalls), (b) creation of a special
reserve fund, and (c) a mandate that the Legislature enact a balanced budget.
Previously, governors were required to propose a balanced budget, but the
Legislature could enact a deficit budget. Half of the Proposition 58 special
reserve funds would be allocated to repayment of the ERBs authorized by
Proposition 57. The ERBs would also be secured by a dedicated 1/4 cent sales
tax; the net sales tax would not increase because Proposition 57 also reduced
the authority of local governments to levy sales taxes by 1/4 cent. Each of
Proposition 57 and 58 would not become effective unless the other also passed.
In March 2004, voters approved both Propositions 57 and 58. Another
ballot initiative aimed at smoothing budgetary gridlock failed, however;
Proposition 56 would have reduced the majority needed to pass budget legislation
from 2/3 to 55% of each house.
In May, 2004, the State Treasury issued the first tranche of ERBs, a
fixed-rate double-barrel security. The true rate of interest on the bonds is
4.025 percent, and it is secured by both 1/4 cent sales tax and the Proposition
58 special reserve fund. The approximately $7.9 billion offering was
oversubscribed. The second tranche of approximately $2.97 billion offered a
variable-rate security. Due to improving economic conditions, the State Treasury
collected a total of approximately $11 billion of the authorized $15 billion
debt, leaving $4 billion in reserve. The proceeds of the bond sale will fund
general obligations, including repayment of $14 billion in short-term revenue
anticipation notes ("RANs") and revenue anticipation warrants ("RAWs") coming
due in June 2004. A RAN is an obligation that is issued and repaid within a
single fiscal year; a RAW is issued and redeemed in different fiscal years.
Yeah right. I ask anyone if they can go to a store and say that they should get their goods at the prices that existed when they moved into the neighbourhood, inflation be damned.(but for a 2% increase).
Try buying grocery at last years price+2%
That is Prop 13. It is a legal theft. By enforcing that the only store-in-town charge some customers less, and at the same time charge others more.
Of course you got a choice. Don't eat. Then you don't have to pay high prices
Oh, there it is:
California Constitution prohibits the State from borrowing to fund current
obligations without voter approval.
Conjure says, "I can't wait to see the next employment report."
Proposed Fiscal Year 2004-05 Budget.
The 2004-05 Governor's Budget, released on January 9, 2004 (the
"2004-05 Governor's Budget"), projected improvements in State revenues as a
result of economic recovery. The 2004-05 Governor's Budget projected General
Fund revenues to grow 2.4 percent to $76.4 billion and expenditures to decline
to $76.1 billion, leaving a reserve of $635 million at the end of 2004-05. A
budget shortfall of over $14 billion and a cumulated deficit of $26 billion were
also projected. To close the gap, the Governor proposed to use $12.3 billion in
proceeds from the ERBs and $14.6 billion in other solutions. As the economy
continued to improve in early 2004, the ERB offering amount was reduced to
approximately $11 billion.
The May 2004 revision of the 2004-05 Governor's Budget (the "2004 May
Revision") updates the 2004-05 Governor's Budget projections by revising
downward projected General Fund revenues by $36 million in 2003-2004, but
revising upward for the fiscal year 2004-05 by $281 million, due principally to
anticipated increases in personal income tax receipts. The State also collected
in 2003-04 about $1.3 billion pursuant to an amnesty program for illegal tax
shelters, which was more than was expected.
The solutions proposed in the 2004 May Revision to close the budget gap
include extracting $500 million from renegotiated Indian gaming compacts,
issuing nearly $1 billion in bonds to cover current pension fund payment
obligations, taking a 75% share of any punitive damages awarded in California
courts, and renegotiating a contract with correctional officers to win $300
million in concessions. Governor Schwarzenegger has signed agreements with five
tribes that would result in a substantial payment to the State in exchange for
expanded gambling rights. The tribes will underwrite a $1 billion bond, which
will be secured by payments the tribes will make to the State, projected to be
in the range of $150 to $250 million annually. A lawsuit seeking to enjoin the new compacts is pending. The pension
bond proposal may not be implemented--when substantially similar bonds were
proposed last year, a superior court enjoined their issuance and the State
settled with the plaintiffs before judgment was rendered on appeal. With the
politically powerful correctional officers union, the Governor is reported to
have reached an agreement in principle that would save the State an estimated
$100 million.
Right there, I got friggn bored...
