Monday, May 14, 2012
It’s not sunshine and rainbows in California- financial Armageddon awaits
Overly optimistic tax receipts combined with higher state expenditures are contributing factors for the Golden State’s financial Armageddon. Governor Jerry Brown (D), admitted on YouTube over the weekend that the state is headed into troubled waters and the waterfall is the $16 billion deficit. Overestimating potential revenues in California has become a common practice used to cook the books, however, all good things must come to an end and Governor Brown acknowledged the party is over. "There has to be a balance and a day of reckoning," Brown said. "This is the day of reckoning... We have to take our medicine." The reconfigured Brown budget plan offers a variety of cuts in state programs, but tethered the cuts to proposed tax increases that the taxpayers will vote on in November. It’s worth pointing out that California is the highest taxed state in the nation and businesses as well as productive taxpayers are fleeing the oppressive tax system. Need further proof? Legislators in Sacramento were banking on the Facebook IPO to bridge the deficit gap. But it was reported last week that Facebook co-founder, Eduardo Saverin, worth an estimated $4 billion is renouncing his American citizenship. "Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time," according to New York magazine. Saverin’s move does require him to pay Uncle Sam an "exit tax," but he will save hundreds of millions dollars. Advertisement Keeping this in mind Governor Brown reverted to a typical guilt mechanism and said without tax hikes California K-12 schools and colleges will suffer the most. "What will change if we don't get the taxes? Schools will suffer." The heavily Democratic state public service unions remain a huge obstacle for lawmakers. "It's a pretzel palace of incredible complexity, and that's why it isn't straightforward how you balance the budget,"Brown said. However, many Republicans said the state’s problems are tied to chasing away the taxpayers and leaving lower income earners to foot the bill for the massive social welfare programs. "We're still recovering from the worst recession since the 1930s," Brown explained in his YouTube video. "Tax receipts are coming in lower than expected, and the federal government and the courts have blocked us from making billions in necessary budget reductions. This means that we will have to go much further and make cuts far greater than I asked for at the beginning of the year." Other programs targeted by Brown include, hospital and nursing homes, in-home care, reducing state employees pay, Cal Grant college funds, state park lifeguards as well as some firefighters. GOP Chair Tom Del Beccaro said the leadership in Sacramento continues to dodge the elephant in the room- jobs. "Amazingly, a year and a half into Brown's governorship and we still hear nothing of the unemployed," Del Beccaro said. "California will continue to face chronic budget deficits because so many people remain out of work; the conversation about revenues should always begin with how to restore jobs. So many people are wondering when Brown will offer plans to make California competitive, so that business will return to this state and bring jobs with them." For more stories;http://www.examiner.com/homeland-security-in-national/kimberly-dvorak © Copyright 2012 Kimberly Dvorak All Rights Reserved.