Join us live on Tuesday, 10 a.m. PDT, on CRNtalk.com, CRN1, for another lively edition of Gadfly Radio!
Troy Senik, has a dynamite article in the Spring issue of City Journal: “The Worst Union in America: How the California Teachers Association betrayed the schools and crippled the state.” Really? The worst? Worse than the SEIU? Worse than the NEA? Yes, yes, a thousand times, yes. But we’ll have Senik make his case, which will be excerpted in the Los Angeles Times in the next few days. And CalWatchDog.com editor-in-chief Brian Calle opines in his latest column at the Orange County Register.
We’ll also discuss Governor Jerry Brown’s May budget revision, which was released officially Monday but previewed over the weekend. Anyone not paying attention would have been shocked to learn that California’s current budget deficit is several billion dollars higher than Brown’s office reported in January—$16 billion, as opposed to around $9 billion at the beginning of the year. Anyone else wouldn’t have been the least bit surprised.
“This means we will have to go much farther and make cuts far greater than I asked for at the beginning of the year,” Brown said. “But we can’t fill this hole with cuts alone without doing severe damage to our schools. That’s why I’m bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety.”
Brown delivered the “news” on YouTube, where he doubled down on his pitch to voters to approve a tax increase in November.
“Please increase taxes on the most affluent,” Brown urged. “It’s reasonable and fair.”
”By the time I leave here, California’s budget will be balanced and the state will be back on road to prosperity,” Brown added. ”I am a buoyant optimist.”
It’s phony-baloney. All of it.
Katy Grimes at CalWatchDog: “Jerry Brown twists out ‘pretzel palace’ budget,” which reports legislative Republicans’ reaction to the governor’s news.
“Tax revenue is up two years in a row, but not enough to satisfy the spending demands of Sacramento Democrats,” retorted Assembly Republicans. “It will be interesting to see if the liberal majority in the Legislature accept the Governor’s cuts, or reject them as they did earlier this year when they blocked the Governor’s health and welfare reforms and grew spending by $1 billion,” wrote Assembly Minority leader Connie Conway, R-Visalia, and Assemblyman Jim Nielsen, R-Biggs.
Tom Del Beccaro, chairman of the California Republican Party: “Amazingly, a year and a half into Brown’s Governorship and we still hear nothing of the unemployed. 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.”
Calle at CalWatchDog: “If nothing else, the budget situation points to the power teachers’ unions have within the Brown administration and California government in general. This is particularly true of the juggernaut CTA, which was recently dubbed by City Journal as the ‘Worst union in America’ because of the lopsided influence it has on public policy in California. Education spending is perhaps the Holy Grail of politics in the Golden State. So it is no surprise Brown’s administration is using education as a justification for increasing taxes. Improving education is popular with voters. But money is not the major problem facing California’s education. Instead, the state is in need of structural reform.”
Robert Wenzel at Economic Policy Journal: “California is fast becoming the new Greece.” And Brown’s proposal to reduce the work week of many state workers—a move that would need to be bargained with the unions because the Democratic-controlled Legislature isn’t about to impose that change unilaterally—would be equivalent to a 5 percent pay cut.
Bill McGurn at the Wall Street Journal (subscription required): “Jerry Brown vs. Chris Christie.”
Hard economic times bring their own lessons. Though few have been spared the ravages of the last recession and the sluggish recovery, those in states where taxes are light, government lives within its means, and the climate is friendly to investment have learned the value of the arrangement they have. They are not likely to give it up.
Meanwhile, leaders in some struggling states have taken notice. They know the road to fiscal hell is paved with progressive intentions. The question regarding the sensible ones is whether they have the will and wherewithal to impose the reforms they know their states need on the interest groups whose political and economic clout is so closely tied with the public purse.
Mr. Brown’s remarks Monday suggest the answer to this question is no.
McGurn’s column follows on the Journal‘s editorial fusillade Monday:
Among the biggest surprises is a 21.5% or nearly $2 billion decline in personal income tax payments from what Governor Jerry Brown had anticipated. This reinforces the point that when states rely too heavily on the top 1% of taxpayers to pay the bills, fiscal policy is a roller coaster ride.
California is suffering this tax drought even as most other states enjoy a revenue rebound. State tax collections were up nationally by 8.9% last year, according to the Census Bureau, and this year revenues are up by double digits in many states. The state comptroller reports that Texas is enjoying 10.9% growth in its sales taxes (it has no income tax), while California can’t seem to keep up despite one of the highest tax rates in the land.
This would seem to suggest that California should try cutting tax rates to keep more people and business in the state, but Sacramento is intent on raising them again. Governor Brown and the public-employee unions are sponsoring a ballot initiative in November to raise the state sales tax by a quarter point to 7.5% and to raise the top marginal income-tax rate to 13.3% from 10.3%. This will make the state even more reliant on the fickle revenue streams provided by the rich.
The Orange County Register: “More bad news ahead of Brown’s revised budget”:
This is a man for all intents and purposes bought by, and in the pocket of, government employee unions. Likewise, so is the Democratic-controlled Assembly and state Senate, which all but precludes a legislative fix.
Sadly, California deserves better than it has gotten for more than a decade in Sacramento. An unwillingness to properly adjust government spending and an insistence on draining even more billions from the private sector is symptomatic of the runaway fiscal catastrophe under way in Europe.