Is California Greece or Rome?

Is California Greece or Rome?

Over at Chlorinated Liberty is a great article on the un-seriousness of the California Legislature. “California Burning”

Now 55 days into the new fiscal year, California’s Legislature has yet to emerge from its duck-the-heavy work hibernation. As has been customary, Lawmakers would rather tackle trivial legislation than balance the budget.

They link to Diane Harkey (R-Dana Point), where she points out that the California Legislature just isn’t willing to do the hard job of fixing the State of California’s budget problems. Over at Red County she says ~

It doesn’t take an economist or financial wizard to know that beginning with $84 Billion in revenues and facing $20 Billion dollar annual shortfalls for the next 4-5 years, you can’t tax nor cut your way to solvency.  Like any business or household, the state has fixed costs, or expenses that must be paid to stay alive, constitutional and Federal.  If you, as a business or household, continue to buy “extras” and spend more borrowed money, you will never dig out of your financial hole. You must show some discipline and implement a strategic work-out plan, reducing expenses, definitely not increasing future liabilities, and display the ability to repay your debts over time. In other words, exercise discipline and show your creditors that you “get it.” Otherwise you face bankruptcy, or for a state, federal receivership or a form of federal debt guarantee.

It seems none of our Legislators want the “bad press” of being the one to say “No!”. Assemblywoman Harkey starts her article thus ~

In this highly-charged election year and the age of term limits, the incentive to achieve more than positive “press” is nearly zero.

She goes on to explain what sounds like progress for the State in cutting back spending. But in reality results in a sleight of hand, and an increased obligation California has taken on.

This week, pension reform was approved for six of the state’s 21 contract bargaining units (unions). The reform is a step in the right direction, but unfortunately increases our debt obligations in future years.  How does this happen? Probably exactly as occurred in 1999 when SB 400 was approved with 7 voting “no.”  SB 400 was the bill that increased pensions in a “boom” year, and estimates are that the state now has $500B in unfunded pension liabilities. (emphasis mine)

In this op-ed at Sign On San Diego, Assemblywoman Harkey breaks down what these “savings” aren’t ~

While there is roughly $68 million of general fund savings in 2010-11, that savings is quickly reversed the very next year and increases to $39 million in extra costs by 2012-13. Other fund account costs also increase in out years. Imagine the net negative cash-flow effect magnified when the remaining bargaining units scoop up the “deal.” (emphasis mine)

(The “deal”? Me-too union negotiations where a bargaining unit gets the same deal another bargaining got in their contract.)

Be sure to read both of her excellent articles about how our California Legislature is just not taking their job seriously and needs to face the music now, not down the road.

Then be sure and visit her Facebook page! This is a lady that gets it!

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