Tax The Rich: Says Brown….

[no_such_reality]

LOL, California is addicted to something for nothing.

http://www.latimes.com/news/local/la-me-911-changes-20120515,0,4265385.story

For too many, the solution is another program. Obviously, the paramedics should treat the person’s gout in his home. Right?, no. The paramedics shouldn’t be envolved.

[desmond]

Great posts on what people can see happening down the road in California. Instead of the “if you can’t hack it in Calfornia then move out”, intelligent people are weighing their options and are making smart financial decisions for a better future for themselves.

[Coronita]

You know. Two comments..

if things proceed as planned, I think what will happen in CA is similar to what is happening at the national level, but even more intense…..

The middle class will erode away in CA and CA will consist of either people within the top 1% who can afford to live here without blinking, and the other extreme folks who can enjoy all the entitlement benefits without having to pay…

The middle class that doesn’t really do that well and yet need to pay for all these entitlement benefits will get the shaft and figure to go elsewhere.

But then again, IF we have a housing recovery, I think a lot of issues go away…One thing is once people start paying their property taxes again, at least at the local level, more dollars come in…

It will be interesting to see in the next couple of months what will happen.

[poorgradstudent]

[quote=paramount]Yes, we can balance the budget with cuts. Cut pensions, benefits for public employees NOW. Break the stranglehold public employee unions have on this state. California public employees/unions have bankrupted California.

Start privatizing state/local gov’t jobs wherever possible.

“California is exceptional in many ways when it comes to taxing its residents. The state has the highest statewide sales tax in the country, currently 8.25%. It also has the highest tax on gas, charging 46.6 cents per gallon. “[/quote]
My understanding is in most cases cuts to pensions require consent from the Unions, as these are benefits that were guaranteed as part of previous contracts, contracts that are legally binding. My understanding is new employees don’t get the sweetheart deals those older workers get, so the long term easy cuts have already been made. As for cutting benefits, basic market forces tell you the state is just going to then have to raise salaries to keep talent. People who work for the state often choose to take lower salaries than they could make in the private sector in exchange for better benefits and job security.

I would like to see California “Break” the unions associated with prisons. California spends far too much on incarceration across the board, partially due to the failed “war” on drugs. Reducing prison population has huge long term benefits, but unfortunately it’s not a great short term fix.

Generally, when you privatize jobs that were once public, the public doesn’t save anything. Even if the private sector could come in and magically cut costs by 5% without a serious cut in service (an ambitious, but plausible scenario), that 5% savings is just going to line the pockets of shareholders. What you’re more likely going to see is an erosion of quality of service. The taxpayers will pay the same amount, lose control, and get nickeled and dimed by the private sector. Think about SDG&E and all the crap they constantly try to pull. That’s what happens when you privatize. Unions have their issues, but at least the public can fight with unions; corporations just bend the public over and have their way.

California does tax residents pretty high, but also provides an exceptional level of support services. If you’re young and middle-to-upper middle class and don’t have any elderly friends or relatives a lot of these support services may be invisible to you. But the fact is, California is one of the few states in the nation that actually does an ok job taking care of the poor. There are states with structural advantages which are able to provide similar services with lower tax rates, but seriously, thank God California isn’t Alabama, Mississippi or Florida.

[Anonymous]

The question is not public vs. privatized, both have positives and negatives.

The issue is transparency.

The true costs of public pensions are easily hidden as they are passed into managed funds with a guaranteed taxpayer backstop.

With each paycheck, a public employee gets a salary of X, and a pension contribution of Y – just like in a private firm.

But there is a hidden cost, Z, which are the assumptions about risk and returns. If a pension fund doesn’t meet expectations, the taxpayer pays again. Often these payments are huge.

We’ve ignored the cost of Z for years, but now they are coming to roost. It is already costing the state billions in the current budget and will continue to grow.

Privatization does have issues, but at least it does not have the risk of massive deferred costs that rob the next generation. When things get out of control, you can fire a private contractor and end the bleeding quickly. We cannot so easily escape unethical pension contracts that were signed by legislators a decade ago.

There are straightforward solutions. One, remove any taxpayer-guaranteed returns on pensions – i.e. take “Z” out of the equation.

Public sector “defined-benefit” is another name for “hidden, unknown, taxpayer obligation” that the next generation will bear.

The better solution is to simply remove “defined benefit plan” from our vocabulary completely. They are a nice idea that history has proven to be completely infeasible.

[bearishgurl]

[quote=flu]You know. Two comments..

if things proceed as planned, I think what will happen in CA is similar to what is happening at the national level, but even more intense…..

