California predicts $1bn budget surplus

After a decade marred by ballooning budget deficits, rising unemployment and swingeing cuts in public services, California’s economy may have finally turned a corner.

The state was hit hard by the financial crisis, with the rate of mortgage foreclosures and unemployment much higher than the national average. Regular budget deficits forced the state to slash public services and two years ago it even had to offer IOUs to its creditors in lieu of cash.

But jobs growth in the Golden State, an economy larger than those of India or Russia, has outpaced the national trend in the US in recent months. California’s Legislative Analyst’s Office is projecting a $1bn budget surplus by the 2014-2015 fiscal year, as $6bn of new tax revenue is due to flood into state coffers after voters passed a staggered tax increase on individuals and families earning more than $250,000 and $500,000 a year.

The LAO said years of spending cuts, the new taxes and an economic recovery had “combined to bring California to a promising moment: the possible end of a decade of acute state budget challenges”.

The passage of Proposition 30, which increases the top rates of tax with new money ringfenced for the state’s ailing education system, was a big victory for Jerry Brown, California’s governor. Mr Brown has urged Barack Obama, president, to consider the state’s election result – and the willingness of California voters to sanction new taxes on the wealthy – in his negotiations with Republican congressional leaders over the so-called fiscal cliff.

But critics of Proposition 30 say it could prove harmful to California and should not be replicated at the national level.

“Dramatically increasing taxes on entrepreneurs and small business owners, as Prop 30 does, is going to hasten the exodus of employers from California to other states, and the jobs and tax revenue will go with them,” said Darrell Issa, a Republican congressman in the state, in an emailed statement.

“Repeating that mistake on a national scale will force those jobs overseas to countries where the business climate is more favourable.”

A spokesman for Mr Brown responded that Republicans liked to “drone on” with complaints about California. “We’re leading the nation in job growth and Mitt Romney just spent Thanksgiving at his home near San Diego,” he said. “There is only one Golden State, and it will continue to be a magnet for people all over the world – including former Republican presidential candidates.”

http://www.ft.com/intl/cms/s/0/bd7eeb8c-3d66-11e2-b8b2-00144feabdc0.html

 

LOL, Would you like to bet on whether or not this happens?

 

And they are already spending it.

These are the same people who projected tax revenues from the tech boom to continue forever and adjusted the pay and retirement packages of public employees "to keep pace with the private sector." Funny that there wasn't a peep about keeping pace with the private sector when the tech boom went bust.

This state government is FUBAR. Since I don't see that changing in my lifetime, I am cutting ties as soon as I unload my real property holdings. Such a shame, really. It is a beautiful place.

 

According to CNN analysis, California's had the 6th highest per capita taxes for the past 20 years; yet California's schools are ranked 47th, roads ranked 45th, and the state has the worst credit rating in the country.

At one time, California was 7th in the country in per-capita GDP. Now California is 12th, soon to be 14th as they get passed by Minnesota and Maryland.

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California has deep structural demographic and economic problems:

http://online.wsj.com/article/SB100...7277242682364690.html?mod=WSJ_Opinion_LEADTop

"From the mid-1980s to 2005, California's population grew by 10 million, while Medicaid recipients soared by seven million; tax filers paying income taxes rose by just 150,000; and the prison population swelled by 115,000." (Yes, you read that right. Of the ten million person population increase, 70% receive medicaid benefits and only 1.5% pay income taxes.)

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The biggest problems is jobs. Even though California is showing job growth, most of the jobs being created are low-paying, often minimum wage. The best jobs, called STEM jobs (science, technology, engineering, mathematics), have been leaving the state for almost ten years.

The article below documents the changes in population and employment in California, and shows why the state's in so much economic trouble.

"California is no longer an incubator of high-wage jobs. The state lost 370,000 jobs paying 25 percent or more of the average wage between 2000 and 2008. This compares to a 770,000 increase in the previous 8 years. California is trailing Texas badly and the nation overall in creating criticial STEM jobs and middle skills jobs..."

http://www.newgeography.com/content...phic,+and+political+commentary+about+places%2

 

Is it April fools already?!?

California is a toxic wasteland that the liberals have utterly destroyed!

 

California has a much larger population than Texas (38 million vs 26 million) so it's not surprising that they create more jobs, especially when cherry-picking short time-frames. Look at per-capita job growth/loss by skill/wage level over the last ten years and you'll see a very different looking graph.

http://www.newgeography.com/content...phic,+and+political+commentary+about+places%2

 

And yes, Bloomberg is now a liberal shill....sad, I used to respect them and seemed to be solid upfront business news and stats. I see more and more cherry picked, manipulated data and stories from them that favor the liberals.

What is Cal unemployment rate? 10.3%? They have one of the highest poverty rates, highest guberment dependent rates, biggest deficits & debt, with the highest taxes. It's all a failure! When dems/liberals take over, it all goes to hell. Ill, NY, Cal, etc....oh, and we are watching it first hand in the EZ.

 

And they just passed prop 30. Absolute theft. A wonderful state, scenery, with some of the best cities in the country and world--but their politicians and electorate are slitting their throats. The bay area and parts of SoCal are successful despite high taxes not because of them.

 

SHENANIGANS!