Archive for July 23rd, 2009

As Arizona stares down a bigger looming budget than our neighboring state of California it’s encouraging to see the Golden State making some tough decisions. Remember their voters shot down any new taxes a few months back basically telling the politicians to figure it out.

Here’s a great opinion from WSJ about California’s next move.

The top points:

Democrats were even forced to implement welfare reforms that most of the rest of America put in place 15 years ago: a work requirement and a four-year limit. The agreement eliminates about $2 billion a year in automatic benefit increases and saves another $1 billion by auditing in-home health-care payments that are notorious for fraud. “Only in California,” says Mr. Schwarzenegger, “is welfare still a way of life.”

And

Earlier this year, when the deficit hit $40 billion, the governor and legislature raised sales and income tax rates, making the Golden State the single costliest place in America to operate a business. Right on time, sales and income tax receipts are down $10.47 billion so far this year even with the higher rates.

Even oil drilling off the coast of Santa Barabara!

Instead, the new budget deal sensibly allows more oil drilling off the shores of Santa Barbara, albeit only on “existing platforms.” This will bring in $100 million more a year and could be the first step in shaking the state from its antidrilling phobia despite huge offshore energy reserves.

Tax system overhaul…

California will only generate more tax revenues through new businesses and jobs, and that will require a tax rate much lower than its top marginal rate of 10.55%. With 50% of Golden State income tax revenues coming from the richest 1% of residents, the state needs lower rates to avoid revenue boom and bust. The liberal obsession with income redistribution has destroyed California’s tax base. (Memo to President Obama, if he’s paying attention.)