The middle class will erode away in CA and CA will consist of either people within the top 1% who can afford to live here without blinking, and the other extreme folks who can enjoy all the entitlement benefits without having to pay…

The middle class that doesn’t really do that well and yet need to pay for all these entitlement benefits will get the shaft and figure to go elsewhere.

But then again, IF we have a housing recovery, I think a lot of issues go away…One thing is once people start paying their property taxes again, at least at the local level, more dollars come in…

It will be interesting to see in the next couple of months what will happen.[/quote]

flu, you forgot all the “older workers”, new retirees and seniors who are NOT in the 1% but have paid-for homes and a (public or private) pension coming in or soon to come in. Many of these residents have property taxes which are protected by Prop 13. These millions of longtime residents can stay in CA indefinitely, IMHO.

There really is something to be said for living frugally over decades and “paying your dues.” I really feel like more of the “middle class” young families COULD remain in CA if they adopted the values of more “stable” generations. Too many have succumbed to “easy credit” for “instant gratification” which, in any case, was not even available to previous generations. In short, most of their “expectations” are far too high when taking into account their actual work experience and current “station” in life. Most younger “Gen X” and “Gen Y” just seem to just want to skip over their first, second and third (all used) vehicles paid for with cash and a first home in a “starter” neighborhood in favor of 60-72 month car payments and heavily-taxed new construction. They “have to have” at the age of +/- 30 what people in my generation didn’t get until 10-20 years later, that is, if they EVER really aspired to these things.

In addition, if you will carefully study young immigrant families or families headed by young native Californians who live near more-established relatives for moral support and childcare purposes, you may notice that their values are more in line with reality as they try to emulate the ways of their more stable elders. For instance, when older relatives find them a good used vehicle to buy or a nearby house to rent or buy (and sometimes pool their funds to help with the downpayment), these young families don’t whine about the house not being “perfect,” they just take it, fix it up with help from family and move forward, happy to have found a suitable house near family. Most of these young families could be considered lower middle-class to middle class and they will NOT be moving anywhere! And CA’s cites, suburbs and rural areas are FULL of them.

I think some here may be imparting their own unrealistic values on how life SHOULD BE in CA for their families in contrast to what they can realistically afford, given their work experience and current “station” in life. Perhaps most of this group are actually transplants from other states/countries with no long-established family here (whom they didn’t move here themselves).

And you may be ROTFLYAO when I mention “station” in life, here. The fact is, if you have fixed expenses every month for any or all of these things: diapers, formula, childcare, preschool, lessons, sports, braces, school trips, private school, tutoring, college, etc, THAT is your current (chosen) “station” in life. It is what it is and if it costs you $800, $1000, $1500 or $2000 month or beyond, THAT is what it costs. Whatever the cost of a homebuyer’s current “station” in life, lenders (and often the buyers themselves) don’t really take all this into account when they decide how much they can borrow for a house, often loaning them way too much money. The young buyer borrows this amount because they (or their spouse) can’t stomach buying a property they can actually, realistically afford, given their current “station” in life.

It has ALWAYS cost more for housing in coastal CA counties than most other locales in the US. This has always been an accepted fact by all adult residents who were born here or came here before the age of five and never left and will never change. Why it this a surprise and why should it be different now?

[enron_by_the_sea]

I just had a chance to briefly skim through an article that actually has details about proposed budget and the actual text of the gov.s proposal

http://www.mercurynews.com/california-budget/ci_20620197/gov-jerry-brown-calls-more-social-services-cuts

Here are some highlights.

* For all the talk from Gov. Brown about cuts, the proposed spending ($91.4B) for 2012-13 is actually 5% (or $5B) higher than 2011-12.

* Gov. says that if you don’t approve his tax increase he will cut $5B from K-12 education. What he does not tell you is that even after cutting $5B from K-12, the state will be spending higher ($48B) on K-12 the next year than this year ($47B). The increase(2%) will more or less keep up with inflation in the economy. I fail to see how this will be “devastating” to public education as some people are saying.

[Allan from Fallbrook]

[quote=no_such_reality]LOL, California is addicted to something for nothing.

http://www.latimes.com/news/local/la-me-911-changes-20120515,0,4265385.story

For too many, the solution is another program. Obviously, the paramedics should treat the person’s gout in his home. Right?, no. The paramedics shouldn’t be envolved.[/quote]

NSR: So, the article mentions that 8 (eight!) first responders rolled on that call. Eight! I don’t know what the hourly rate is, but that has to be a significant amount of money expended on what amounts to a nuisance call (nothing against the gout-ridden dude, but that ain’t what the 911 services are for), and doesn’t count fuel and other expenses, along with the opportunity costs (those same personnel could have rolled on a REAL call instead.)

