If it’s May then you know it’s time for the annual California budget revision and yesterday Gov. Schwarzenegger unveiled two proposals for the current fiscal year.The budget revisions come amidst the setting a $21 billion state overspending problem.
The last budget agreement that passed in February intended to address the state’s then $40 billion overspending problem. That budget raised the state’s income, sales, and car taxes by approximately $16 billion and set the stage for next week’s special election in which Californian’s will decide if they want to double down and add yet another $16 billion in new taxes, borrow from the lottery, and divert money from various dedicated funds. For ATR’s analysis of the May 19 special election ballot measures, Click Here.
The Governor’s plans entail billions of dollars in long overdue spending cuts that are certain to be met with staunch resistence by the state’s powerful unions and other spending interests.For details on the two revised budget plans, click here and here.
The Propositions on next week’s ballot that affect the current budget are 1C-E. If those pass the state will need to find a little over $15 billion in cuts. If they fail, as appears to be the likely outcome, the state will need to find approximately $21 billion in cuts. While Schwarzenegger has socked it to taxpayers already this year at one of the worst times to do so, and while his revised budget plans are far from perfect, ATR commends the Governor for not including further tax hikes in his two proposals. Taking a very positive step in the right direction, the Governor’s plans also call for long overdue divestiture of various state assets.
If higher taxes were the answer then California, home to the highest sales and income tax rates in the country, would be in perfect shape. Reality shows otherwise. Based on the latest polls, it looks as though Californians are going to send a message to lawmakers next week that raising the state’s draconian tax burden further will not be tolerated.
The problem in California is overspending and until that is brought under control, the state will continue to be a fiscal trainwreck. The state has simply been living beyond its means for far too long. Last year California spent $33 billion more than it brought in. Golden State spending has risen 300% since 1991. As Reason Foundation Policy Analyst Adam Summers pointed out in a recent study, had the state limited spending to the rate of population growth and inflation, the state would be sitting on a $15 billion surplus rather than staring down the barrel of a $21 billion deficit.
Taxpayers all over the country should have their eyes what happens in California, as Golden State tax and spenders are attempting to put all American taxpayers on the hook for the state’s profligate ways.
ATR urges all Californians to get to the polls next Tuesday, reject Props 1A-F, and send a loud and clear message to the politicians in Sacramento that the taxpayer well has run dry and the state needs to get its fiscal house in order once and for all.