How Do States Handle Budget Problems?

Date: August 3, 2008

If you are one of the middle class doormats who watches helplessly as your state and local property taxes push you onto the brink of bankruptcy year after year, you may be interested to know how states handle their budgets when revenue is predicted to be woefully short of the king’s ransom our self-centered politicians demand from the peasantry.

How New Jersey Handles Budget Problems

In New Jersey, it’s a simple task for the politicians when they find capricious reasons to spend more money – they raise taxes. Now it may be in the form of an increase in the sales tax to cover the $270 million that was already spent (to patronage contractors) before the voters defeated the stem cell research program, taxes on small business, or even massive reductions in property tax rebates (another scam if we ever saw one).

Who else but the middle class will pay for the Democrat’s “vital” programs with fiscally irresponsible barrels of money spent in the so-called Abbott districts, just for starters? You probably went to a rundown school which, according to the liberals and “progressives,” means you obviously received an inferior education. But the Democrats can fix that. They’ve already spent $8.6 billion in a miserably failed attempt to build new schools with crystal chandeliers and Olympic size swimming pools (that are already covered in graffiti). But since they blew that money with few schools built, Governor Jon Corzine has the solution. He’s going to borrow another $3.9 billion, naturally without voter approval as required by the state constitution, to finish the job, so your children can eventually pay back the $100 billion the state owes when your children start working and paying taxes.

What, you expected to see the issue on the ballot this November? You must be mad! The sheep have no say in the Garden State.

So while the politicians ensure that their golden nest eggs (humorously called pensions) are secure, they just keep bleeding the middle class. Who else should pay the piper to keep the machinery of corruption and waste humming along? Sure, the rich will cough up a few more bucks. But are they really hurt by the oppressive tax increases? The pain will be minimal. Maybe they’ll have to buy a Mercedes instead of a Rolls Royce. Are the poor going to feel the pain? Hardly likely, since they rarely pay any taxes anyway. In fact, the ignorant masses are the most likely recipients of the largesse from the New Jersey equivalent of Fort Knox. How else would you expect the corrupt Democrats to buy their votes?

So who’s left? Why, you are sucker! With the double punch of a depressed economy and higher prices hitting everyone in the purse, states will find that their crystal ball predictions for revenue will be in the toilet, so you, the middle class, will be the target to cover the gap to feed the frenzy of uncontrolled government growth.

The financial wizards in the state of New Jersey are already predicting a decline in revenue between $500 million and $1 billion. Will the politicians do something about the double dippers or make state workers ply their trade until the age of 60 or 65 (instead of 55), or pay one farthing for their lifetime health or dental care, or decide that Abbott Districts should not get more money than any other school districts, so we can truly have EQUAL education (which could save close to $3 billion a year)? Dream on because there will be no action on any of these issues. The bottom line is the legislature will impose a “temporary” tax to fix the problem. And in case you haven’t noticed, these “temporary” taxes have a way of lingering on until you’ve died in the Poor House.

So tighten up your wallet, because you are going to feel more pain until the crooks and empty suits are thrown out of office. And if Democrats win the presidential election in November, you can expect your federal taxes to increase by at least 10% to pay for irreversible, inefficient and uncontrollable social programs (like universal healthcare) to add to your fiscal woes, in addition to the 2008 $485 billion federal deficit mismanaged by the Bush administration.

How California Handles Budget Problems

California, with a massive budget of $133 billion for its 38 million residents, faces a $15 billion shortfall. The budget dispute has broken down along party lines. Democrats have insisted on increasing taxes to help close a $15-billion budget gap. Republicans are banking on cuts in government services and, like Governor Schwarzenegger, have focused on changing the state budget process to create a more secure rainy-day fund.

The Governator, expressing frustration with lawmakers' failure to approve a state budget, ordered his administration to lay off thousands of part-time employees and moved to temporarily slash the pay of most full-time staff. Schwarzenegger, a RINO (Republican In Name Only), apologized to state employees. But he said he had no choice in the absence of a budget one month into the fiscal year

Nearly 200,000 employees could have their pay cut to the federal minimum wage of $6.55 an hour, with full salary reimbursed once a budget is signed. More than 10,000 lost their jobs on Thursday, July 31st. Exceptions were made for those deemed too critical to let go for purposes of law enforcement, public health and safety or other crucial services. Schwarzenegger also limited overtime and imposed a hiring freeze.

It is far from clear, however, whether the governor can put the salary cuts into effect, or how long it might take. State Controller John Chiang, a Democrat who was elected to his post, suggested that the governor had overstepped his authority and said he would not cooperate. Chiang made his statements in a letter to Schwarzenegger and at a Los Angeles news conference.

Chiang disputed the governor's interpretation of a 2003 decision by the California Supreme Court that Schwarzenegger says requires most employees to be paid only the federal minimum wage during a budget impasse. And the controller insisted that the state has enough money to pay its bills through September.

Speaking to 100 union members outside the Ronald Reagan State Office Building in Los Angeles, Chiang called them "innocent victims of a political struggle. The state of California, the elected leadership, cannot put the important public servants of California in harm's way," he said. "We put people first, we make sure we protect their interests, and that's why I have to tell the governor, with all due respect, I am not going to comply with this order."

The workers, members of Service Employees International Union Local 1000, were dressed in purple and chanted in protest against the governor's move.

Gee, we have to wonder, “Did the workers get paid for the day they protested?”

Schwarzenegger said he would file suit against the controller in court "if that's what it takes." But the governor also expressed hope of signing a budget within days, which would make a battle unnecessary.

An agreement, if one is reached, will have come too late for the 10,300 part-time, seasonal and occasional employees who Schwarzenegger's aides said received pink slips on July 31st, without any guarantee of being rehired later. That is about half of all such state workers.

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The irony of all of this political pandering is that once the budget is signed, just as Corzine did in New Jersey, the California legislature will pass a bill authorizing all state workers to receive full compensation for the salary they lost during the budget impasse, so we the taxpayers are paying through the nose once again for state worker’s freebie vacations. Regardless of where you live, nothing changes except the middle class gets ripped off once again.

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