Tuesday, June 30, 2009

California Revenue Estimates


Projected 09-10 revenue budget:

55,863 - personal income taxes (54.4%)
29,248 - sales tax (28.5%)
11,982 - corporate income tax (11.7%)
5,516 - insurance and other (5.3%)


So...if you can pay your personal income tax with your IOU, you can pay your corporate income tax with your IOU and you might be able to pay your sales tax with your IOU...and there will probably be at least $12B in IOUs issued by 9/30...

Good luck with that 10/1. CA might have the money, but it won't have the cash.
This isn't really a big deal.

If California was sending IOU's to welfare recipients this would be a big deal.

People that pay enough taxes to get a return don't generally riot.

It's not welfare moms who are going to feel the heat. It's businesses who sell and provide services to California. Ironic these businesses have to live within their means to stay in business are having to take the **** sandwiches from Cali...
And how do the vendors, contractors and local governments who get paid with IOU's then pay their own employees?

Also with IOU's?

June Federal Receipts: The Dive Continues, As Does Media Near Silence

June Federal Receipts: The Dive Continues, As Does Media Near Silence


June Receipts:




As we near the end of June, which is supposed to be one of the four biggest months for federal tax collections (January, April, and September are the others), it is clear that the serious receipts shortfalls are not only continuing, but have caused the March 20 projections of the administration and the Congressional Budget Office (CBO) outdated.

Media coverage of the ongoing receipts dive has been minimal at best. A Google News search on "federal receipts" (typed in quotes) returns on seven items, two of them originating from yours truly.

Here is where things stand as of the last Friday of June in both 2009 and 2008, per Uncle Sam's related Daily Treasury Statements: (see above & link for extra column)

Comparing June 26, 2009 to June 27, 2008 is more valid than comparing the same days of both years, because each period contains the same number of Mondays, a big day for receipts, and Fridays, a big day for sending out refund checks.

As you can see, as we approach the end of the month, June 2009 receipts from economic activity are down 25% from last year. It's clear from last year's results that it would be unreasonable to expect a high level of receipts from other than withholdings in the final two days of this year.

Estimating on what I believe is the high side, it looks like total June 2009 receipts will come in at about $230 billion, consisting of about $198 billion in the line items identified above (i.e., another $13.2 billion will come in during the final two days) plus $32 billion in other receipts. That would be a 12% drop from last year's official total, but a 20% drop from last year's $287.8 billion in total receipts from economic activity.

Looking forward to the rest of the year, I estimate the following results based on how the government defines receipts: (see above)

I believe these estimates, if anything, are on the high side. July 2009 will probably come in at 90% or worse compared to July 2008, because July 2008 had over $13 billion in stimulus payments, which Uncle Sam (erroneously, in my opinion) treated as negative receipts instead of outlays. August 2009, vs. August 2008 will be worse than July, because August 2008 stimulus payments were barely $1 billion. September 2009 vs. will probably be even worse than the previous two months, because that month is heavily influenced by corporate income and non-withheld tax receipts, which as you can see above have fallen far more than the overall average. Also note that August and September of 2009 will show year-over-year declines for the second straight year. Monthly year-over-year receipts from economic activity increased for an almost unbroken string of four years up until August of last year, when the recession as normal people define it began.

You can also see that my full-year receipts estimate is almost $60 billion, or 2.8%, below the CBO's March 20 estimate (PDF) based on budget information supplied to it by the White House, and 4% below the White House's own estimate based on the same underlying information CBO used.

As I mentioned in a June 20 post (at NewsBusters; at BizzyBlog), the repayments of roughly $68 billion of TARP money during June by many of the larger banks are not being treated as receipts by Uncle Sam, because the original TARP disbursements/"investments" were not treated as outlays. More on how "Net Present Value" accounting is rendering almost indecipherable federal financial information that used to be mostly understandable is here.

When federal spending is hemorrhaging in the hundreds of billions and trillions, it may seem relatively unimportant to focus on differences of less than $100 billion in receipts. But that is far from the case. First, the declines are far more than what one would expect from an economy that has contracted by about 3.2% (non-annualized) in the past three reported quarters, indicating that something beyond normal business reactions is at work here. Second, the steeper the receipts decline, the smaller the foundation on which to build an economic recovery will be, and the more likely it is that the administration will give us a fake hand-wring and push tax increases as the only answer to the shortfall -- even though tax increases, based on history, would more than likely extend the economic spiral instead of stopping it.

Cross-posted at BizzyBlog.com.

Putin tells Russian casinos to cash in their chips

Putin tells Russian casinos to cash in their chips

MOSCOW – Nearly two decades after the Soviet collapse set Russia's roulette wheels spinning again, Prime Minister Vladimir Putin is calling in the chips on the gambling industry — a symbol of the glitz and excess of Russia's oil-fueled boom.

It's all part of a Kremlin crusade to clean up a country that has long had a fascination with games of chance — and to rein in an industry seen as a breeding ground for corruption and organized crime.

The government ordered the closure of all casinos and gambling halls Wednesday — confining gambling to four special zones in far-flung regions of Russia, most thousands of miles and half-a-dozen time zones away from Moscow.

