Author: Kevin Abrams
One of the most pressing issues in California politics today is a fiscal one: the state is now facing a budget deficit upwards of $40 billion, and one which grows by about $33 million every day.
California is running out of money fast, and this situation is being exacerbated by a political stalemate involving both legislatures and Governor Schwarzenegger. This impasse results partly from the California legislature’s setup: because of Propostion 13, dating back to 1978, a 2/3 supermajority is required to pass any budget increase of 5% or more. Therefore, despite Democratic control of both legislative bodies, some Republican votes are still needed if action is to be taken.
Politics professor Regina Freer said this political paralysis stems from a refusal to cooperate from both parties: “If you are a Republican you have likely signed a pledge that you will not raise taxes […] [On the other hand] Democrats believe they’ve compromised enough by cutting spending to important social programs […] Someone is going to have to blink.” Additionally, Governor Schwarzenegger’s attempted compromise, which involved both tax increases and environmental and labor deregulations, was mutually opposed rather than embraced by both parties.
In lieu of a new budget passage, Governor Schwarzenegger has taken some drastic, if not unorthodox measures in an attempt to save money. In December of 2008, he announced his plan to enact mandatory furloughs, a 2-day unpaid leave of absence each month for all state workers. Additionally, the state government has plans to start handing out I.O.U.’s in place of tax refunds, a phenomenon some are referring to as “Arnoldbucks.” The governor has also halted funding for over 2,000 public works projects across the state.
Despite these sacrifices, many still believe this problem won’t be solved until a new budget is passed. Economics professor Robert Moore explains: “The budget stalemate in California has definitely made the current recession in California quite a bit worse than it otherwise would be.” Moore said, “I currently serve on a parent academic advisory council for our local public high school, and the havoc the budget stalemate is causing for these well-meaning school administrators and teachers is simply inexcusable.”
So, how did this budget shortfall come about? Economics professor Sita Slavov believes it is the result of poor fiscal responsibility. “States are restricted in their ability to borrow money to cover budget shortfalls […] Ideally, states should be saving when times are good […] California has failed to do this adequately,” Slavov said. “Califor nia relies more heavily on income taxes compared to other states […] Revenue from a progressive income tax will vary a great deal over the business cycle. When there’s a recession, incomes fall, and income tax revenue takes a hit.”
Regardless of how this happened, the situation may have serious consequences for California’s future. “It’s likely that as the pain of the stalemate begins to take hold on residents, the public will get mobilized […] We might see a recall move foment,” Freer said. “I personally do not see how we can manage our fiscal crisis without some tax increase. The longer we wait, the bigger that increase will have to be to have any impact.”
The new fiscal year will begin on July 1.
This article has been archived, for more requests please contact us via the support system.
