California Voters Respond To Deficit
California’s in a major crunch right now, as property taxes — a windfall the last several years — have turned into a drought:
California Governor Arnold Schwarzenegger said his state’s finances have deteriorated so rapidly that a budget he signed just six weeks ago has already fallen into a $11.2 billion deficit and taxes must be raised.
Schwarzenegger ordered lawmakers into a special session to consider ways to close the gap. He proposed increasing the sales tax by 1.5 percentage points for three years as well as raising oil severance and alcoholic beverage taxes and motor vehicle fees. In all, taxes and fees would increase $4.7 billion while spending is cut $4.5 billion.
“We have a dramatic situation here and it will take dramatic solutions to solve it,” Schwarzenegger, a 61-year-old Republican, told reporters in Sacramento. “We must stop the bleeding.”
California has been hard hit by the housing-market rout and the worst financial crisis on Wall Street since the Great Depression. The state leads the nation in foreclosures and its unemployment rate reached 7.7 percent last month, the fourth highest in the country. Double-digit declines in stock markets have sapped tax revenue from income and capital gains.
So how have the voters responded? By taxing and spending and borrowing and spending.
First, taxing and spending:
Measure R, the half-cent sales tax for transportation projects, was still being narrowly approved after counting and adding 159,849 ballots Friday to the results of Tuesday’s election.
Initial results of Tuesday’s election showed Measure R — which requires a two-thirds majority vote for approval — narrowly passing with 67.41 percent of the vote. The updated tally released Friday shows the measure passing with 67.22 percent of the vote.
Measure R would generate an estimated $40 billion over the next 30 years to fund transportation and transit projects across the county.
Always fun to see people vote 30 years of additional taxation on themselves. But at least by voting to tax themselves, they’re being honest about it…
…Not like statewide voters, who have decided instead to tax their children and grandkids:
Before the final ballots had even been tallied, high-speed rail advocates in California were getting down to work, laying the foundation for a bullet train that will link San Francisco and Los Angeles as early as 2020.
Voters on Tuesday approved the Safe, Reliable High-Speed Passenger Train Bond Act, more commonly known as Proposition 1A, by a margin of 52 percent to 47 percent. The law authorizes the Legislature to issue almost $10 billion in bonds to fund the first phase of an 800-mile high speed rail link between Northern and Southern California. Advocates of high-speed rail hailed the victory as a watershed for high-speed rail in America.
Ah yes, bonds… The financial instrument that allowed supporters of the high-speed rail project to boast that this $9B for the project will come “WITHOUT RAISING TAXES.” This, in a state with a bond rating of merely A+ (which, to those of you who think an A+ is good, is only the 5th-best bond rating available) — a far cry from the AAA rating enjoyed in the past.
Even worse, they only authorized enough bonds to start the project. After cost overruns, governmetn graft and corruption, environmental impact studies, and all the other losses in the process (legal fees due to eminent domain, I’m sure), $9B might get them from San Francisco to about Redwood City. By the end of the process, I think $100B will be a conservative cost for this project.
California is crumbling under the weight of decades of bad decisions. Our voters have just increased the burden.