There is a downside, though. It deprives the federal budget of billions of dollars a year in taxes, while leaving more than 400,000 people without work amid the country's economic crisis.

"They've killed the industry overnight," said an embittered Michael Boettcher, the British founder of Storm International, a casino group that includes the gaudy Shangri-La in central Moscow.

"It's like closing all the five-star restaurants in London because you're eating too much, and saying that if you do want to have them, you'll have to relocate to North Wales," he said. "Who's going to go? Nobody."

More than once Russia has seen officials announce sweeping reforms, only to later back down. So when the gambling law was introduced in 2006, many wondered whether the Kremlin would actually follow through on its threat to pack the $3.6 billion a year gambling industry off to Siberia and other obscure locations.

Many casinos and hole-in-the wall slot machine parlors stayed open until the last possible moment, while the owners of a few gambling dens took the opportunity to expand their business abroad.

"For Rent" signs are up on Moscow's premier tourist boulevard, the Novy Arbat, where the biggest casinos were open for business just days ago. On glitzy Tverskaya Street — Moscow's Fifth Avenue — the Shangri-La was one of the few casinos still doing a brisk trade as customers placed their final bets.

Gambling has exploded in recent years in Russia. Following the 1991 collapse of the Soviet Union, casinos mushroomed across the country, especially in the capital, drenched in oil wealth. Slot machines quickly spread beyond gaming halls to shops and malls across the country.

As gambling grew, so did the problems. The Russian casino culture quickly became synonymous with ostentatious displays of wealth and organized criminal activity. Compulsive gambling wreaked destruction on players and their families.

The evils of playing the odds are penned into Russia's collective consciousness. Fyodor Dostoevsky wrote "The Gambler" in a desperate race against time to pay off mounting debts run up at the roulette wheel, vividly depicting a gambler's rollercoaster ride from exultation to despair.

When Russian lawmakers signed the casino closure law in 2006, the move was in step with the image Putin wanted to project: that of a clean-living, tee-totaling and workaholic president. But equally, say analysts, the government saw an opportunity to weed out the criminal element in the casino business.

Gambling was also seeping into every corner of Russia's public life, moving Putin to assert that the vice "was as addictive as alcohol in this country," according to the Itar Tass news agency. Slot machines were everywhere: grocery stores, railway stations, bus stations and clinics.

"You could buy slot machines for $100 each. It was ludicrous, and something had to be done," said Boettcher.

Russia's diplomatic relations, meanwhile, soured with neighboring Georgia over a damaging spy scandal. With a large percentage of the gaming industry controlled or overseen by Georgians — much of it rumored to be mafia-linked — the government appeared to be sending a message that it was cracking down on organized crime.

Many casino owners say they'd sooner take their business to nearby Belarus and Kyrgyzstan than relocate to the zones.

Bettors, meanwhile, are expected to turn in their thousands to online gaming or poker, which is classified as a sport.

Moscow Mayor Yury Luzhkov, a prominent critic of the gambling industry, said Tuesday he would now turn his attention to Internet gambling and poker halls.

"We've approached the government for a decision on poker clubs and Internet gambling for cash, which is pretty much the same as the gambling business," Luzhkov told Itar Tass. "Poker clubs — how can you say that's a sport?"

Starting Wednesday, casinos and slot machines will be allowed to operate only in Kaliningrad on the Baltic Sea, the Primorsky region on the Pacific coast, the mountainous Altai region in Siberia and near the southern cities of Krasnodar and Rostov, host to the 2014 Sochi Olympics.

It could take five years before some of the outposts are ready to open their doors. In two, not even the location has been settled on.

In the meantime, gambling will go underground, critics fear, creating a breeding ground for corruption and organized crime.

"It could very well turn out to be Russia's Prohibition," said Chris Weafer, a strategist at Uralsib Bank in Moscow, referring to the U.S. drinking ban in the 1920s that rapidly proved unenforceable and ushered in organized crime. "People are not going to give up their gambling fix that easily."

Coleman Concedes

Coleman Concedes

Ending an eight-month legal battle, Republican Norm Coleman conceded Tuesday to Democrat Al Franken in the Minnesota Senate race after the state's high court ruled that Franken should be certified as the winner.

Though Coleman could have tried to take the case to the federal Supreme Court, he told reporters outside his home in St. Paul that continuing to drag out his challenge would hurt his state.

"I just had a conversation with Al Franken congratulating him on his victory," Coleman said. "The Supreme Court of Minnesota has spoken. I respect its decision and I will abide by its result. ...We have reached the point where further litigation damages the unity of our state."

Coleman, though, said he had no "regrets" about his prolonged legal challenge to this point -- which has kept the Democratic Party one seat short of a 60-seat filibuster-proof majority for months.

Democrats applauded the state Supreme Court's decision Tuesday afternoon and welcomed the former "Saturday Night Live" comedian to the halls of Congress.

President Obama, in a written statement released moments after Coleman conceded, said he looks forward to working with Franken to "build a new foundation for growth and prosperity by lowering health care costs and investing in the kind of clean energy jobs and industries that will help America lead in the 21st century."

