PDA

View Full Version : Why Is California Broke?



slvrbugjim
5th March 2011, 11:09 AM
Why Is California Broke?

http://globaleconomicanalysis.blogspot.com/2010/01/why-is-california-broke.html

Inquiring minds are asking "Why Is California Broke?" It's a good question. Please consider ...

* California has the 3rd highest state income tax in the nation: 9.55% tax bracket at $47,055 and 10.55% at $1,000,000 - Tax Foundation 2010 State Business Tax Climate Table 2
* California has the highest state sales tax rate in the nation by far at 8.25%. Indiana is next highest at 7%. Table 15
* California corporate income tax rate is 17th worst in the nation with a rate of 8.84%. - However, of the non graduated states, only Pennsylvania at 9.99%, Rhode Island at 9.0%, and the District of Columbia at 9.98% are higher. One size fits all (and a very high one at that) is exceptionally hard on small businesses. Table 8 and Table 2
* California ranks 13th best in property taxes. However proposition 13 causes massive distortions for new buyers. Table 2
* California has the fourth highest capital gains tax 9.55%. - Capital Gains Tax Rates By State
* California has the highest gasoline tax as of January 2010, averaging 65 cents/gallon. The national average is 47.4% - API Motor Fuel Taxes
* California has one of the highest state vehicle license car taxes, 1.15% per year on value of vehicle, up from 0.65% in 2008.




So where's the money going?

* 1 in 5 in LA County receiving public aid, nearly 2.2 million people as of February 2009. 20% in Los Angeles County receive public aid
* California has 12% of the nation’s population, but 36% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 8 states combined. Unlike other states, this “temporary” assistance becomes much more permanent in CA. July, 2009 California has more recipients in key welfare category than next eight states combined.
* California prison guards highest paid in the nation. The maximum pay of California's prison guards is nearly 40 percent higher than that of the highest-paid guards in 10 other states and the federal government, according to a study by the California Department of Personnel Administration. Cal-Taxletter
* California teachers easily the highest paid in the nation. National Education Association
* California now has the lowest bond ratings of any state, two steps above junk. The new rating affects about $72 billion of general obligation and lease-supported bonds. July 15 California bond rating cut again
* California ranks 44th worst in “2008 lawsuit climate.” Institute For Legal Reform
* California, a destitute state, still gives away college education at fire sale prices. California community college tuition is by far the lowest in the nation. Nationwide, the average community college tuition is 4.5 times higher than California CC’s. This ridiculously low tuition devalues education to students – resulting in a 30+% drop rate for class completion. Moreover, 2/3 of California CC students pay no tuition at all – filling out a simple unverified “hardship” form that exempts them from any tuition payment, or receiving grants and tax credits for their full tuition. [Expired Link]
* California offers thousands of absolutely free adult continuing education classes. In San Diego, over 1,400 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense. San Diego Continuing Education
* California residential electricity costs 13.81 cents per kilowatthour. The national average is 6.99-8.49. US Department of Energy
* It costs 38% more to build solar panels in California than in Tennessee – which is why European corporations have invested $2.3 billion in two Tennessee manufacturing plants to build solar panels for our state. March 5, 2009 More Solar Companies Producing Elsewhere to Sell to California


The above lists reformatted and reordered from a list compiled by Richard Rider, Chairman, San Diego Tax Fighter

California Pension Crisis

To top things off, please consider Plundering California: How Public-Sector Unions Brought The State To Its Knees.

Government workers also enjoy absurd protections. The Los Angeles Times did a recent series about the city’s public school district, which doesn’t even try to fire incompetent teachers and is seldom able to get rid of those credibly accused of misconduct or abuse.

A state law referred to as the Peace Officers Bill of Rights, along with excessive privacy restrictions, likewise makes it nearly impossible to fire police officers who abuse their authority.

The media have finally started to take notice, largely because of some impossible-to-ignore financial excesses, particularly the tens of billions of dollars in “unfunded liabilities”—that is, future debt—run up by politicians more interested in pleasing union officials than in looking after the public’s finances. News reports have also focused on scandals at CalPERS, the California Public Employees’ Retirement System, which has faced record losses after making risky leveraged investments in bizarre real-estate deals. (The government pension system encourages such risky behavior: with defined-benefit systems, union members stand to gain if the investments go well, while taxpayers shoulder the burden if they don’t.) Meanwhile, the Los Angeles Times reported on a politically connected insider who received $53 million in finder’s fees from CalPERS, raising questions of pay-to-play deals.

But the real scandal is a two-tier society where government workers enjoy benefits far in excess of those for whom they supposedly work.

