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Sacramento’s $68 billion definition of insanity: California’s never ending budget rollercoaster
Dennis Wyatt 2022
Dennis Wyatt

It’s time to replace California’s state motto.

“Eureka” — I have found it — is so 19th century.

Whereas, “Insanity,” is so apropos.

No single word in any language catches the California state of mind so succulently.

We’re talking about the mindset of posers up in Sacramento.

The posers are those that think they are true leaders.

Yet instead of defining true leadership, they embody the phrase “insanity is doing the same thing over and over again and expecting different results” that some attribute to Albert Einstein.

Last week, the independent legislative analyst reminded Californians how the legislature and governor are the true definition of insanity.

The announcement California is staring down a record $68 billion deficit comes just 18 months after Gov. Gavin Newsom bragged the Golden State was sitting on a $97.5 billion surplus.

Fortunately for Newsom, who is biding his time for Father Time or term limits to catch up with Joe Biden, the news of the projected deficit came after the Blue vs. Red debate with Florida Gov. Ron DeSantis.

Trying to explain California’s $68 billion deficit versus Florida’s $22 billion surplus could have prompted Newsom to embark on political contortions that could have thrown his back out.

To be clear, this is not all Newsom’s fault.

It was the result of teamwork.

And it is teamwork that is old as the Internet itself.

California’s basic revenue problem is a legislature that lacks the backbone to change a tax system that is based heavily on soaking the rich.

It is no state secret the boom or bust nature of how California chases the bulk of revenue needed to provide services for a state of 39.5 million people is due to its dependence of the rich doing very, very well.

The rich that aren’t chased out of California by high taxation, that is.

California for decades has gone thru the boom and bust cycles.

Every governor has warned about the need to end the insanity.

But in the end they cave to political pressure from within their political parties.

When the Republicans were in control, they spent their political energy on tax rebates and not attempting a major overhaul of the broken tax-revenue system.

That’s not the Democrats’ forte.

They prefer viewing the state budget as an earthly version of the ever-expanding universe.

In other words, forget about putting long-term tax solutions in place by harnessing surpluses to bridge a major overhaul of California’s tax system heavily reliant on income taxes.

Spend what you have.

But simply spending is for wimps.

Only losers spend money on one-time initiatives.

Instead, roll out massive new reoccurring spending initiatives.

Consider what Newsom and his partners in crime in the legislature did last year knowing that the state’s financial roller coaster would eventually start its predictable plunge.

They agreed to raise the minimum wage for health care workers in California to $25 an hour.

That brilliant fiscal move will cost the state right around $20 billion this year in Medicaid payments to hospitals as well as health care workers employed by state agencies.

Guess where almost a third of the state’s $68 million projected deficit was caused by — the state legislature’s generosity with money they did not have.

This is in addition to additional healthcare costs skyrocketing almost overnight for those not dependent on the government.

Meanwhile, the economic downturn that has short circuited state revenue Sacramento is no longer raking in from the wealthy has also led to more workers being unemployed, especially in the free-spending tech sector.

The result has sent the state’s unemployment rate up a full one-percent in the past year to 4.8 percent.

The national unemployment rate for anyone keeping track is 3.9 percent.

Of course, the fallback position is to blame this all on Proposition 13.

Too bad economic study after economic study shows real revenue in terms of constant dollars has exceeded the rate of inflation since 1978.

The real failure is the failure to act.

Proposition 13 happened when the California Legislature — after more than a decade of giving lip service to property tax reform — was overpowered at the ballot box by angry voters.

Nothing is now on the horizon to jolt the state into a reset.

The only people in position to save California is Newsom and the legislature.

Unfortunately, they are more worried about circling the wagons, trying to protect their pet programs that rely on the state budget than trying to end the nightmare by trying to come up with a permanent solution to end the madness.

So here we are back where we’ve been five or six times in the last 30 years or so.

There, of course, will be a cry to gut Proposition 13 as if that is the magical pill.

A clarion call will go out to find creative ways the taxman can stick it to Californians instead of pursuing reform to rebuild the tax system from the ground up to make it fair and reliable in down times and restrained in gung-ho times.

And the great California nightmare — the state’s boom and bust cycle coupled with the legislature’s reptilian impulse to spend the Golden State into oblivion — will continue to undermine the California dream.

Eureka!

We have found the true meaning of California.

Sacramento keeps doing the same thing over and over again.

The absolute definition of insanity.