FACE-OFF: A BAIL-OUT FOR CALIFORNIA?

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on hot topics

LET’S STAY OFF THE BAILOUT BANDWAGON

By Steve Hunyar

December
26, 2008 (San Diego) —When
former California Governor Grey Davis first took office in 1999, the
California State budget was $81.3 billion.  By 2003, the budget
ballooned to $98.9 billion when Davis also announced the state was facing
a possible $28 billion shortfall.  The level of fiscal mismanagement
was astonishing to say the least.

Infuriated by Davis’ budget announcement and the ongoing energy crisis,
Californians voted Davis from office in an historic recall election,
and simultaneously voted to replace him with Arnold Schwarzenegger.  The
new governor reinvigorated state politics and gave Californians a sense
of hope for the future.  Voters felt back in control of our state
again, and felt that we had a leader who was going to take the bull by
the horns and break the endless cycle of spending increases.

Last September, Governor Schwarzenegger signed a $145 billion budget,
which included a $15.2 billion budget gap.  To date, the state legislature
has not approved the budget and continues to fight over the details. 

During the same timeframe, Schwarzenegger has been lobbying Capital
Hill politicians to provide a bailout for California.  Reminiscent
of images of the Great Depression, the Governor traveled to our nation’s
capital with his hat-in-hand, asking the Federal Government to do what
he has been unable to do, close the budget gap.  Buddy, can you
spare a dime?

In 2003, Schwarzenegger campaigned on fiscal responsibility and balanced
budgets.  However, the state budget has swelled over 46% under his
tenure.  Do you feel as though you are getting 46% more goods and
services for your tax dollars than you did just 5 years ago?

The real culprits with respect to the California budget are colossal
waste and a lack of leadership.   One example of the enormous
waste is our state education.  Only 45% of every education dollar
collected from taxpayers makes it to the local school districts, leaving
55% for Sacramento bureaucrats who do little or nothing to add value
to our children’s education.  I can only assume that every other
bureaucracy does the exact same thing to the other programs throughout
our state – suck them dry before the money reaches the departments that
actually put it to good use.

This is not the typical increase taxes versus cut spending message we
hear from politicians on both sides of the aisle.  Much of this
gap can be closed through eliminating waste.  Like most business,
government needs to streamline, eliminate middle management, reduce the
regulatory burden on its agencies via audits, and be more efficient.  Anyone
who has dealt with the government knows exactly what I am talking about.  We
see laughable examples of government inefficiency daily.  It’s not
very funny when you realize it’s our money.

Sacramento’s response to anyone who dare oppose the budget is the usual
litany of fear mongering tactics.  Threatening cutbacks in law enforcement,
fire protection, and releasing prisoners are the usual strategies employed
by politicians wanting to divert attention away from Sacramento’s wasteful
spending habits. 

I fully understand that the Governor is only one part of our state government
and that the legislature is a large part of the problem.  However,
as with Harry Truman, the buck has to stop somewhere.  Governor
Schwarzenegger needs to stop with the platitudes and rhetoric, take meaningful
action, and show some leadership.  Note to Governor:  Stop
acting like an actor and start governing like a governor.  Being
in charge means having to make very tough decisions.

He knew these problems were coming when he took office.  He needs
to lead this state out of this morass by cutting waste – starting with
the Sacramento bureaucracy.  At a time when most Americans are unsure
of the future and need reassurance, we do not need a leader who’s response
to this crisis is to ask for a loan from Big Brother. 

There are a number of problems associated with asking for bailout monies.

First, a bailout benchmarks an unhealthy precedent as standard operating
procedure for our state.  A declaration to future governors and
legislators that they can run-up huge spending bills and pay for it with
borrowed money when necessary.  This is tantamount to a credit card
with no limit.

Second, amortizing California’s poor financial management burden onto
Americans in other states is unhealthy policy.   It will create
additional resentment of Californians by residents of other states that
have been fiscally responsible.

Lastly, Californians will be on the hook for principle and interest
on loans to the Federal Government.  Just like the automakers, there
will be strings attached to these loans.  Washington D.C. already
wields enough power over California; let’s not add to that leverage.

The Governor and Legislators knew this was coming.  A Sacramento
insider warned me two years ago, ‘they have been creatively cooking the
books for so long, they are running out of ideas.  There are no
more bookkeeping options available to them’.

The government is one of the few entities that seeks to increase in
size and scope when economies sour.  Families and small businesses
tighten their belts.  Savings is at an all time high in America
right now because the citizenry is digging in for the bad economy.  The
state government could learn a valuable lesson from its constituents.

We need to send a message to Sacramento to stop the insanity.  The
citizens of California deserve someone with the fortitude to stand-up
to the madness and say enough is enough.  The Governor and his fellow
politicians in Sacramento need to act like every responsible household
in California.  Going to Washington D.C. with hat-in-hand and a
palm up is not the answer.

Steve Hunyar lives with his wife and two children in Alpine.
Owner of a software company, he is also a former school board member.
He is the author of a new book, America the Disposable: The Culture War
During the Era of Apathy. For more info, visit www.steve4kids.com.

PARDON ME, CAN YOU SPARE A BAILOUT?