The above snip is from the book Plunder! by Steven Greenhut.

The answer to the question Why Is California Broke? should now be quite apparent.

* California has a horrible business climate that drives business elsewhere.
* California has an array of some of the highest tax rates in the nation.
* California is beholden to the unions, especially the teachers union and prison system, and at the municipal level to the police and fire unions.
* California hands out money with free services encouraging an influx of illegal aliens and an exodus of those wealthy enough and mobile enough to move.......................................

http://globaleconomicanalysis.blogspot.com/2010/01/why-is-california-broke.html

lapis
5th March 2011, 11:37 AM
On the other hand there's this:

CAFR1 Makes a Challenge to - The San Francisco Chronicle (http://cafr1.com/challenge.html)

by Walter Burien - 03/27/10

It was not from the options offered but what was not shown. Collective local governments in California are now over 14,000. The State Government is the largest but collective totals from local governments from within the State dwarf the revenue pool of the state.

Collective CA local government's each have many specialty investment accounts (many thousands of separate funds large and small). The total from all are in excess of eight-trillion dollars. (conservative estimate)

To resolve the so called "Budget Shortfall" I would do a standing audit of "all" local government investment funds and then from each deduct an equal percentage to satisfy any budget shortfall "with" a 50 billion dollar cushion to last through the rough times... the "equal" percentage would probably be less than 2% to accomplish that objective, and done deal..

People have been sound-bite conditioned to think Government only generates tax income and that is where the public's focus is directed. In reality in combination of all local governments and the state from CA the investment capital is massive (noted above in excess of 8 trillion dollars) that generates in return revenue greater than all taxation collected in the state.

The public has been kept oblivious to the scope and size of these collective funds and through intentional misdirection pointed at tax income and expenditures dealt with. So your pie charts that give the impression of 100% is actually just 1/3rd of the pie when it comes down to government's true "gross income"

Now you will hear expressions like: "Here is our rainy day fund" and in reality that is like your pocket change jar you keep in the kitchen compared to the many other thousands of other government investment funds never mentioned.

You will also hear when investments are mentioned: "Oh, that is our employees retirement Funds" WRONG... The retirement funds are but one category.. (a large one) then you have self insurance funds; advance forward liability funds; special liability funds; enterprise forward project funds; and the list goes on and on. Just on the state level you are looking at around 12,000 separate specialty investment funds large and small. And with an audit of all local government specialty investment funds would be well in excess of 100,000 specialty investment accounts.

Never a peep about this to the public, and the reason why? DUE TO THE MONEY AND CONTROL involved! Governments from all across the country have been developing their non-tax income for over 65 years.

The public was presented with "Budget Reports" to account for where "Tax" income and expenditures were applied "for the year". To see the same local governments "gross income; standing investment wealth derived over decades; the investment return generated; and the enterprise operations massive wealth generated, you must look at the same local governments Annual Financial Report, or as government calls it, their: Comprehensive Annual Financial Report (CAFR). A Google search will pull up many.

For the CA State CAFR just put on the search line: "The State of California" CAFR

The state CAFR will pop up for downloading. You can do the same for "The city of Los Angeles" or Burbank, San Francisco, Sacramento, County of Los Angeles, etc., etc., etc....

Now a local government like the State of CA can say: "We have a fifty-billion dollar shortfall on our budget" (Tax Revenue) and a "true" review of the state's Comprehensive Annual Financial Report could show the state 200 billion in the black. The budget will be shown in the CAFR and it is only 1/3rd of the pie when it comes down to gross income...

Some people have referred to this as having two sets of books. Well, there are not two sets, there is only one and that is the CAFR of which the budget is a segment thereof.. an inferior report to the CAFR.

The silence (is golden) maintained as far as not a peep as to government's Annual Financial Report and non-tax income shown that most Cities: Counties; School Districts; State Universities; Enterprise operations; and the states prepare each year I call "The Biggest Game in Town" of which I put a video up on Google 12/25/08 that had over 870,000 views in the first 5 days worldwide and not a word from the media; controlled education; the political parties; or government itself. That silence is golden rule present over the last several decades is well entrenched due to the money and control involved. The public would not be pleased to find out that they have been played like this to say the least..

I challenge the SFC to publish in the next 30 days, and do so conspicuously the links to download the top 200 local California government CAFRs with it noted: "The SFC strongly suggests that every taxpayer carefully review their local government's Comprehensive Annual Financial Report (CAFR)"

The CAFRs are local governments "Holy Grail" of accounting showing collective wealth that has built up over decades. Whereas a budget report primarily shows "TAX" income and tax expenditures for the year....

