California continues to deal with a $26.6 Billion budget deficit. How are they doing with the tough decisions? Initially, the plan was to reduce spending by $12.8 Billion in return for a continuation of tax increases, raising $14 Billion. Some of the cuts were to have been in revisions to pension systems for public employees. Is this what they did? No. Instead they decided to use the age-old approach of smoke and mirrors. They decided to raise a significant portion of the tax revenues from thin air. This includes $4 Billion in “anticipated revenues” from mystery sources. What happens when the revenue does not come in? If this happens, it will trigger $2.5 Billion in spending cuts.
How in the world did California get in such a bind? Over-spending, in a word. The Wall Street Journal, in a curious article sought to discourage high school seniors from trying to get into Harvard when being a California prison guard provides more promise for the future. Alysia Finley pointed out that there was no cost to go to school to become a prison guard as opposed to $200,000 to attend Harvard. Further, the guard gets great benefits and a salary, likely larger than the Harvard grad. Well that cannot represent the income over the long haul, can it? Apparently so. After ten years the Harvard grad can expect an income of $125,000. With salary, overtime and bonuses, the guard is in the same position. And this does not even consider the guard’s retirement package. At 55 years old, he can retire on 85% of his last year’s income for the rest of his life plus medical benefits. I can think of numbers of reasons not to go to Harvard, but this is compelling. Boy, and I went to law school! Now they tell me. Well is it any wonder why California is in the debt it is?
As good as that sounds, I would rather have a job where I could enjoy the elements. How about being a lifeguard? Wow. Sounds great. Sun, beach, girls.
No, not good. I went through college and lived in pretty rustic surroundings. Not again. But wait. If I were a lifeguard in Newport Beach, California, I could make more than $200,000. What a gig! There must be a hitch. No, and this does not even consider their benefits and pension.
These egregious examples start to show the problem and we have not even discussed the enormous pension benefits for the rank and file public employee which has resulted in an enormous unfunded liability for the citizens of California.
Well it is certain that with these salaries and benefits, we won’t see any defection to another state, say Texas. Actually, California should encourage these public employees to go anywhere, and soon. In fact, it is the private jobs that are leaving. These are the jobs that are paying for the public employees. Where are they going? To Texas, and in droves. As we have discussed in an earlier paper, California has been designated as the worst state for job and business growth. Texas is the other end of the scale. In the last three years, Texas has gained 165,000 jobs while California has lost 1,200,000. Why can’t California compete? California has never seen a tax increase it doesn’t like. Texas has the best tax rates in the country. And this does not even consider the draconian regulatory burdens that businesses must endure. Where would you want to be?
So it is not just excessive spending for public employees that is driving California under. It is the climate for business and workers as well.
What can California do? Well one approach won’t work. The state has determined that it does not have sufficient funds to build the prisons California needs to house prisoners. Oh well, can’t pay for everything. Crowding the jails is a solution. Well it doesn’t stop here. The Supreme Court ruled that over-crowding in jails is not acceptable and California would have to release tens of thousands of prisoners. What does this say about California? The state cannot pay to house criminals. It must turn them loose in society.
When you connect the dots, there may be another perspective on California’s incapacity to keep the bad guys away from the rest of us. It seems to have an uncanny relationship to many other issues that California faces. Is the education system in California incapable of teaching children what they will need to live a productive life? Are the failures destined to be part of the criminal element? Will budget deficits exacerbate the problem? Have the public unions, which have drained the resources from the people, also convinced the people that they are entitled to be supported by the state? Has the failure of the federal and state governments’ to deal effectively with illegal immigration contributed to our criminal population as well as our deficits? Has the presence of liberal judges who impose bizarre rulings on our people contributed to the costs society incurs and the growth of the criminal class? Has the failed policy of taxing and regulating businesses out of California, taking jobs with them, contributing to the increase in crime in California? Is everything related?
Is the glint of the Golden State gone? Is it a state that has failed and lost its right to govern the people? What is ahead? Just as we are seeing in Greece and others of the United States, laying people off is becoming a trend. It is not over. In Costa Mesa, the government fired one-half of its work force. It won’t be the last.
The public unions have bought politicians from small towns to Sacramento. They have established incredible power and they do not intend to give it up. Watch what they do to maintain power. As bad as they are and as much damage as they have caused, the unions alone could not have brought California to its knees. It is a complex array of mistakes and purposeful acts that have gotten us where we are. It will take more than union concessions to solve the problems we see, though that is a good start. First, the people must understand our current state and appreciate how dire it is and how difficult it will be to right itself. Until we see where we are, we will be incapable knowing where we are going.
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