Month: July 2011

Is There A Deal That Could Be Had In Sacramento Between Jerry Brown and the Republicans?

As the California budget debate drags on in Sacramento in the spirit of Ronald Reagan, which a few of us here at Mad As Hell And… left college to work for in his run for the Presidency in 1980, maybe it is time for the Wacko Liberals and the Republicans to cut a deal, but a deal that does not stick it to the People of California in what is still the worst recession in California since World War II.

 

 

It’s time to end the budget nonsense in Sacramento so the state of California can focus on getting back to work because Jerry Brown and the Republicans continuing to argue about what in the end could be small amounts of money needs to be brought to an end.

Michael Gardiner of the San Diego Union-Tribune put out a news story a couple of weeks ago for HealtyCal.org that breaks down the taxes that Jerry Brown is trying to extend for 5 more years and here are those taxes and how much they would raise from the People of California:

How the tax package affects you

“Which taxes are at stake?

Sales tax: The state share was increased 1 percent, to 6 percent. It would raise $4.5 billion in 2011-12.

Income tax: There is a 0.25 surcharge. It would raise $2.07 billion in 2011-12.

Vehicle license fees: An increase of 0.65 percent to a 1.15 percent rate based on vehicle value. It would raise $1.38 billion in 2011-12.

Dependent exemption: A $99 credit, down from the $309 allowed two years ago. It would raise $1.25 billion in 2011-12.”

Now that you know what temporary taxes that Jerry Brown and the Democrats would like to extend for 5  more years (which is outrageous on its face) the next important number to know is what is the REAL budget deficit that the state is now facing after the Democrats cut about $5 Billion Dollars in state spending last week (No, the Democrats did not cut $14 Billion Dollars, but really only about $5 Billion Dollars after removing the fund transfers and other Bogus cuts).

Those $5 Billion Dollars in cuts by the Democrats leaves about $7 to $8 Billion Dollars left that needs to be cut from California government spending for the 2011 fiscal year which runs from July 1, 2010, to June 30, 2011.

Looking over the above taxes that Jerry Brown would like to extend for 5 years and keeping in mind the things that Brown has already agreed to with the Republicans to reform pensions and a few other items we could see the outline of a deal being something like this:

Jerry Brown and the Democrats

1.  Cut $4.5 Billion more Dollars from the 2011 fiscal year budget

2.  Follow through on the already agreed to pension reform changes

3.  Install a strict spending cap with 2011 fiscal year as baseline with spending growing no faster than inflation and population growth

Republicans

1.  Agree to one-year extension of sales taxes, $4.5 Billion Dollars

2.  Income taxes, vehicle license fees, dependent exemptions all expire and revert back to old tax rates/numbers

3.  That would roughly be $4.5 Billion Dollars by both sides after the already agreed to cuts that Jerry Brown had already earmarked for this 2011 fiscal year budget.

4.  Hard Spending Cap:  The above would set the baseline General Fund budget for the state of California around $80 Billion Dollars and a Total State Funds budget of around $122 Billion Dollars for the fiscal year 2011 which in future years could go up no faster than inflation and population growth.  The great thing about a hard spending cap is that it would send a very strong signal to business both in the state and ones that were thinking about relocating to California that the government was committed to controlling government spending into the future.

If the Democrats are not willing to make the above deal then let them get the signatures to put the tax extensions on the ballot for a November vote and let the public sector unions spend tens of Millions of Dollars of their union members money and the People of California will vote the tax extensions down.  (That will just be tens of Millions of Dollars of money that will not be spent by public sector unions in the 2012 election).  That would mean the Democrats in Sacramento would have to cut the entire $8 Billion Plus Dollars to balance the budget and if they want to take a chance with a vote then we say have at it!

Yes, some Republicans will howl about the Republicans caving in to Jerry Brown and the Democrats but in exchange for 1 year of $4.5 Billion Dollars in taxes, it would be well worth it to get some pension reform and a hard spending cap tied to inflation and population growth.

Would Jerry Brown and the Democrats take such a deal if offered by the Republicans?

 

 

Well, we would bet that Jerry Brown would take the above deal because he knows what a dire situation is in going forward in the coming years as more state workers begin to retire, but the Democrats in the California legislature would have to be dragged to such a deal because they are owned LOCK, STOCK AND BARREL by the public sector unions and the unions would take down the state of California and destroy its People before they would give up the right of their union members to sit around on their asses for 30+ years in retirement collecting $70K plus annual pensions.

Yes, there is a deal to be had in Sacramento but the deal that would actually benefit the People of California is one that mostly likely cannot be done without strong leadership from Jerry Brown.