Brian Devon

The state spent it on waterbeds and hookah pipes for impoverished Republican inner city hedge fund managers.

bmac32 Loc: West Florida

Cooking the books!

I can take your checking account and make it show you owe or have lots of money. The problem with my method is the bank people get to check who checks the state?

ldsuttonjr Loc: ShangriLa

With there fiscal prowess...that would not surprise me!!!

bmac32 Loc: West Florida

California has long been synonymous with budget deficits so deep that it looked like the Golden State would inevitably be our Greece—beautiful and bankrupt.

But Gov. Jerry Brown announced that his state has suddenly projected a surplus of $851 million. Two years ago, when Brown came back into office, the state had a $25.4 billion deficit, a Sisyphean problem Governor Arnold struggled with unsuccessfully all last decade.

This reversal of fortune raises a lot of questions. What caused California’s budget turnaround? Is it sustainable? And finally, could there be a national lesson here as Washington tries to confront deficits and debt?

The top-line takeaway is that a balanced deficit-reduction approach seems to have worked in the Golden State. When he entered office in 2011, Brown proposed billion-dollar-plus cuts in welfare and Medi-Cal, as well as $500 billion from the UC system.

All told, his initial proposed budget was almost $20 billion less than Governor Schwarzenegger’s 2008–09 budget, which clocked in at $103 billion. Democrats and unions howled, and Brown’s ultimate budget was less austere than originally advertised, but deep cuts were enacted.

Crucially, Brown also took on the unpopular task of raising taxes—winning a 2012 ballot fight sonorously known as Proposition 30 and 39—that raised sales taxes and closed business tax loopholes. Next year, the combined new revenues are expected to exceed $5.8 billion.

The final factor is an improving economy—always the decisive X factor in deficit-reduction efforts. California’s economy is improving slowly, but the shift from the pit of the Great Recession moved the numbers in the right direction.

The result of increased tax revenues and spending cuts is that—at least for now—a projected deficit has been turned into a surplus.

This is good news. But not everyone is happy. And the numbers do sidestep a deeper problem.

Remember, deficits and debt are different things. Projected year-to-year deficits are comparatively easy to close, especially on the back of an improving economy. But out-of-control debt is ultimately what drags you down.

The Los Angeles Times offered a front-page reality check, under the headline “Debt a Cloud Over State’s Future,” pointing out the inconvenient fact that California “has accumulated a crushing load of debt for retiree pensions and healthcare now totaling more than taxpayers spend each year on all state programs combined.” Ouch.

Brown’s budget does begin to pay down the debt, but the outstanding amount dwarfs the pay-down.

Brown’s budget does begin to pay down the debt, but the outstanding amount dwarfs the pay-down. Of course, that hasn’t stopped liberal activists from demanding more money be spent immediately on social services, under the banner of “investment.”

Moreover, there are real questions about whether the increased tax burden—especially on the wealthy—will end up eroding the state’s tax base in the near future.

“There’s some doubt that high income taxpayers won’t either move to Nevada—or some other low or no-income tax state—or find other ways, such as delaying realization of cap gains, to avoid hefty new surtaxes—especially since their federal taxes are also increasing,” emails the Sacramento Bee’s Dan Walters. “California’s marginal income tax rate (federal plus state) is now highest in U.S. at highest level, about 52 percent.”

But Walters acknowledges that Brown’s budget miracle is more or less legitimate, at least for now. “It’s mostly new revenue from sales and income tax hike approved by voters in November with a dash of economic recovery and a smidgen of creative bookkeeping such as slowing down some debt repayment and assuming renewal of a tax on health care providers to trigger some federal aid,” Walters’ continues. “But overall it’s mostly the new taxes.”

Other Golden State observers take an even more skeptical view. “There is a reason Gov. Brown is known as Governor Moonbeam,” says KABC’s center-right John Phillips. “Structural deficits are everywhere, the nonpartisan Legislative Analyst’s Office says there’s still a $1.9 billion budget deficit, and rich people can’t cross the state line fast enough—taking revenues down almost 11 percent since the passage of his Prop 30 tax hikes with them. On the plus side, hey, we’re not Detroit!”

The Rust Belt does have problems that make California’s cyclical deficits and deep legislative dysfunction seem comparatively easy to solve. But Jerry Brown deserves credit for pulling off at least short-term success in a state budget situation that had many experts calling impossible to solve. In the near term, the deficit turned surplus highlights the improving national economic environment.

It also provides a compelling object lesson for advocates of a “balanced approach” for reducing deficits, like President Obama & Co. Contrary to conservative talking points about how revenue is not a legitimate part of deficit-reduction solutions—instead, it’s all spending cuts all the time—California’s recent example shows that increased tax rates can help rapidly reduce deficits. Moreover, especially compared with much of Europe, the Obama administration’s decision not to simply pursue a path of deep austerity cuts seems to have been the wiser path, at least for now.

But conservatives could have the last laugh if the wealthiest Californians decide to flee the state for comparatively low-tax climes, like a sun-baked Gérard Depardieu.

