Numbers can tell a story, and the California state budget is a murder mystery.
On Thursday, Gov. Jerry Brown stood between two easels stacked with charts and warned that the good times can’t last forever.
There’s no money for new spending, he said as he unveiled the annual May revision of his January budget proposal, because although state revenues are a little higher than he thought they’d be back in January, they’re still $3.3 billion lower than state finance officials projected last June.
If these are the good times, why are state revenues lower than expected?
State Finance Director Michael Cohen said the revenue shortfall is mainly due to sales tax revenue coming in below expectations. People just didn’t make purchases at the rate that was anticipated.
The answer to that question is on page 5 of the state’s “Revenue Estimates” document. “The level of wages has been revised downward,” it says. The Economic Research Unit further explains, “In the updated 2015 taxpayer data from FTB (Franchise Tax Board), the level of taxable wages was revised downward. This supported our interpretation of the weak cash data for sales tax receipts.”
In other words, Californians are earning less money and buying less stuff.
And these are the good times. We’re in “an economic recovery that won’t last forever,” the governor said.
California is spending record sums on anti-poverty programs, $19 billion per year more than in 2012. We have the highest poverty rate in the nation, over 20 percent, according to the Census Bureau, when the cost of living is taken into account.
But taxpayer-funded programs can never catch up to the problem, because higher taxes are part of the cause of the problem. Where are the jobs that allow people to climb out of poverty and enjoy a rising standard of living, instead of declining wages and never enough money to buy things?
Those jobs are being driven away to other states with better business climates, and the jobs that are left in California pay less than our budgeteers expected.
What can we do about it?
We could repeal the costly and restrictive climate legislation recklessly passed a decade ago. Assembly Bill 32 and Senate Bill 375 should be re-examined in the harsh light of current data showing declining wages and purchasing power.
AB32 has added extra costs to manufacturing and energy production in California, and SB 75 has limited construction of new homes in affordable areas by trying to contain “sprawl” and reduce driving.
As a result, we have fewer high-paying jobs and a shortage of housing. Combined, these have driven home prices out of reach, which further discourages employers from locating here.
This is actual harm to California residents. Weigh that against what we’re accomplishing with the climate legislation.
“Even if California were to eliminate carbon dioxide emission entirely, it would have no effect on global climate change,” says the state Senate analysis of…