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Califoreclosure: The Enron of state governments

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POSTED July 29, 2009 12:58 a.m.

It’s official. California is now the Enron of state governments.


Gov. Arnold Schwarzenegger signed a budget Tuesday that has so many accounting tricks in it that it would make Houdini’s head spin and Bernie Madoff jealous.


Here are just a few of the gems that Arnold and his 120 co-conspirators came up with to assure that California will be crippled for years to come:


•The June 30, 2010 pay date for state workers was shifted to July 1, 2010 to save $900 million but it passes a $900 million burden into the next fiscal year.


•They are increasing withholding from our paychecks starting Oct. 1 to collect $600 million in state revenues a year ahead of time passing a $600 million revenue shortfall into the next fiscal year.


•It takes $1.9 billion from cities and counties share of the property tax but under provisions of Proposition 1A they must repay it in three years with inertest. That shifts at least $2.4 billion – interested included - into the next three years or an $800 million burden per year.


•It sells off $1 billion worth of the State Compensation Fund’s workers compensation insurance portfolio built up by employer and employee contributions to protect workers. Insurance Commissioner Steve Poizner is threatening to file a lawsuit as he astutely points it this will increase a bigger exposure – and a tax burden – on employees and employers by taking money collected for one purpose and using it for another.


•It accelerates payments from taxpayers who make quarterly estimated payments by making them fork over more in the first six months. This gives the state $1.7 billion revenue this year at the expense of losing $1.7 billion next fiscal year. Then there is the little problem of people paying taxes way in advance on the assumption they are either going to still be in business or alive.


Just those five accounting tricks alone creates at least a $4 billion shortfall for the start of the next fiscal year on July 1, 2010.
Of course, no one – even the spineless wonders up in Sacramento – believes the state is going to go for an entire year without another massive deficit to tame.


The torture the budget sham will inflict on Californians by stretching the pain out over years upon years by borrowing and slights of hand will end up being much worse than if the hammer just came crashing down all at once and we all had to deal with it for a year or so.


This budget isn’t about saving California. It is about avoiding real decisions. It is painfully obvious we can’t afford to line Capitol Mall in Sacramento with office towers jammed with an army of bureaucrats whose sheer numbers would have had warriors like Napoleon shaking in their boots.


There is redundancy galore in Sacramento.  The Hoover Commission found there are a dozen agencies dealing with water in Sacramento. Why not end the duplicity and streamline the mess known as state government?


The answer is easy. State workers – or more especially their unions – control the governor and the 120 cowering misfits who have the audacity to call themselves leaders in the California Legislature.


Besides, it took tremendous pressure for the legislature to finally kill off the useless Integrated Waste Management Board because its governing board was stuffed with their old cronies making close to $100,000 a year for doing essentially nothing.


We were told repeatedly that eliminating the board wouldn’t make much of a difference. It was too small of an amount of money. Funny, but that’s the line they use for just about everything up in Sacramento.


California’s action - or is that auction - hero governor forget to mention three little words in is his public statement made while signing the farce of a budget as to what the next four to six months hold in terms of the potential for yet another round of budget hemorrhaging.


The words? “I’ll be back”

To contact Dennis Wyatt, e-mail dwyatt@mantecabulletin.com




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