There yah go, more casinos:
Governor Schwarzenegger has signed agreements with five
tribes that would result in a substantial payment to the State in exchange for
expanded gambling rights.
Done, move on...
El Cliffo writes:
Mel, that's nonsense. The great waves of American immigration happened before the US had an income tax, established in 1913 by the Sixteenth Amendment. The highest-tax rate period corresponds with very low immigration (1925-1960)."
I mentioned the 1950s tax rates for a reason. The immigrant's children kept the patent office busy, sometimes benefits are delayed. I'd gladly go back to Ike's tenure--with tax rates, and troops in Little Rock. Imagine, upholding the Constitution, with troops--ending a foolish war--Earl Warren. Yup, I'd love to party like it's 1959.
Yeah right. I ask anyone if they can go to a store and say that they should get their goods at the prices that existed when they moved into the neighbourhood, inflation be damned.(but for a 2% increase).
That 2% compounds. If you buy in 2008 your property tax rate is 1.00%. If you bought in 1978 your tax rate is 1.81%. There's no debating the truth of Prop 13 when people start with the conclusion that it is unfair and destructive. It's a friggin' tax on a captive segment of the population. Of course it is unfair and destructive. There now with that out of the way is anyone willing to listen?
I better finish the history for the future bloggers:
Entities with the capacity to charge user fees,
providers of transportation, water and sewer services, will face the heaviest
funding cuts, losing 40% of their property tax revenue to the State. The measure
would also replace the 1/4 cent sales tax revenue with a share of property tax
revenue, permanently reduce the VLF to 0.65 percent, and eliminate the State's
VLF backfill obligations. The LAO has criticized the local government proposal
for merely shifting the budget crisis from the State level to the local level,
rather than fixing it. To the extent that local entities are unable to recoup
their losses with higher fees, service, capital investment and maintenance may
suffer. For years after 2006, the proposal has been criticized for limiting the
State's future flexibility to manage revenue shortfalls, and by locking into
place an unwieldy relationship between the State and local governments. It is
not possible to predict whether the Legislature will accept the agreement in
principle or California voters will endorse the initiative.
Constitutional, Legislative and Other Factors.
California voters have approved a series of tax-limiting
initiatives, adding complexity to the revenue-raising process of the State and
local entities. California also has a rule of taxpayer standing (Cal. C.C.P.
526a) that permits any citizen or corporation liable to pay a tax to challenge
the assessment in court to prevent illegal expenditure, waste, or injury,
provided that no bonds for public improvements or public utilities may be
enjoined. With this relatively low bar to taxpayer lawsuits, the California
judiciary has interpreted many of the tax-related initiatives, sometimes with
results unexpected by taxing authorities. No assurances can be given that
California entities will be able to raise taxes to meet future spending
requirements. It is also possible that California entities have not successfully
complied with the complex and ambiguous legislative framework, and may in the
future be required to return revenues previously collected.
***If you want more go here, and I'm sure there is a more up-to-date file for this:>>>
http://www.secinfo.com/dsVsf.z4Sq.htm
Columbia Funds Series Trust, et al. · 485APOS · On 5/6/05
Like throwing a big bucket of water on a hornets nest
or
" I think I'll just whack this thing with a bat and see what happens "
CA is SCREWED. Arnold better grow eyes in the back of his head
Thank GOD I left CA for good!
If you buy in 2008 your property tax rate is 1.00%.If you bought in 1978 your tax rate is 1.81%.
Yeah right. Pull that trick on innumerate folks.
There's no debating the truth of Prop 13 when people start with the conclusion that it is unfair and destructive
Guess what - if it was fair and non-destructive, the tax basis would get adjusted at the same 2% for everyone.
As a follow up, here is a good up to date history file:
APPENDIX C DESCRIPTION OF STATE CONDITIONS
California
In addition to the general financial condition of the State, certain California constitutional amendments, legislative measures, executive orders, civil actions and voter initiatives could adversely affect the ability of issuers of California municipal obligations to pay interest and principal on such obligations. The following information relates specifically to California Intermediate Municipal Bond Fund. This summary does not purport to be a comprehensive description of all relevant facts. Although the Fund has no reason to believe that the information summarized herein is not correct in all material respects, this information has not been independently verified for accuracy or thoroughness by us. Rather, this information has been culled from official statements and prospectuses issued in connection with various securities offerings of the State of California and local agencies in California, available as of the date of this Statement of Additional Information. Further, these estimates and projections should not be construed as statements of fact. They are based upon assumptions which may be affected by numerous factors and there can be no assurance that target levels will be achieved.
