Right on schedule the biggest financial crisis in California is being carefully stage managed like a Hollywood blockbuster. People aren't even remotely close to grasping the enormity of the problems. This isn't Camarillo's bad investment adventure or Orange County's bad arbitrage of decades past. Let's be clear here. If every State employee took an immediate 5% pay cut and hiring is frozen and all unfunded programs are suspended and every authorized revenue stream increased to their limits then we would be facing a critical emergency that would necessitate a Constitutional suspension of existing fiscal limits and a renegotiation of near every collective bargaining agreement extant. That's not going to happen. As predicted the governor has pre-declared an emergency. Arnold has stated his intention to call the actual emergency in the middle of January. You read it here first. It is my intention to keep tell the truth of the crimes before even the perpetrators know their own schemes. The opening salvos of the all too predictable "Washington Monument Ploy" are fired.
Here's the local fishwrap telling everyone else what EN readers already know:
The emergency will likely mean cuts to schools, colleges, prisons and aid programs for the poor, elderly, and out-of-work that have already spent nearly half their promised funding for the year.
and...
[The deficit is]equivalent to state spending on both prisons and all the University of California campuses in one year.
Our Speaker of the House had two observations. Side by side I think you'll see why there's absolutely no chance of this situation being handled competently.
#1:"This is a serious step for a serious problem," Assembly Speaker Fabian Nuñez, D-Los Angeles, said in a statement. "We look forward to seeing the specific proposals the governor is constitutionally required to put forward in declaring a fiscal emergency."
#2:“After a solid year of hard work and negotiation, we are now only inches away from finalizing the framework for an historic agreement to deliver universal health care for the people of California.
Budget facts;
Revenue $102b. Spending $117b. Out year unfunded obligations ~$11b.
Healthcare facts;
6.8 million uninsured Californians. Funding would include:
-- A $2.3 billion fee on hospitals that would be offset by a big increase in payments made for services for enrollees of government programs.
-- Employer fees that would run from 1 percent to 6.5 percent of payroll and would generate an estimated $2.7 billion.
-- About $5 billion in new federal support, mostly for the Medi-Cal program.
-- A new tax on tobacco products that would cost up to $2 a pack
Can you smell the bullshit? $2.3 billion from hospitals? Are they freakin' insane? They are using kool-aid for their bong water. As noted previously Simi Valley Hospital has stopped accepting Medi-Cal because they weren't being paid. This in context of dozens of emergency rooms closing in Los Angeles alone.
California is already as business unfriendly as possible. Sales taxes run as high as 8.25% and income taxes are 9.3%. There is even sales tax charged on gas taxes. The turnips have no more blood to give. Eternal vigilance, stay tuned.
31 comments:
Very interesting. And first.
Mish reminds us that California sold $1b in general obligation bonds in November foregoing insurance!
I'd say "the party's over," but, what party? Most of us missed out on the cash-and-dash phase.
BTW, what happened to that $35B shortfall that got Arnold into office? If CA survived that maybe they'll survive this.
[The deficit is]equivalent to state spending on both prisons and all the University of California campuses in one year.
Wow.
My understanding is prisons are big business in California, with employees making up a powerful union lobby. What percentage of inmates are non-violent drug offenders? What about illegals who should be deported?
lou,
everything you ever wanted to know;
http://www.ppic.org/content/pubs/cacounts/CC_806ABCC.pdf
prison guard primer;
http://www.cjcj.org/cpp/political_power.php
Outrageous pay;
http://www.signonsandiego.com/uniontrib/20060228/news_1n28guards.html
Prisoners cost about $35k/yr.
Rob:
It occurs that y'all could always drill more oil wells and set up offshore rigs in the Santa Barbara Channel.
After a few more brushfires, the noobs of Malibu should be all cleared out, and that should open the area for extracting that sweet $80 a barrel crude from the ground.
If it's okay for the Gulf of Mexico, why not for SoCal?
Y'all need the jobs.
Funny thing is the oil platforms we have actually reduce the pollution in the channel. Far less oil seeps up out of the sea floor than in times past.
Prisoners cost about $35k/yr.