Bottom line: This fight ain’t over. But at least for the moment, Jerry Brown’s balanced if painful plan to turn deep deficits into a modest surplus deserves study. It offers a rare glimpse of good news in the relentlessly bleak world of state budget. Whether it is sustainable remains to be seen.

saveamerica Loc: Texas

Brian, once again we have caught you in another lie. Brian, you are just like Obama, just throw some numbers out, it don't have to be the Truth.
California Budget Balanced, Agrees Analyst
By JUDY LIN 01/14/13 07:10 PM ET EST
Last week, Brown released a $97.6 billion state spending plan for the new fiscal year and projected a $1 billion reserve. Two months ago, the Legislative Analyst's Office had projected a more cautious outlook that forecast a $1.9 billion deficit.
Despite the fresh tax revenue, Brown wants his Democratic colleagues who control both houses of the Legislature to refrain from overspending. He wants to build a reserve to cushion against future downturns and make strides toward paying down the state's bond obligations.

ldsuttonjr Loc: ShangriLa

Brian just likes to revel in the absurdity of it all! When a well packaged web of lies has been sold gradually to the masses over generations the truth will seem utterly preposterous and its speaker a raving lunatic.

Serenity54321

Please, I only live in IL because I have to. The dreariness of streets overrun by poor people who feel they are entitled to anything and everything is bleak. Or, on the nice side of town there is nothing but fancy street signs and snobby little kids who think that they own the world because their parents have money.

Blue states who have been blue for years are broke and corrupt. They can't pay their bills, are overrun by unions and welfare, and look desperate to everyone else. Yes, I am talking about CA, IL, and NY here. These are the "thriving" pictures of Blue states.

If liberalism was the way to riches, these states would be the most productive and happy states in the country. Um, they're not.

This is because businesses and jobs leave, the poor stay and grow by numbers because these blue states are most "productive" to their cause, and the middle or upper class that do stay hide in their mansions and stick their noses up at everyone, double-locking their doors to keep out the thieves.

Hooray for the Blue! (Sarcasm)

mountain high

I see tv ads constantly, inviting businesses to come to the state of ny, and enjoy 10 years tax free. 2 questions:
1) why would any business person, with even a hint of conservative leanings, give ny state a second thought, considering its extreme left/insulting governor?
2) if I owned a business that was already in ny state (heaven forbid!), I'd be hell-bent to get a tax-free status for my company. if I could not get it, I'd be out of there quickly.

ldsuttonjr Loc: ShangriLa

Serenty: There is a lot said in jest...especially now that we live in a country full of jesters!! They have been pumped full of lies all these years by their Progressive Democrat handlers!

bmac32 Loc: West Florida

I see the same thing and wonder why? I see too many reason NOT if I was to start a business.

deb_bus Loc: fort worth and wichita falls tx, and houston

Well, I live in Houston, Tx and it's a red state. We are booming in Houston. Jobs everywhere. And they are moving two more oil companies down here in houston.. That's about 20,000 more jobs. I love it here. Texas is a state of its own. Anybody living in a poor or broken state need to move here.

ldsuttonjr Loc: ShangriLa

deb_bus: watch out for Brian, Kevyn & Retard...they have different ideals...I was born in Texas and something keeps drawing me back!!!!

deb_bus Loc: fort worth and wichita falls tx, and houston

Jetboy I know about the people you named. Glaucon is another one. All left wingers. I call them oscandal worshippers. That's all they are. You should come back to Texas. It really is nice down here. Where are you now? There Is no place like Texas. I've lived In other states, but always come back here. I love it.

ldsuttonjr Loc: ShangriLa

deb_bus: I live in the State that essentially emancipated Texas! Tennessee

Art

In my Opinion, Dr. Kevin "Coach" Collins reported Democratic Party beating as a result of Occidental’s move is a very weak and contrived example of California Democratic leadership failure. While the article focuses on Occidental’s corporate office move from L.A., he neglects to mention how many local jobs will move with Occidental to Houston. The company will relocate the management of most of its oil and gas exploration and production operations to Texas. But it will spin off its California business into a new company with about 8,000 employees which will stay in California. In the meantime, L.A. County alone added 32,600 jobs in November, more than half of the state's net job gains. Wrong county of California to focus on Democratic failure.

While Occidental may be moving it corporate office to Texas, its oil fields are not. Occidental pumps oil from the fifth-largest oil field in California, and the seventh-most productive field in the United States.

California’s Imperial County’s unemployment rate increased in July of 2013 up to 26.1 percent, as the area lost about 2,600 jobs in the labor force, according to data released by the state Employment Development Department. This is a much better example of California’s failure under Democratic leadership.

I believe making up disasters as Collins has is entertaining but does not help the credibility of the Republican Party as eventually the truth comes out. Ted Cruz warns "People don't like to be lied to," he said to explain historically low approval ratings for Congress, adding that forcing Republican politicians to tell the truth "makes their head explode." In conclusion, "truth is stranger than fiction" and there is a lot to be told that would help Republicans retake leadership in our country.