Now that growth in California’s tax revenue is widely understood to be a mirage, with April wiping out all the gains in the previous 4 months, Schwarzenegger Preps ‘Terrible Cuts’ to Close Deficit.

California Governor Arnold Schwarzenegger will seek “terrible cuts” to eliminate an $18.6 billion budget deficit facing the most-populous U.S. state through June 2011, his spokesman said.

“We can’t get through this deficit without very terrible cuts,” Schwarzenegger spokesman Aaron McLear told reporters in Sacramento. “We don’t believe that raising taxes right now is the right thing to do.”

Schwarzenegger’s newest plan will revise the proposals introduced in January to account for the tax-collection shortages. In January, the governor said California may have to eliminate entire welfare programs, including the main one that provides cash and job assistance to families below the poverty line, without an influx of cash from the federal government.

Since then, the Democrat-controlled Legislature has made few strides toward closing the budget hole. Legislation adopted during the emergency session ordered by Schwarzenegger knocked about $1.4 billion from the deficit.

Democrats this week introduced a package of bills that would raise as much as $2.9 billion annually by imposing a 10 percent severance tax on oil production in the state, repealing corporate-tax breaks approved last year to spur job growth and assessing commercial property taxes differently.

By the beginning of 2010, Schwarzenegger and the lawmakers had closed a $60 billion deficit partly by slashing spending on schools, temporarily raising taxes and borrowing from local governments.

Prison System Insanity

I do not care for the Greece comparison, but some of the slides in 16 Reasons Why California Is The Next Greece are quite telling.

Slide #7: In 23 years, California erected 23 prisons and ONLY ONE university
“In a recent 23-year period, California erected 23 prisons — one a year, each costing roughly $100 million dollars annually to operate, with both Democratic and Republican governors occupying the statehouse — at the same time that it added just one campus to its vaunted university system, UC Merced.”

Slide #9: CA spends $859 million per year on imprisoned illegal immigrants
“There are roughly 19,000 illegal immigrants in state prisons, representing 11% of all inmates. That’s costing $970 million during the current fiscal year. The feds kick in a measly $111 million, leaving the state with an $859 million tab.”

Proposals for California

Borrowing money from local governments does not “balance” budgets. Nor do “temporary” measures.

California needs to slash spending permanently. One good way to do that is take every illegal alien in a California prison and send them back to their country of origin. The next thing California needs to do is privatize the prison guard system, getting rid of every union prison worker in the process.

California also need to privatize every service it can, implement a school voucher system, and cut the pay and benefits of the legislature and their bloated staffs. Finally, California needs to kill defined benefit plans for any union and government workers that remain (ideally none).

Finally, California need propositions to undo some of the silly union-sponsored and voter approved propositions that are destroying the state.

Instead, California pisses around the edges, borrows from the future, and in general never solves a damn thing.

It’s not just California. Illinois has the same problems. Please see Illinois $13 Billion Budget Woes Reach Boiling Point; Governor Quinn Works for Union Thugs and Promises to Raise Taxes by 50%; Bill Brady for Governor for details.

The only governor in the country with a real clue is New Jersey Governor Chris Christie. Christie has shown real leadership in taking it straight to the unions. No other governor has come close to doing what he has for the taxpayers of his state.

Mike “Mish” Shedlock
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