General Economic Factors. The economy of the State of California is the largest among the 50 States and is one of the largest in the world, with prominence in the high technology, trade, entertainment, agriculture, manufacturing, tourism, construction and services sectors. The States General Fund depends heavily on revenue sources that are cyclical, notably personal income and sales taxes....... (much more)
http://www.secinfo.com/d14D5a.t26H9.htm
Remember there is no recessio
Earthquakes, fires, and BK--maybe it's no longer America's future--or, maybe it is!
El Cliffo,
After WWII, many high earners in the US actually became ex-pats. Here's a good chart that show's income vs tax distribution:
Comparison of Share of Income to Share of Income Taxes Paid | Perot Charts
"Did the gov cut his pay too?"
Yes, but the Governor cut his pay when he took office, and cut his pay to $0. That is correct. He does not accept payment for his service as Governor to the State of California.
"The fact he takes no salary is no defense, he doesn't need the money."
The last time I checked, the US was not a communist country yet. You get paid for the work you do, not whether you need the money. Arnold is to be commended for sacrificing his salary.
Re: Prop 13 haters.
You are welcome to send additional income of yours to the State.
I will pay what is owed. And, yes, my wife and I bought 20 years ago.
Thank god for prop 13.
Arnold is just following the law -- as he is required to do. Plus, he is limited with term limits and can do the unpopular things to get California on track.
John Chiang is going to have to borrow the money to pay the employees and will probably lose in court.
Of course, none of this would be happening if the legislature would propose a balanced budget. Oh, the horrors of less property tax ... sure gets in the way of the socialist Clownifornia agenda.
Welcome to the soup line fatties.
Speaking of Corzine....how's that recent "investment" you made doing???
I forgot who it was....C? Leh? MER?
Actually doesn't matter does it??
I wonder if arnold stopped driving his hummer?
Ciao
MS
California is going to be the new south.
john writes:
California is going to be the new south.
john
The truth behind that is damn scary.
We do not have the education nor the infrastructure to rebound as quickly as we have from past recessions (due to population growth).
The senate just needs to pass a balanced budget! There is no pot of gold to keep the state running. I really doubt they'd find anyone to loan them $15 Billion anyway...
Got Popcorn?
Neil
There was a time when a burgeoning population was an advantage. Figure out why that is no longer the case and you know exactly what is wrong with California.
I will pay what is owed. And, yes, my wife and I bought 20 years ago.
Thank god for prop 13.
Nice racket you got going on there, sir. Pass a law that you pay less, and others pay more, for the same thing, and enjoy living off the toil of others.
You can then sit back and say "I paid what is owed", and taunt those whom you leech off.
Maybe we should bring back the poll tax with people like you getting a free pass. Leechers like you should then be able to pompously strut claiming "I paid what I owe to vote, and if you don't like what I'm paying, you're welcome to pay more"
I'm not a Californian, but it appears as though Prop. 13 can't be blamed for literally all the problems. There's plenty of blame to go around, as this article in the Sacramento Bee describes:
404 - Not Found - sacbee.com
It makes the budget mess here in Michigan look manageable.
bummer writes:
[about; Thank god for prop 13.]
Nice racket you got going on there, sir. Pass a law that you pay less, and others pay more, for the same thing, and enjoy living off the toil of others.
Where do you come up with these ideas? Everybody pays the same; 1% of purchase price with increases capped at 2% per year.
What's eating you is your inability to be the one who decides what long time property owners should pay. You are exactly why so many of us say thank god for Prop 13. 'Scourse iffen you don't like it you can always change it.
Out of curiosity how would you change it? Give the State, and municipalities the power to charge whatever they wanted? Charge the smartest buyer the same as the stupidest?
Me? I'd charge half a Georgist tax and apply a density intensity multiplier.
In 1850 California became a state.
The State had no electricity.
The State had no money
Almost everyone spoke Spanish.
There were gun fights in the streets.
So basically, it was just like California today except the women had real breasts and men didn't hold hands.
What's eating you is your inability to be the one who decides what long time property owners should pay. You are exactly why so many of us say thank god for Prop 13. 'Scourse iffen you don't like it you can always change it.
Yeah right. Charge a tax based on when you were born, and then claim that its for 'long term holders'.
