Monday, June 04, 2012

California Governor Moonbeam Takes Charge Of Horrible Situation

California's fiscal and governance crisis careens from bad to worse. The latest blow: a 70% increase in the state's projected budget deficit in Gov. Jerry Brown's revised budget, to $16 billion from $9 billion. Meanwhile, S&P warns of a downgrade to the state's bond rating, already the lowest of any state, and the latest CEO survey ranks California's business climate dead last.

Caught in the symbiotic financial embrace of special interests—teacher and other public-employee unions, trial lawyers and environmental extremists—Mr. Brown and the state legislature repeatedly nibble around the edges of the budget broken by costly, ineffective programs, financed by an uncompetitive, volatile tax system...

Mr. Brown's original bad idea, raising the state's top marginal tax rate of 10.3% to 12.3% for five years, is now even worse: a highest-in-the-nation 13.3% on individuals and small businesses for seven years retroactive to Jan. 1, 2012, and a small increase in the sales tax for next year.

While the governor proposes cuts in social services, higher education and the courts, total spending nevertheless goes up to $91.4 billion in fiscal year 2013 from $86.5 billion in 2012, a 6% increase. Spending on K-12 education alone rises beyond constitutional requirements to $38.5 billion from $34 billion, a 13% increase.


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