Beats the hell out of giving them decent jobs. This society needs an enema.
2,400 officers made more than $100,000
$100k/year plus fat pensions and bennies. SuWEET.
There is even sales tax charged on gas taxes.
Perhaps the state budget crisis could be resolved if they taxed the sales tax on the gas tax and continued taxing the taxes ad infinitum.
If Casey bulked up again maybe he could get a sweet W2 job as a prison guard. He could pay off every dirty penny within 2 decades.
Wait, scratch that. That isn't MLM. It's work, and he'd have to pass a background check.
Hi, Casey!
I used to live in Hollywood... I say at least half the deficit could be made up if we just had a botox tax.
@Debbie,
Great idea! How about a fake boob, dick and lip tax too!
Regarding botox, I cannot imagine how much Nancy Pelosi would have to pay in taxes unless it were considered a special govt write off.
Great, yeah the penis luxury tax again. I tried to claim depreciation with careful mileage records but the IRS denied on the grounds of the inflationary nature of my claims.
Many of my inlaws work in the CA prison system, including two past Wardens.
My brother in law is very typical os a current employee of the CCPOA: Goes into the CCPOA at age twenty with only a HS degree. Starts in the cell blocks and yards but works his way into desk duty after 10 years, at which time he is making over $100k per year salary plus OT, plus full medical, dental, eye coverage etc., plus paid vacation, plus an obscene number of paid sick days which accumulate year over year.
After 23 or 24 years they retire with lifetime full bene's and 95% of their salary. Why 23 or 24 years? Because all those accumulated sick days are "cashed in" so they in essence call in sick the last two years of employment.
The daily "work" routine of a CCPOA desk jocky would embarass even a paralyzed pot head.
After retirement many, many come back to "work" as "consultants" at 100% of their old salary, hired by their old buddies who fully expect the same sweet deals when they themselves "retire".
The system is far beyond sick, far beyond fixable, and far far and away the best government job in the entire US.
How about out-sourcing CA prisons to another (cheaper) willing state, say North Dakota? Any statuates against that?
As far as the universal healthcare now being considered, as a fairly large employer I can tell you this: Many firms, mine included, provide fully paid coverage to qaulified employees only, in my case FULL TIME people after 12 months employment. At least half of my employees are flex schedule, college students, etc. that work less then 25 hours per week.
If the current bill is passed, I will have three choices:
1.) Provide all of my employees with the premium full coverage insurance that I now only offer to qualifying employees, and then go out of business.
2.) Provide them all with a shitty stripped down package.
3.) Provide them with nothing and just pay the payroll deduction and be done with it.
I'll choose number 3.
Who in their right mind would want to be a prison guard?
@FCB:
I'm interviewing a potential employee on Monday. She gets almost a baseline living from her SS plus her ex-husbands SS. She's willing to work 1/2 time for medical benefits + pocket money.
Besides that, (after 10 days of retirement) she's bored - & a damned-good collection person. Which I need.
FCB,
You called it. And best of all you get to go into "competition" with a newly created underground economy.
Rob,
I know what you mean about the oil seepage. When I was a kid (1960s), you had to be careful on the beach to avoid the globs of tar all over the place. Mostly gone now.
On Taxes in Cali, watch out for the "services tax". Coming soon to an office near you. They're now going to try to collect sales tax on consultants, lawyers, doctors, basically anyone who offers a professional service. If they try this one, we'll be going back to a cash economy right quick. But I bet they try it.
FCB,
Some smaller companies have already shifted to all part time employees.
Premium, high-quality insurance may become a thing of the past. I buy the best insurance I can get, and it's terrible compared to what I could buy five years ago. Ten years ago, I could buy excellent coverage. Now, I'm looking at $10,000/year deductible for high-quality coverage. And it's far more expensive, although being over 50 doesn't help :-(
watch out for the "services tax"
You bet. That would probably be the straw that drives me to get a j-o-b.
Sacramento is totally clueless.
Just so we're clear on the terminology, because two different terms are used interchangeably.
Insurance provides a safeguard so that when a medical catastrophe occurs, the person won't go bankrupt paying for it. They still have to pay a portion of the bill.