This is basically geezers sucking the blood of the young.
Out of curiosity how would you change it? Give the State, and municipalities the power to charge whatever they wanted? Charge the smartest buyer the same as the stupidest?
Make tax basis year the same for everyone? Are you against that? Because, even though your tax will not rise, your leeching will get crimped? Because I can make up the shortfall in services with the reduction in my taxes; you will pay from your pocket for the same?
What leechers like you want to obscure is the fact that you consume the same govt services that everyone else does.
Yeah right. Charge a tax based on when you were born, and then claim that its for 'long term holders'.
This is basically geezers sucking the blood of the young.
That 's nonsense. The property tax you pay has nothing to do with your age.
That 's nonsense. The property tax you pay has nothing to do with your age
And what is that wondrous mechanism by which I could be born in 1945, so that I could buy something in 1970, about age 25? Assume I'm 30 now?
Pray tell.
And that's leaving aside the debts you geezers piled up in the last 30 years, after Prop 13. You lived off it, and refused to pay for it.
What debts did I pile up ?
Ah, no more talk about when you were born?
The debts you geezers piled up when your govt piled up in you geezers lifetime because you refused to live within your means, nor raise revenue to meet expenses because of Prop 13.
You're projecting. I don't have any debts.
Oh yeah, I forgot. You can vote for spending now, and stick the bill on the next generation. Sure you don't have any debt. My mistake.
I don't vote for or against spending. The state legislature does that.
Jim,
Don't bother. "Bummer" is just trying to enforce the "life is fair and equitable" clause of the contract we all sign at birth. Wish him luck and move on to more productive efforts.
There's an old saying -- Life is unfair, and then you die.
"The worst is when they get to pass on the tax basis to their kids."
Actually that is the second worst, the worst is that corporation owned property never resets as people are smart enough to buy the corporation rather than the property.
Holding company ownership is actually a common arrangement for commercial and rental properties even in states that don't have insane property tax laws, but it is especially lucrative in California.
Bummer/EngineerJIm:
This things tend to turn quickly into "who is the stupider generation" rants. The Boomers got the shaft, too, in paying for a retirement for their parents, which in all likely hood they will not receive fully. Their parents never even fully paid for WWII if you want to go that far.
On the flipside is that any "keep the widows in their homes" laws/programs like Prop. 13 artificially subsides the established at the expense of the newcomers. Yes "everyone" has the same caps but the net effect is to discourage long timers from giving up cheaply taxed homes. The cheap taxes allow elderly non-working couples or singles to compete directly with young workers for the same housing.
Don't bother. "Bummer" is just trying to enforce the "life is fair and equitable" clause of the contract we all sign at birth. Wish him luck and move on to more productive efforts.
Oh yes. Call a deliberately engineered geezer racket as "life is unfair"
Life is unfair - health, birth, parents talents. Not because geezers loot you.
You got raped? Tough luck. Life's unfair.
You are a slave? Tough luck. Life's unfair.
You cant vote? Tough luck. Life's unfair.
What else can you expect from leechers who suck the blood of their young?
From the Sacramento Landing blog
"The union representing the Stockton Police Department's rank and file has filed a claim against the city, saying a 9.5 percent raise budgeted by the city is not enough under the terms of a 2005 agreement.
...
The pay increase the police union says it is owed could trouble a city budget already beleaguered by the collapse of the housing market and the inability of flattening sales and property tax revenue to offset rising costs."
This is why the state's in trouble
"...California is in especially deep trouble because of rapidly falling house prices and a weakening economy."
Er, California is facing a $15 Billion deficit in large part because they refuse to control spending:
State outlays were up 44% over the past five years, meaning that California is spending at a faster pace than even Congress.
Life doesn't have to be fair. But taxes should be. Prop 13 is a tax on the young. Baby boomers for decades spent money they didn't have (welfare, entitlements, etc). They hope their kids and grandkids would pick up the tab while they kept their low rate. Property tax have to be the same for everybody.
Fair? What?
Is it fair when my multiple-scleriosis retired 95 year old grandma cannot afford to stay in her home of 50+ years (grandpa built it) near her grandkids, just because the most recent arrival wants to completely overpay well beyond their own income for the house next door?
She paid more than her share of property taxes to build up all the infrastructure that the recent newbies want to buy into.
