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Friday, Feb 3, 2023
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Balancing State Budget Avoiding the Obvious Problem

In Sacramento, the big to-do these days is about the size of the deficit in the 2008-09 fiscal budget just unveiled.

It’s a whopper , it could reach as high as $17 billion.

Gov. Arnold Schwarzenegger tells us that taxes will have to be raised, while services are cut. He’s proposing, among other items, extending the sales tax to services, including legal services. (Hey, good luck with that.)

The real story here is that no one is talking about pay and benefit cuts for state workers, or reducing the head count for the state government work force, other than teachers (who always make good fall guys).

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Apparently, touching compensation or benefits is off the table for most of the work force.

Everyone knows that state and local government workers (the aforementioned teachers being an exception) are paid more handsomely and receive far better benefits than us working stiffs in the private sector.

Ironically, it is that very same private sector that is always asked to shoulder the burden of such shameless largess.

It’s an imbalance that’s been out of balance for years. Just ask anyone who’s been following the pension crisis in the city of San Diego.

City Hall, like the state Capitol, has become a repository of elite Mandarins, not the usual municipal worker. And for the most part, neither their pay nor their benefits can be touched. A Superior Court judge said so.

We, the taxpayers, have been asked to pay for Sacramento’s spending binge without much input.


Miscalculations

Thus, the miscalculations of the past become the financial quagmires of the future.

Schwarzenegger, and Gray Davis before him, have given into the demands of a highly organized work force that’s completely isolated from the economic forces buffeting the rest of us.

The government’s labor force, tightly organized, influences the budget process way beyond its numbers. It influences decision making under the rotunda each day lawmakers are in session.

We’ve begged and borrowed to balance previous budgets without fixing the underlying problems associated with levying taxes to pay for government services.

We haven’t faced the obvious, and the obvious is this: We can’t tax and spend our way out of the problem. We have to “cut, trim and squeeze” as President Reagan used to say when he ran the state from the governor’s chair.

And we have to do it soon.


Tom York is editor of the Business Journal.

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