“So we have no choice but to make California far more efficient and effective than it is, by running this thing a little bit more like a business,” proclaimed Meg Whitman, in one of her ads during her failed run for the Governor of California. Of course, it’s tough to run your business when your employees are almost 37 million strong and own all of its shares. However, in a perfect world we have political theories like the ‘Benevolent Dictator’, which means that you readers can take a whack at it. It, of course, being balancing California’s massive $19 to $26 billion annual deficit. So, please follow this link to the LA Time’s Budget Balancing Application!
Tool Bias, and Budgeting Rules
California has a history of avoiding its own balanced budget requirements. California’s constitution requires a balanced budget by mid-June of each year, a deadline which has only been hit 5 of the 30 years it has been in effect. Furthermore, only in 5 more years was the budget submitted in the two weeks following, leading up to the July 1 start of the fiscal year. Pretty sad attendance record!
The tool does use some weasel words which you’ll see as you try to cut certain programs. For example, surf into the Legislature tab in ‘General Government’ and you’re treated with this: “Cutting the Legislature’s budget in half would save about 1/8 of 1% of the budget”. Well then! I guess we shouldn’t bother? Of course, right above it states that this sort of cut would save $120 million, so I guess it is a substantial result nonetheless. You’ll also note that tax increases are not behavioral (more due to budget rules than anything). For example, take the gas tax. We’ve written on it here at DQYDJ, but no where do we believe that the rate of gas purchases would stay constant with any increase. The same thing for any of the other taxes. The general tax rule is “increase taxes on things you want less of”. Let us give an example by translating one of the rules in the calculator:
“The top income tax-bracket is 9.3%. Increase it to 10% for incomes over $300,000 a year and 11% over $600,000.” [not true, but this tool is just a facelift from 2009]
“We want less people earning over $300,000 in the state. Increase their taxes, and increase the outflow of people by increasing taxes still further at a salary of $600,000.”
Long term, you can see tax increases may not be the best deal. However, it will satisfy California budget rules! Your comments, please!