By Jamie
Reno

December
19, 2008 (San Diego) — This morning I’ve been boning
up on our state’s massive budget problems and the unthinkably deep
cuts that loom. It’s not a pretty picture. Gov. Arnold Schwarzenegger's
underlings are reportedly already telling labor unions that the governor
will order two-day-a-month unpaid furloughs for state employees beginning
in February to help the state save money. And that’s just the beginning.
I’m sure more painful mandates and sacrifices are coming.

Reading all this bad news, I had a moment of clarity (or insanity, depending
on your perspective): If the federal government can bail out failing
industries to the tune of $17 billion, why can’t it bail out state governments?
In other words, why can’t the Feds put some of our taxpayer money back
into our own state coffers? California is in crisis, as are many other
states. Imagine what $17 billion could do to stimulate the state economy,
create more jobs, keep recreation centers and pools and after-school
programs open, build roads, support social services, etc? Am I missing
something, or does this just make too much sense?

This would not be robbing Peter to Pay Paul, nor would it be rearranging
the Titanic’s deck chairs. It would simply be a rare example of our tax
dollars actually going to help our communities, which is what our tax
dollars are supposed to do, rather than going to private entities that
may or may not have earned the right to be bailed out. I understand the
importance of saving America’s automobile industry, and I do care about
jobs for auto workers, as overpaid as some of them are thanks to out-of-control
unions. But I did not pay my federal taxes with the expectation that
they would be used to bail out an industry whose leaders have been so
woefully visionless for the past 30-plus years. And I don’t think you
did either. Every CEO at every major auto company should have been sacked
before any monies were given by the Feds to these guys who to a large
degree drove themselves into this ditch.

If bailing out a state with federal money sounds like a wacky, out-of-the-box
idea, maybe a wacky, out-of-the-box idea is just what we need. Why shouldn’t
we bail out California, which has the eighth largest economy in the world
but could be out of cash by February? Granted, there would be heated
debate over where this money would go. But there’s always heated debate
over where state budget money should go. I don’t want to hear some pencil-neck
economist’s long-winded take on why this idea won‘t work. Let’s just
do it.

Here in East County, the state budget mess will likely have a huge negative
impact. My biggest concern is what it will do to our two local colleges
– Cuyamaca and Grossmont. These are both esteemed institutions and integral
parts of this region that need and deserve every state dollar they get.
East County is already reeling as a result of these tough economic times.
Sales tax measures were passed last month by voters in both La Mesa (Proposition
L) and El Cajon (Proposition J) just to retain important city services
from cops to disaster preparedness to road repair. Social services, too,
are likely to suffer greatly with this dreadful state budget as more
East County residents lose jobs and homes.

I’m not the first to raise this idea, of course. Governors nationwide
are already pushing for it. Not long after the bailout news broke, the
National Governors Association sent a letter to Congress asking for immediate
assistance. The Center on Budget Policy and Priorities recently released
a report saying that states are facing ‘a great fiscal crisis’ and that
their revenue projections are only weakening. Only nine states—Indiana,
Texas, Wyoming, Alaska, North Dakota, Nebraska, South Dakota, West Virginia
and Montana—aren’t facing budget shortfalls in the next two years, the
report said. The economic slide is especially tough on the states because
they have balance-the-budget requirements. The Feds don’t, obviously.

Mayors, too, are asking for help from Washington. Last month. the U.S.
Conference of Mayors came up with a “Main Street” stimulus package and
identified 4,591 infrastructure projects that would cost $24.4 billion
but would create more than a quarter of a million jobs in return, the
mayors said. Cities are really struggling, locally and nationwide. Officials
in Philadelphia, Atlanta and Phoenix have reportedly asked for a share
of federal bailout money allotted to financial institutions. Worried
about the state shortfall, San Jose’s mayor recently told reporters he’d
ask the Feds for $14 billion for public transportation and other projects,
but then he backed off and said he’d only ask for whatever the fair share
would be if the Feds chose to help cities.

Gov. Schwarzenegger recently gave a speech in which he said the federal
government only sends 80 cents to the state for every dollar California
sends to Washington. He was quoted as saying, “So it’s not like we’re
asking for a bailout, because it’s our money. We’re just saying, ‘Hey,
give us some of our money back.’”

I agree with the Govenator on this one. But his fervent request , as
well as many other pols’ pleas, have fallen on deaf ears. Washington
types often ignore state and local officials, but they listen closely
to lobbyists and donors. As a result, the only bailouts we’ve seen to
date have been for the Wall Street Ponzi schemers and the Detroit dinosaurs.
If the Feds can bail those guys out, they can and should bail out states
like California. Sounds to me like a no-brainer. Which means, of course,
that it will probably never happen.

Jamie Reno is the longtime San Diego correspondent for Newsweek.
He has written for many other publications including the New York Times,
Rolling Stone, Sports Illustrated, People, Entertainment Weekly, Los Angeles
Times Syndicate, San Diego Union-Tribune, San Diego Magazine and USA Today.
He has won over 70 Society of Professional Journalist and Press Club awards
and is the author of Hope Begins in the Dark. www.hopebeginsinthedark.com