Truly yours,

Walter Burien - CAFR1.com
P. O. Box 2112
Saint Johns, AZ 85936

Tel. (928) 445-3532

dys
5th March 2011, 11:51 AM
Lapis-

Are you able to post comments on Mish's blog? I will try again, but everytime I've ever tried in the past my comments never get posted...it just says perpetually 'awaiting moderator approval'.

dys

solid
5th March 2011, 11:51 AM
* California prison guards highest paid in the nation. The maximum pay of California's prison guards is nearly 40 percent higher than that of the highest-paid guards in 10 other states and the federal government, according to a study by the California Department of Personnel Administration. Cal-Taxletter


I started a thread about this a long while ago. Prison guards make 6 figures easy, and it's the easiest and most boring job on the planet actually. The guy I know sits around browsing the internet and watching movies most of his shift. He used that as a way of promoting how great his job was. I told him I was happy with my job of action, with less pay. At least I earn my FRN's.

Things are out of whack. Bouncers at a local pub work harder than prison guards.

madfranks
5th March 2011, 12:54 PM
* California prison guards highest paid in the nation. The maximum pay of California's prison guards is nearly 40 percent higher than that of the highest-paid guards in 10 other states and the federal government, according to a study by the California Department of Personnel Administration. Cal-Taxletter


I started a thread about this a long while ago. Prison guards make 6 figures easy, and it's the easiest and most boring job on the planet actually. The guy I know sits around browsing the internet and watching movies most of his shift. He used that as a way of promoting how great his job was. I told him I was happy with my job of action, with less pay. At least I earn my FRN's.

Things are out of whack. Bouncers at a local pub work harder than prison guards.


Things are wayyyy out of whack. Garbage collectors in New York make $144,000 yearly (http://www.wnd.com/?pageId=253645) because they're unionized, even though their level of unskilled work is worth a fraction of what they are paid.

gunDriller
5th March 2011, 03:21 PM
Californians pay far more in federal income taxes than the California receives back from the federal government ... i think.

but, Calif. receives a LOT of money from the US government for military bases, defense contractors, so-called Homeland Security, etc.

the Beach Boys version of the Fascist State, with Hollywood Zionists sitting square in the middle making the movies.

as far as why the state is broke - pretty obvious - outgo exceeds income.

i still think they should sell Alcatraz. i think Larry Ellison would pay $1 billion for it. dude's got a big ego.

lapis
5th March 2011, 04:33 PM
Lapis-

Are you able to post comments on Mish's blog? I will try again, but everytime I've ever tried in the past my comments never get posted...it just says perpetually 'awaiting moderator approval'.

dys


No I haven't, but I've read that you're not the only one who's tried to get CAFR information to him. However, this was an article posted a couple of years ago about Houston, but it appears to be just a partial analysis of the city's CAFR:

City of Houston is Bankrupt (So are California, Oregon, and Pension Plans in General)
http://globaleconomicanalysis.blogspot.com/2009/10/city-of-houston-is-bankrupt-so-are.html

It's interesting that Mish directs his readers to the link of the CPAs analyses' of the CAFR, but not directly to the CAFR itself.

Ragnarok
6th March 2011, 08:57 AM
Because in addition to all the above, peoplehere keep voting for bond issues, thinking that because they aren't direct "tax increases" everything will be fine, not realizing the meaning of the word "bond". Synonyms for bond include: band, bind, bracelet, chain, cuff(s), fetter, handcuff(s), irons, ligature, manacle(s), shackle.

I never, ever vote for bond issues.

R.

steyr_m
6th March 2011, 10:28 AM
Why is it broke? Prop 187 didn't get enacted, people running the show deliberately wanting the system to crash. Lots of reasons....

mick silver
6th March 2011, 10:32 AM
they need to tax more that why there broke

General of Darkness
6th March 2011, 11:50 AM
I think it's easier to explain with pictures.

It starts with this.

http://farm4.static.flickr.com/3489/3840965544_b07440556b.jpg

Which leads to this.

http://media.tumblr.com/tumblr_l8vfbpzcTS1qbqate.jpg

Which pushes lies and the denial of history.

http://1.bp.blogspot.com/_C3yi086dAa0/TBPJv4RUuTI/AAAAAAAAACE/kHpBhL9ScbY/s1600/Multiculturalism.jpg

Which then leads to a new face to Amerikwa.

http://media.nj.com/hudson_voices_impact/photo/childjpg-b0ee6aef607ca0ac.jpg

Which then leads to the ultimate land scape of what the future will look like

http://politicalvindication.com/wp-content/uploads/2009/03/reliques_02_499x330.jpg