What Happened with California?

[LukeFL]

I don't trust reading about what happened with this state's financial turmoil anywhere else. I do trust DUers information because you are all fact checkers and are more fair when it comes to telling the truth.

Can anyone tell me or help me understand why is California in such bad financial situation? I am in Florida and I know why we are in a hole( tax cuts to tge wealthy by my right wing state legislators) but CA?

Any help will be appreciated.

[Walk away]

1. They passed a law that made it virtually impossible to raise taxes.

So the State went broke. What a surprise!

[bluestate10]

2. Prop 2 killed California. A Prop was passed in the last election to raise taxes to fund schools.

Another problem that California has is that it sends close to one half of every federal tax, Medicare and Medicaid dollar collected from state residents to red states - this is a problem with every blue state except two, all but two blue states are big tax donors.

[gcomeau]

3. Two things.

1. If you make it nearly impossible to raise taxes without asking people to vote on the individual tax increases you're going to have revenue problems. That's just stupid.

2. This: http://www.motherjones.com/politics/2011/11/states-federal-taxes-spending-charts-maps

Specific to California, for every dollar in federal tax revenue California contributes it only receives 87 cents in federal spending in return (as of 2010). Where does the rest go? Well, Mississippi for example gets almost $2.50 in federal spending for every dollar it contributes.

So basically, the pathetic gasping economies of a bunch of mostly red states are propped up by siphoning off revenue from the massive economy of California. What does this translate to in total dollars?

California contributed $314 Billion in tax revenue in 2007... (last numbers I could find on short notice, can hunt up more recent ones if necessary)

About $40 billion of that was siphoned off to prop up other states economies.

Give that money back to California and it erases the state budget deficit and puts California in surplus if that cash wasn't being siphoned off every year. Of course it also does little things like bankrupting Mississippi, and Alabama, and Alaska, and New Mexico, and West Virginia...


So the next time some right wing moron cracks some smartass comment about those liberal Californians not knowing how to run an economy, verbally smack them upside the head with this and ask if the red states would care to give California all it's damn money back and watch them shut up fast.

[LukeFL]

4. That was very informative.

Thank you. So if I were California I will be wanting to secede from the union- they are being screwed by the red states.

Can this changed? How can California survive? Why hasn't an honest governor come out and put it exactly how you said it?

[gcomeau]

5. Personally...

I think that strong areas of the economy contributing to prop up weaker ones is how things should work. I'm not so much angered by the fact that California's powerhouse economy contributes funds that get used in other states (in a sane country we SHOULD be helping each other out) as I am by the fact that the people running those (mostly solid GOP) other states pocket all that money then spend all their time spitting in the face of the economic competency of the (mostly solid Democratic) states that are paying their damn bills.

If they would shut the hell up then I'd just say fine, come on California, fix your idiotic tax setting legislation, modify your budget, and raise the extra revenues you need.


As it is? Just to send a message and put the GOP in their place I'd like to see the state reps from Cali and New York and New Jersey and the other states that put in more than they take back out propose legislation that requires all federal spending be distributed to states within a certain margin of the proportion those states contribute funds in the first place and say it's because there shouldn't be "makers and takers, and everyone should get back out what they put in" and then watch the Republicans heads explode trying to argue against it without making it obvious to their constituents that they've been running their state budgets on national scale welfare programs using blue state money and if they had to survive on their own they'd be bankrupt.

[montanto]

6. Not to mention Ahnold

refinancing the budged deficit for years and years, leaving Brown with a huge hole to fill.

[Buns_of_Fire]

7. By and large, I would say it started with Howard Jarvis and Proposition 13 in 1978.

http://en.wikipedia.org/wiki/Howard_Jarvis

Proposition 13:

Proposition 13 (officially named the People's Initiative to Limit Property Taxation) was an amendment of the Constitution of California enacted during 1978, by means of the initiative process. It was approved by California voters on June 6, 1978. It was declared constitutional by the United States Supreme Court in the case of Nordlinger v. Hahn, 505 U.S. 1 (1992). Proposition 13 is embodied in Article 13A of the Constitution of the State of California.

The most significant portion of the act is the first paragraph, which limited the tax rate for real estate:

Section 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

The proposition decreased property taxes by assessing property values at their 1975 value and restricted annual increases of assessed value of real property to an inflation factor, not to exceed 2% per year. It also prohibited reassessment of a new base year value except for (a) change in ownership or (b) completion of new construction. (Bold mine.)

Proposition 13 also mandated that a 2/3 majority be reached in both houses for any future state tax increases (including income tax rates), and a 2/3 majority for any local tax rate increases.
http://en.wikipedia.org/wiki/California_Proposition_13_(1978)