Debate rages over California’s budget surplus

May 26, 2013

moneyAfter years of battling over state budget deficits and spending cuts, California lawmakers are now arguing over how the state should deal with an unexpected surplus. [NewYorkTimes]

The Legislature’s independent financial analyst estimates the surplus at about $4.4 billion while Gov. Jerry Brown projects the surplus at closer to $1.2 billion.

Nevertheless, advocates for the disabled and those impacted by social program cuts believe some of the money should be used to reverse those cuts while others want the money put away for the next economic downturn.

Proponents of putting the money away for a rainy day note the uncertainty about whether the revenue is a one-time event, the result of wealthy residents selling off investments at the end of last year to avoid increased costs as federal tax cuts expired.

Brown opposes significant increases in social program spending and wants the excess put into savings. His administration provided the lower $1.2 billion estimate.

“A good deal of the surge of revenues that we have seen since the beginning of the year is the result of higher-income individuals being able to realize some of their gains at the end of 2012,” said H. D. Palmer, the director of external affairs for the California Department of Finance to the New York Times. “We don’t believe it is prudent to budget on the capital gains. It wasn’t that long ago when we had the same experience during the dot-com boom. We don’t want to see that movie again.”

The office of the independent legislative analyst called Brown’s figures pessimistic, saying the extra revenue was closer to $4.4 billion.

“I support the governor’s call to pay down more debt aggressively, I support the notion of a rainy-day fund,” said Darrell Steinberg, the president pro tem of the Senate to the New York Times. “But I also believe that we have an obligation to make some limited but important investments in restoring some of what has been lost over the last four or five years.”

 


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The Gimlet Eye

The bureaurats speak of the money as if it belonged TO THEM:–(


Russ J

PENSION FUND! It’s gonna gobble of any and every surplus for the next 20 years. Don’t spend it – you crazy MO-FO poticicoez


The Gimlet Eye

Every penny of that money should be refunded to the taxpayers.


Spirit Filled

If they refuse to send our money back than at least pay back some of our debt. Maybe the people that lent it to us need some back. If our dear Brown borrowed money from the mafia who would get paid back first. Well pretend that we owe the mafia and get us out of debt.


When you owe someone you are chained to them. We need to be free. That’s what we tried to do, pay the house off early and take care of all our debts. Worked very well and I didn’t have a government job. Just a frugal wife.


God Bless


Citizen

Jerry Brown is the only thing keeping the California legislature from spending every penny we have and more. He does have loyalty to the state of California; unfortunately we have too many legislators who see their job as an opportunity to use the state as their ATM machine for their own interests/constituencies.


CCWheelers

I think saving is always better when in doubt. Investing is the best idea. California has large areas that do nothing. If we invested in energy so Californians can lower their costs, that would be smart. California has a bigger problem right now. Santa Barbara normally has 22″ of rain each year (and is very dry).. This year we have had about 8″. California has a water problem. A portion of that money should go towards a water, and emergency equipment and efforts to make us safe from fires.


r0y

Never save paper money, though (or worse, electronic). Convert it to tangible goods (land, assets, etc) then call that a savings plan. Only a fool who does not understand fiat currency would want to save paper money.


Plus, with how the private banking system is destroying our national currency, it would be foolish to pay off any debts, beyond the legally-required minimums. When a coke is $1, and you make $5/hr it’s one thing to have $250K in debt. When that same coke is now $50, and you make $500/hr, that debt is still $250K. It’s an extreme example, but not unheard of (hyperinflation).


Still, in the end this is only estimates and projections. Until it materializes, I’d say do not count the chickens before they hatch.


tomsquawk

i don’t think we can go to sleep on this one before it is frittered away. write or call your representatives and demand how the money should be spent. keep it out of the GENERAL FUND and give-aways. better yet a very retrictive proposition that would mandate how it would be spent. no pay raises as well. It’s our money.


BeenThereDoneThat

Wow I agree with Brown. That’s scarry.


I agree that people have short term memories. We are still struggling and the first thing anyone can think of is, lets get out the credit card and go on a spending spree.


Lets try something different, JUST ONCE and show some fiscal restraint!!


OnTheOtherHand

I don’t know why so many people rag on Brown about economic issues. He isn’t perfect but he has been a voice of fiscal reason overall within the Democrat Party in this state. This is not the “same” Gov. Brown as the one elected a couple of decades ago. He is close to the best governor we could expect given the political demographics of this state. Criticize him all you want on specific issues (I have my list) but we could easily do worse overall.


bobfromsanluis

” … but we could easily do worse overall.” Yeah, like thinking about what Meg Whitman would do as Governor and having the news that the state has any sort of surplus- tax breaks for the wealthy, perhaps?


racket

Give it back.