CA Revenue comes in 6.5% lower than expected (and some common sense solutions)

[ctr70]

http://globaleconomicanalysis.blogspot.com/2011/11/california-revenue-15b-65-lower-than.html

(Great suggestions from Mish cut & pasted below…I like #1, #2 and LOVE #4…no more stinking defined benefit pension plans)

*****Rather than increase taxes (grumbling on that is guaranteed to start), how about ….

1. Putting an end to collective bargaining for public unions
2. Getting rid of needless bureaucracies
3. Scrapping prevailing wage laws
4. Scrapping defined benefit pension plans*****

[GH]

AWW comm on cant we just borrow ?? Greece has all these things why shouldn’t we?

[briansd1]

Actually Greece was a poor dictatorship not too long ago.

They tried to catch-up with their richer European cousins. They borrowed too much.

[bearishgurl]

If CA voters REALLY wish to get all those things done, better bring in a whole new Legislature. GOOD LUCK!

[EconProf]

If we just had High-Speed Rail everything would be all right. And higher pay for government employees so they would spend more. And more environmental protection to attract people and businesses back to California.

[urbanrealtor]

[quote=EconProf]If we just had High-Speed Rail everything would be all right. And higher pay for government employees so they would spend more. And more environmental protection to attract people and businesses back to California.[/quote]

Aren’t you a retired government worker living on a pension?

I seem to recall somebody saying they retired from teaching at sdsu.

Maybe that was someone else.

[EconProf]

urbanrealtor: to what would you attribute the shortfall?

[urbanrealtor]

[quote=EconProf]urbanrealtor: to what would you attribute the shortfall?[/quote]
Lower-division post-secondary instructors refusing to answer my questions.
Duh.

Sorry, I can’t help love the irony of me (the owner of an independent business) being more left than you (who I think is paid by my taxes).

Anyway:

I would attribute it to several issues.
Generally, those would fall under the rubric of a spending-revenue combination that is waaaaay out of line with reality (the same way the federal government spends at 22% of gdp and taxes at 17%).
I don’t have easy fixes but I can call out a few of the more glaring issues.
The biggest, tastiest target is prop 13.
There were a lot of ways to deal with older people being unfairly taxed as a result of property valuation increases (like adding the tax obligations as silent liens).
None of those sensible ways was tried.
Instead we just said “no new taxes”.
As a result of this, California as a whole has the lowest tax rate as a percentage of net worth in the US.
In other words, if you are rich you pay less taxes as a rate (and often in dollar amount) than those who work (and have their income taxed).
Places who need to impose usage assessments are legally barred from doing so as an ad valorem obligation.
They are just required to use a flat usage fee.
That is why places like Temecula have effective property tax rates over 3%.
Those actually get higher in rate the lower your gross market value.
This makes these places are the most regressively taxed in the state (and probably the US).

I mean its fucked up.

[Hobie]

Deficits (spending) does not mean we are not taxed enough.

As usual, EconProf is right on the mark. I would be honored to have had my children under his tutelage.

Repealing Prop13 is not the answer. Actually it will self repeal. As more homes resell the a new tax basis is established and there you are. Wha la, more taxes in the coffers.

So what will make this happen? Growing the economy not devising clever new tax policy.

And the fvcked up part is our policy makers do have the long term big picture vision they would have learned had they not skipped the Econ100 class.

[paramount]

ctr70: All of your suggestions are right on. If you really want to see some of what you propose become a reality, I’d suggest starting here:

(A California ballot measure to eliminate public employee collective bargaining):

http://ballotpedia.org/wiki/index.php/California_%22End_Collective_Bargaining_by_Public_Employee_Unions_Act%22_(2012)

[gandalf]

This includes public safety for a change. I like that it’s consistent.

Usually there’s some carve-out exception for police/fire.

[gandalf]

[quote=EconProf]If we just had High-Speed Rail everything would be all right. And higher pay for government employees so they would spend more. And more environmental protection to attract people and businesses back to California.[/quote]

EconProf, did you really teach/research at a CA public university? Do you collect a pension?

Curious, what is your stance on funding levels for CA public higher education? Where do you stand on continued budget cuts for SDSU and The CSU? For UC?

In your view, what role does education play in a modern economy? How would you characterize the contributions SDSU and UCSD make to the San Diego region?

[EconProf]

I taught for 23 years, mostly at SDSU, while also investing in SD real estate, which eventually displaced teaching in my family’s priorities. Also started up a glazing contracting business, 11 workers at its peak, sold profitably after 9 years. Was not politically correct at SDSU, writing UT articles against tenure, inept teachers, for trimesters instead of semesters, etc., so moving toward the private sector was inevitable. Got a small pension at 50 and free health care for family. Way too generous and no I’m not giving it back.
There is vast waste and bureaucratic bloat at SDSU, as at most universities. Quality teaching is not rewarded, tenure protects the incompetent, useless research and never-read publication is prized, gold-plated student centers and gyms and over-the-top facilities are overdone, and students are not warned that certain majors are useless in the job-market. The public would be shocked to learn how light the teaching load has become for some faculty, and how little some actually work. Of course, there are many fine, hard-working and effective teachers. But they get about the same pay as the bad ones.
SDSU, UCSD, and all the other universities of course do a lot of good for San Diego’s work force and economy….spend a few billion and that’s what happens. But they could do so much more if they were shaken up and realigned in their priorities and methods. The protesting students and faculty, and their enabling media coverage do not get it, and say all we need is more money as we Californians are undertaxed, so I see little hope for genuine change.

[patientrenter]

[quote=EconProf]I taught for 23 years, mostly at SDSU, while also investing in SD real estate, which eventually displaced teaching in my family’s priorities……. [/quote]

It is a little bit bizarre, you’ll have to admit, EconProf, that an advocate for sensible free markets happens to have made most of his living from a sheltered government job, and from an asset bubble – California real estate – that was stoked by government actions such as easy money policies from the Federal Reserve, government guarantees from the FHA and Fannie Mae etc, and a complete failure to enforce underwriting standards on the home loan industry. (If we went back to minimum 20% downpayments, and no government guarantees, and no Fed intervention in the market for mortgages, we’d fix our current housing problems for once and for all, yet no one is advancing these things. Everyone is still anxious to receive their free lunch.)

I work deep inside FIRE, and yet I advocate a complete ripping out of its influence over our real economy. Therefore I understand your situation a little. Sometimes being on the inside enables you to see things more clearly.

[gandalf]

Mostly respectable answers, EconProf.

Except that you’re collecting a public employee pension and free healthcare for life on the public’s dime.

It’s okay with me though.

I can look past it because our largest problem actually isn’t public unions. It’s the financial industry — by a wide margin. The insolvencies from financial deregulation, bubbles and fraud are orders of magnitude larger. They created pension insolvency. Your benefits are affordable were it not for Wall Street.

* * *

How come you didn’t get involved in campus administration?

Helping run a large organization more efficiently is a laboratory in applied microeconomics.

In your view, what changes could be made to higher education help improve the way universities operate?

[Author]

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