The budget impasse in California is over. The governor and the legislature agreed to a “compromise” that does essentially nothing and solves no long-term problems.

Please consider California Budget Deal Ends Impasse With Vote Expected in Days

California Governor Arnold Schwarzenegger and top lawmakers came up with a compromise to close a $19.1 billion deficit and give the state a budget, ending a record three-month impasse with a vote expected next week on the spending plan.

The accord doesn’t raise taxes, as sought by Democrats, nor does it dismantle the state’s welfare system, proposed by Republicans, the leaders said yesterday. Passage of the plan would clear the way for Treasurer Bill Lockyer to borrow about $10 billion on Wall Street by issuing short-term notes needed to pay bills until tax revenue comes in later in the year.

Legislative aides briefed on the details said last week’s framework cuts spending by around $8 billion, less than the $12 billion the governor had proposed, and holds education spending about the same as last year’s level, around $49 billion. The framework also would suspend for two years a tax break that let companies deduct part of net operating losses in a previous year from current-year taxes, said the two people briefed on it.

Nothing was solved by this “compromise”. The state’s massive welfare system is still intact, the massive pension problem was shoved aside, and the bloated state prison system was not even discussed.

Instead, the state will borrow $10 billion of the $19 billion it needs, hoping the revenue comes in later. It won’t. California will be back at this next year with a different legislature and governor in place.

Perhaps democrats can win the Governor’s office and enough seats in the legislature to raise everyone’s taxes enough to support more free give aways to unions, illegal aliens, and other groups with their hands in taxpayer pockets.

Corporations Vote With Their Feet

Wealthy taxpayers and corporations are not bothering to wait for the vote. They have had enough. Nevada News and Views reports Companies Fleeing California For Utah Over Confiscatory Tax Rate

Computer software giant Adobe, computer game monster EA Games, and Internet auction king ebay are abandoning California to set up shop in Utah. Why? California’s horrid business climate and high taxes.

Adobe Systems, maker of a suite of graphics programs such as Adobe PDF, Illustrator, Photoshop, and InDesign, have announced that they are building a $100 million facility in either Salt Lake City or in nearby Utah County, Utah. The facility will bring thousands of jobs to Utah over the next few decades.

In May the Internet auction company ebay also announced a major new facility to be built in Salt Lake City. The $287 million data center will also bring hundreds of new jobs to the Bee Hive State.

Not to be forgotten, games maker Electronic Arts opened its new facility in July in Salt Lake City where around 100 employees are already at work.

These companies fleeing California’s horrid business climate are not alone. There has been a steady flow of businesses out of California for the better part of a decade. As California’s political morass worsens, as its budget woes increase, and as her politicians are proven incapable of making the hard budgetary decisions to take power from unions and chop unnecessarily lavish social programs, the state’s jobs are bleeding out. California is an a freefall the end of which is still unseen.

It should be noted that Utah is a right-to-work state.

The article mentions by name, about 70 companies that have left California. Many of the names are highly recognizable.

Mike “Mish” Shedlock
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