California budget circus gets even more bizarre

The nation's largest state (by population) is not only near bankruptcy, its government is doing a fine imitation of a banana republic, complete with a shoving and shouting match (video here) on the State Assembly floor Wednesday.  Last night, Governor Jerry Brown vetoed the budget passed by his own Democratic Party, actually keeping his campaign promises to avoid budget gimmicks and tricks, which the Democrats had made liberal use of.

This leaves the state, and the state legislators, in limbo. Some background:

Last year, tired of nearly a quarter century in which the State Legislature failed in its constitutional duty to pass a budget by June 15, voters approved a ballot measure which allowed a budget to be passed by a simple majority vote, allowing Democrats (which have a seemingly permanent lock on majorities in both chambers) to avoid compromising with Republicans, who had been empowered by the previous requirement of a 2/3 vote for the budget.  In order to secure voter approval of the measure, it included a provision suspending legislators' paycheck and daily expense allowance (a munificent $400 per day!) for ecery day after June 15 without a budget.

It was this penalty provision that motivated Democrats to pass their budget. However, the budget was full of "baling wire and chewing gum" gimmicks, that created the illusion rather than the substance of a balanced budget.

Gov. Brown's veto has now thrown into question whether legislators will receive their pay and allowances. They did pass the budget as required. The decision-making authority has been claimed by Democrat state controller John Chaing, whose office issues state checks. He has not yet indicated how he will proceed.

Brown and the Democrats need two GOP votes in each chamber to set up an election in which state voters would be asked to vote on tax increase extensions (several "temporary" taxes and fees are set to revert to former lower levels this year) and possibly new taxes. A 2/3 legislative majority is needed for tax increases, and Republicans are resolutely opposed to them, so voter approval is the only way taxes will be raised. However, it is far from clear that California voters would vote in the affirmative.

So California continues in a state of fiscal chaos, on the path toward bankruptcy, its legislators unsure if they will be paid, its governor having shocked his own party, and voters largely indifferent to their state government which spends upwards of $100 billion a year, based on a near 10% state income tax top rate, a near 10% sales tax, and a 10% state capital gains tax.

A better comparison would be Greece, but of course California is far bigger.  If it were a sovereign nation, California would outrank France in GNP.

The nation's largest state (by population) is not only near bankruptcy, its government is doing a fine imitation of a banana republic, complete with a shoving and shouting match (video here) on the State Assembly floor Wednesday.  Last night, Governor Jerry Brown vetoed the budget passed by his own Democratic Party, actually keeping his campaign promises to avoid budget gimmicks and tricks, which the Democrats had made liberal use of.

This leaves the state, and the state legislators, in limbo. Some background:

Last year, tired of nearly a quarter century in which the State Legislature failed in its constitutional duty to pass a budget by June 15, voters approved a ballot measure which allowed a budget to be passed by a simple majority vote, allowing Democrats (which have a seemingly permanent lock on majorities in both chambers) to avoid compromising with Republicans, who had been empowered by the previous requirement of a 2/3 vote for the budget.  In order to secure voter approval of the measure, it included a provision suspending legislators' paycheck and daily expense allowance (a munificent $400 per day!) for ecery day after June 15 without a budget.

It was this penalty provision that motivated Democrats to pass their budget. However, the budget was full of "baling wire and chewing gum" gimmicks, that created the illusion rather than the substance of a balanced budget.

Gov. Brown's veto has now thrown into question whether legislators will receive their pay and allowances. They did pass the budget as required. The decision-making authority has been claimed by Democrat state controller John Chaing, whose office issues state checks. He has not yet indicated how he will proceed.

Brown and the Democrats need two GOP votes in each chamber to set up an election in which state voters would be asked to vote on tax increase extensions (several "temporary" taxes and fees are set to revert to former lower levels this year) and possibly new taxes. A 2/3 legislative majority is needed for tax increases, and Republicans are resolutely opposed to them, so voter approval is the only way taxes will be raised. However, it is far from clear that California voters would vote in the affirmative.

So California continues in a state of fiscal chaos, on the path toward bankruptcy, its legislators unsure if they will be paid, its governor having shocked his own party, and voters largely indifferent to their state government which spends upwards of $100 billion a year, based on a near 10% state income tax top rate, a near 10% sales tax, and a 10% state capital gains tax.

A better comparison would be Greece, but of course California is far bigger.  If it were a sovereign nation, California would outrank France in GNP.

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