What’s the Big Deal About a Teensy $14.5 Billion Shortfall?
Stop all this hand wringing and whining about California’s budget shortfall.
A hole of $14.5 billion. Whoopty-do.
Why is there all this rending of garments and teeth gnashing over such a pretty puny problem.
Much ado about nada. Fitch, knock off the downer rating watch stuff and come in from the ledge.
First of all, the cold fact is $1 billion doesn’t go as far as it used to. Ask Dr. Evil.
California’s $14.5 billion gap is less than half the $29 billion gross income Bank of America reported in September 2007. That $29 billion doesn’t even count the additional dough BofA is gonna rake in after snapping up Countrywide at the Filenes Bargain Basement price of $4.1 billion, 28 percent of California’s estimated budget shortfall.
For Warren Buffett, $14.5 billion is what’s jingling in his pocket when he drives over to Gorat’s for a slab of red meat. Berkshire Hathaway, Buffett’s holding company, reports more than $276 billion in total assets.
The governor’s budget is premised on combined general fund and special fund revenue of $129.7 billion. The $14.5 billion is a mere 11 percent of total revenue.
If you compare the shortfall only to the $103 billion general fund, it still represents a measly 14 percent.
Governor Schwarzenegger’s predecessor, Democrat Gray Davis, grappled with what budgeteers initially pegged as a $38.3 billion gap between revenue and expenditures — a hole bigger than the debt of the other 49 states combined.
That was a serious budget problem — not some piddling $14.5 billion rounding error. Even Everett McKinley Dirksen would stipulate $38.3 billion is real money.
Pete Wilson had himself a $14.3 billion budget hole back in May 1991, when $1 billion really meant something.
In 1991, the general fund was less than half the size it is now — just under $45 billion. So Wilson and those whacky legislative cut-ups who create the real budget (term used advisedly) found themselves staring into a red hole the size of one-third of California’s operating budget.
Big fiscal oowie.
After more bellowing than an elephant seal in rut, a deal was cut closing the gap through a combination of taxes and cuts.
Senator Tom “Family-of-Four” McClintock, a Northridge Republican, contends that rather than help fill the budget hole, the taxes retarded economic growth, which, had the taxes not been in place, would have grown faster and, thus, dropped more coin in state coffers. It wasn’t until the taxes went away a couple years later that California’s economic hamster wheel started spinning real good, to badly paraphrase Tom.
This 1991 compromise solution is laid out in excruciating detail in the Legislative Analyst’s aptly named, 53-page “State Spending Plan for 1991-92.” Studies indicate the report has proven even more effective in curing insomnia than prepared remarks by George Deukmejian. (I should know – I wrote some of his speeches)
The current occupant of the governor’s office says his $14.5 billion bump-in-the-road stems from too much spending. Jacking up taxes won’t solve the fundamental problem.
The Legislative Analyst and the Democrats say creating some additional state revenue should be part of the mix. The Legislative Analyst further opined this week that the governor’s across-the-board cuts don’t take into account that some state programs are more equal than others. And so on.
As the budget games start to commence to begin, the question must be asked: Does anybody really want to endure at least six months of hurled invective and specious claims by all parties that they’re the sole gulpers of the thin air up yonder on the moral high ground?
And we’re going to inflict this suffering on ourselves for what? A lousy $14.5 billion?
Better to do the Indiana-Jones-just-whip-out-the-pistol-and-shoot-the-sword-swinging-bad-guy thing and be done with it.
California is the most populous state in the nation with more than 37.7 million residents. One out of eight Americans live here. And we’re growing, adding 3.8 million new Californians since the 2000 census.
These facts come from the website of the Department of Finance which helps the governor put budgets together every year. The demographic stuff is located right above the “Dynamic Review Analysis for California” link, which is probably anything but dynamic. (It may have comparable curative powers to the Legislative Analyst’s 1991-92 spending plan thing, however.)
Rather than horse around with subcommittees and special sessions, appeal directly to the people.
Here’s how truly inconsequential this budget shortfall is: Divide the $14.5 billion among us 37.7 million Californians.
If we all chipped in, our individual hit would be a scant $384.62 – less than the cost of one of Willie Brown’s ties. Under $35 a month. About what they’d ask for in support of a public TV station.
There have to be a bunch of swells who would throw down double or triple to cover the kids and the fiscally challenged. Even as a struggling small businessman, $1K seems do-able.
Actually, it seems like quite the bargain if it eliminates six months of posturing and speechifying.
And, you know, really, when you get down to it: What’s $14.5 billion among friends?
Filed under: Venting
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