This story is sort of California in microcosm: Lots of money wasted on services of little benefit.

[Coronita]

[quote=enron_by_the_sea]I just had a chance to briefly skim through an article that actually has details about proposed budget and the actual text of the gov.s proposal

http://www.mercurynews.com/california-budget/ci_20620197/gov-jerry-brown-calls-more-social-services-cuts

Here are some highlights.

* For all the talk from Gov. Brown about cuts, the proposed spending ($91.4B) for 2012-13 is actually 5% (or $5B) higher than 2011-12.

* Gov. says that if you don’t approve his tax increase he will cut $5B from K-12 education. What he does not tell you is that even after cutting $5B from K-12, the state will be spending higher ($48B) on K-12 the next year than this year ($47B). The increase(2%) will more or less keep up with inflation in the economy. I fail to see how this will be “devastating” to public education as some people are saying.[/quote]

Go figure…

[Anonymous]

The Mercury News article is a bit confusing on the K-12 numbers:

The budget for K-14 education actually increases $3.8 billion — even if the taxes aren’t passed […]

But if voters don’t agree to higher taxes, K-12 and community colleges would be cut by about $5.5 billion, possibly reducing the school year by a combined total of 15 days in 2012-13 and 2013-14. The state would not pay off $2.8 billion owed to schools. And cuts to K-12 programs would amount to $2.4 billion, or more than $400 per student.

Not sure how to interpret that. Are they increasing or cutting?

[blake]

In other (old) news, San Diego schools purchase 25,700 Apple iPad 2 units

Somebody must’ve gotten a really good kickback for this …

[enron_by_the_sea]

[quote=harvey]The Mercury News article is a bit confusing on the K-12 numbers:
[/quote]

I agree it is confusing. You can go to the source (gov.’s proposal) linked there

http://www.docstoc.com/docs/120484452/Gov-Jerry-Browns-May-Revise-of-California-Budget-2012-12

Page 8 shows chart of K-14 funding over the years. It is $47B for 2011-12. Proposed to go up $53.7B in 2012-13 if the taxes pass. (That will be $2.9B above the statutory limit of prop-98. The prop-98 limit itself does increase by $3.7 because of higher revenue – which is what the Mercury News is alluding to .. Perhaps.)

If taxes don’t pass then Brown will take $5.5B away and schools will be left with 53.7-5.5=$48.2B. That is still $1.2B (or 2.5%) more than 2011-12.

[bearishgurl]

[quote=Allan from Fallbrook][quote=no_such_reality]LOL, California is addicted to something for nothing.

http://www.latimes.com/news/local/la-me-911-changes-20120515,0,4265385.story

For too many, the solution is another program. Obviously, the paramedics should treat the person’s gout in his home. Right?, no. The paramedics shouldn’t be envolved.[/quote]

NSR: So, the article mentions that 8 (eight!) first responders rolled on that call. Eight! I don’t know what the hourly rate is, but that has to be a significant amount of money expended on what amounts to a nuisance call (nothing against the gout-ridden dude, but that ain’t what the 911 services are for), and doesn’t count fuel and other expenses, along with the opportunity costs (those same personnel could have rolled on a REAL call instead.)

This story is sort of California in microcosm: Lots of money wasted on services of little benefit.[/quote]

This is a ridiculous waste of taxpayer funds, IMO. The LA dispatchers are obviously not getting the REAL story before summoning emergency responders, IMO. Perhaps they are not trained to see thru these scams. There are many things they could have done, including questioning the caller more thoroughly and/or ask to speak to someone with or surrounding the caller. This is not unheard of. Honestly, they should place a county lien against this individual for summoning emergency help when he only needed to wheel himself to the bus stop or ask someone to do this for him if he was in pain. But what good would it do? The caller is obviously indigent and feels he is “entitled” to everyone springing into action when he has a hangnail.

First responders, incl fire and police agencies in SD County charge callers for false alarms and other time wasters on a case-by-case basis (incl those agencies/contractors in Chula Vista). It is not an insignificant amount (avg of $170 per “false” alarm).

[no_such_reality]

BTW, everyone is clear that we are closing the multi-year continuing budget gap by INCREASING SPENDING, right?

Yes we are. The proposed budget for next year is more than 6% larger than last year’s budget.

[Anonymous]

enron, thanks for the explanation.

[Author]

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