Prop 13 puts a sane increase-cap on the propery AT THE TIME YOU BUY IT based on the PRICE YOU CHOOSE TO PAY AT THAT TIME.
Frankly, us Californians think you guys don't have a tight enough leash on your governments ability to tax the shit out of you without any viable way to get representation (or even a callback from
your representative...because you are
just one of millions...) Representative
government is NOT SCALING, so Prop 13 protects us...a little. It's just a per-year cap, so it's not like it doesn't catch up.
Think of Prop 13 as a dampening function working against house-price-to-income insanity and generally rampant inflation...it buffers folks from stupidity that's beyond their control.
Now don't you guys wish you had it?
There is no way in hell Californians will undo it...
Jesus, there are two things you can pretty much expect the average nimrod to believe:
1) Other people are overpaid
2) Nimrod himself is overtaxed, often because others are overpaid.
I thought there were less nimrods on this blog than there seem to be. I really am having fun picturing you day-traders taking your manicured fingers off the keyboard and taking a day for a turn at prison guard. You wouldn't make it until break.
You guys - again, who I thought weren't nimrods - have managed to blame purportedly high state salaries on the high cost of living, and immediately claim that you don't have enough free cash because you are "overtaxed". Funny, not even counting the illegal aliens (another ugly underlying thread) I would have to say since you overtaxed people so vastly outnumber state employees this is not exactly clear thinking. Y'know, the majority drives the prices, not the 1/2 dozen cops that happen to live in the area.
And maybe 200K is overpaying a teacher, you're talking about California, for chrissakes. Lots of people who wouldn't come out of the house for that.
First you should have her in your own home - you can seriously have her living by herself?
Bullhocky. The feds - that is, everybody - paid at least 80% of the most important property-value raiser, the interstates. And drove another good chunk of money into CA for "defense" projects that eventually seeded Silicone Valley and a LOT of aerospace. And due to that, for the past generation or so many Californians have been cashing out of little crummy places with enough dough to buy their own small island. So excuse my lack of tears... if she lived in NJ her place would be worth squat and the taxes would be commensurate.
a different chris,
Yes, in the 1950's the DOD located defense plants in California (in order to geographically disperse things in case of a Nuclear attack). And yes, the original work in integrated circuits was funded by the DOD. And yes, the internet was originally funded by the DOD (ARPANET). And yes, Bill Gates and Steve Jobs had absolutely nothing to do with any of these developments.
But that's all history and has nothing to do with Prop 13.
She paid more than her share of property taxes to build up all the infrastructure that the recent newbies want to buy into.
This is boiler-plate from the Howard Jarvis looters association.
If her taxes paid for infrastructure, then she gets that back in rising property values. That's econ 101.
Prop 13 puts a sane increase-cap on the propery AT THE TIME YOU BUY IT based on the PRICE YOU CHOOSE TO PAY AT THAT TIME.
Sure. That's why it is called the old leeching of the young. What's so sacred about fixing taxes when you buy it? Why not fix it based on the when the house falls under a full solar eclipse? Fixing it based on purchase date is a very clever trick to leech of the young.
How about if your govt services were capped at 1970-levels+2%? We'll get 1970 ambulances and firetrucks to your place.
The truth behind this Prop 13 looters is that they want OTHERS to pay MORE.
Very hard to convince a leecher that he's a leech. Upton Sinclair squared
Just walk into an emergency room in Sacramento sometime- easily 95% illegals.
I live here, and this is unadulterated BS. If people want to be xenophobes, fine, but spare us the made up nonsense.
Slight hyperbole on DK's part but not by much here in SoCal.
The emergency room anecdotes alone i can verify down here...
We've had "the trouble with tribbles" it seems ever since, well, ever since the beginning of the housing bubble (around 2000). It's like one day the wife and i looked up and it was "geejuz, where did all these Mexicans come from!?"
Fuel to the housing bubbles fire? Critical mass to the building/speculation frenzy? Burdens to the state budget? Health, Education, Penal, Welfare? Oh hell yes.
Some people are STILL laboring under fuzzy warm ellis island notions of tolerance and magnanimity. Uh uh.
Mexicans seem to have an absurd amount of racial/cultural/ pride for folks who've bailed on a failed state/culture by the millions only to attempt it's reconstruction in the u.s.
Personally, I think of Rome more than i do Ellis Island.
I agree with DK, allow the previous will of California voters to go thru. Deny services to illegals and start arresting their employers while you're at it.