Universal health care is socialized medicine, where the state taxes everyone and provides "free" medical care for everything (routine visits, prescriptions, etc.) to everyone.
Too many people have been conditioned to expect medical insurance to provide universal health care, hence the increase in price. Insurance with a high(er) deductible, say $2,000, is still affordable for most people. You can get a plan for a family of 4 for less than $300/mo. I know because I've been shopping around. The insured pays for everything up to $2,000/year, then the insurance kicks in.
Don't forget that you're paying the sales tax on the gasoline tax with money that you've already paid income tax on.
FCB:
"... Starts in the cell blocks and yards but works his way into desk duty after 10 years..."
Hmmm, and how many times can a bull get shnked, spat upon, beaten up and have convict feces and urine thrown on him in a ten year period?
I had the opportunity to work in the California Correctional Syatem when the Fuzz recruiters descended on my Marine Base.
As I recall, the CHP wanted you to be a turnkey in Chino for four years after you got out of the Academy. The LAPD required a two year stint at LA County Jail after graduating.
I contemplated the work environment of the the LA County Jail on a Friday and Saturday night for about 3 milliseconds before opting to decline thier kind offers.
If the gig isn't lucrative, who would do it?
And why?
The injury rate for prison employees is far, far less than hundreds of other jobs which pay a small fraction of the CCPOA, much less provide a 6 figure lifetime pension with full bene's before you turn 50 - and allow you to return as a "consultant" for a nice double dip.
I've never met anyone in the system, save the union reps, who would even attempt to say with a straight face that the current compensation structure is required to recruit and maintane hi skool graduates.
They just smile and milk the system, and who wouldn't?
Don't forget the corporate franchise tax. $800/year minimum, regardless of whether your company makes any profit or not. Just for the dubious privilege of doing business in CA. I have a Nevada corp with a Nevada bank account but receive some mail at a CA p.o. box. Every year I get a letter from Sacramento where I have to prove my little business doesn't do business in CA by checking off a bunch of boxes. Actually I don't do business in CA right now but they do their damndest to grab that $800 every year.
The gas tax situation in L.A.:
.18 fed
.18 state
+ 8.25% sales tax
So, that's .36 fed and state taxes plus almost .03 tax on the tax, for every gallon.
FCB:
"I've never met anyone in the system, save the union reps, who would even attempt to say with a straight face that the current compensation structure is required to recruit and maintane hi skool graduates."
Uhhh, you know that my academic education ended at high school, right?
That said, it's always a good idea to presume that %95 of what any union rep says on any subject is utter and complete bullshit until indepently verified otherwise.
Does that mean that I shouldn't try to get the maximum amount of return for my labor?
Especially since my labor entails lethal dangers and unhealthy environments that the more educated would balk at?
George Meany of the AFL-CIO had a great line:
"I'd rather live in a town that had lost all of it's lawyers than live in a town that had lost all of it's plumbers."
That may be the %5 truth he ever uttered.
Fact is, if you're a business person, you live and die by sales.
To sell a product or service, you need to price that service at what the market will bear.
If your prospective customers cannot afford your service or product, you ain't going to sell much of anything.
Even without any competition at all.
That's why new Hyundais don't cost 100k dollars.
I wish Business, especially American Business, would reawake to the fact that their payroll IS their market.
Henry Ford doped this out one hundred years ago.
The Chinese have yet to show any great desire to buy Fords, and Mexicans aren't exactly the mother of all markets for Apple computers, see?
Dont tear down what someone else takes home...they might just be your customers.
Dawg said
California is already as business unfriendly as possible. Sales taxes run as high as 8.25% and income taxes are 9.3%. There is even sales tax charged on gas taxes. The turnips have no more blood to give. Eternal vigilance, stay tuned.
Dang!
Here is NH we have 0% sales tax and 0% income tax. There is a small tax on investments. Most money comes from property taxes which keeps revenue at a town level so the locals toss any free spending idiot.
No shaking, no floods, no fires, but we do get lots of snow (two 1 foot dumps in past couple days).
Then again, we are constantly on guard to ensure no member of the Kennedy family is allowed in office here.
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