Republican Gov. Tim Pawlenty also issued a statement saying in light of the court decision and Coleman's announcement he would sign the election certificate Tuesday certifying Franken as the winner. He thanked Coleman for his service, calling him an "extraordinary leader," and congratulated Franken.

In a signal of Coleman's dimming legal prospects, the Minnesota Supreme Court ruled unanimously Tuesday that Franken should be certified.

"We affirm the decision of the trial court that Al Franken received the highest number of votes legally cast and is entitled under (Minnesota law) to receive the certificate of election as United States Senator from the State of Minnesota," the court wrote in its 5-0 ruling.

With Franken and the usual backing of two independents, Democrats will have a big enough majority to overcome Republican filibusters.

The earliest Franken would be seated is next week because the Senate is out of session for the July 4 holiday, said Jim Manley, a spokesman for Senate Majority Leader Harry Reid.

The election certificate also requires the signature of Minnesota Secretary of State Mark Ritchie. Ritchie, a Democrat, said he was ready to sign it "as soon as the governor issues it."

The court's ruling stopped short of explicitly ordering the governor to sign the document, saying only that Franken was "entitled" to it.

Coleman's appeal hinged largely on whether thousands of absentee votes had been unfairly rejected by local election officials around the state.

The unanimous court wrote that "because the legislature established absentee voting as an optional method of voting, voters choosing to use that method are required to comply with the statutory provisions."

They went on to say that "because strict compliance with the statutory requirements for absentee voting is, and always has been required, there is no basis on which voters could have reasonably believed that anything less than strict compliance would suffice."

The Associated Press contributed to this report.

http://www.foxnews.com/politics/2009/06/30/minnesota-high-court- rules-franken-senate-battle/

Judge orders NY Senate into chamber

Judge orders NY Senate into chamber

ALBANY -- A judge is ordering New York's split Senate into a working session together, for the first time in more than three weeks.

But a lawyer the Republican-dominated coalition that mounted a coup for power on June 8 says he will appeal the decision, which will probably further delay Senate action.

State Supreme Court Justice Joseph Teresi is ordering all 62 members of the Senate into session Tuesday morning. Gov. David Paterson has requested the action because he says there is essential work to be done.

Both the Republican-led coalition and the Democrats they tossed from power have responded to Paterson's orders by meeting separately and conducting no official business. The factions are deadlocked 31-31. Negotiations over sharing power have failed so far.

The coup began June 8 when Thomas Libous, R-Binghamton, presented what appeared to be a routine bill to the Senate's presiding officer at the time, Neil Breslin, D-Albany. Following the chamber's rules, Breslin started reading the bill.

The trap was set.

The motion called for replacing the Democrats' top two officers and turning over Senate control. Democrats hemmed and hawed, countered at every turn by Republicans.

"It's a coup!" uttered Sen. Ruben Diaz, D-the Bronx. On the Senate floor, Libous loudly told the stunned Democratic leadership, frantically whispering into phones about legal options, to act on his motion or step down.

"I move that we adjourn!" shouted Sen. Jeffrey Klein, D-the Bronx.

"Roll call! Roll call!" Libous shouted back, windmilling his hand to keep the parliamentary plotters moving.

The Democrats stormed out, cut the lights, TV and Internet feeds, and silenced the microphones.

In 26 minutes, 30 Republicans and two dissident Democrats from New York City had seized control.

But ruling proved harder than overthrowing.

One of the plotters, Sen. Hiram Monserrate, D-Queens, who faces an assault charge involving a glass-slashing injury to his girlfriend, bolted back to the Democratic party and confusion turned to chaos as the Senate was left split, 31-31.

Closed-door meetings were quickly held and the case went to court, only to have a judge say the judiciary shouldn't solve the legislative branch's problems. In one meeting, Klein and Sen. Pedro Espada, D-the Bronx, the coalition's choice for Senate president who is also facing campaign law violations, nearly came to blows, according to two people who were there.

Meanwhile, the New York Post hired a clown who mugged with stone-faced senators in blue pinstriped suits.

Paterson ordered them into special session at 3 p.m. Tuesday.

The coalition immediately called a meeting for 2 p.m., hoping to seize the gavel and run the session. But Democrats sneaked into the chamber at 12:30 p.m., grabbed the gavel and rostrum, then locked the door. At 2:30, they allowed in the Republicans.

Instead of a constitutional "extraordinary session," the bizarre simultaneous session ensued.

At one point, Sen. George Winner, R-Elmira, trying to conduct the coalition's session from the row of antique desks with brass ink wells reserved for reporters, told Sen. Ruth Hassell-Thompson, D-the Bronx, who was laughing: "You're out of order!"

Hassell-Thompson barked back, "Don't you dare tell me I'm out of order!"

Sixteen days after the coup, leadership is still a puzzle and the Senate, once derided as one-half of the nation's most dysfunctional legislature, is still idling in neutral.

"Nobody is proud over what has happened over the last couple of weeks," said Sen. Malcolm Smith, who brought the Democrats into the majority on a promise of reforming government, only to lose his leadership post in the power grab. "I'm not even going to debate whether the means justify the end."

N.J. Gov. Corzine Signs $29B 'Recession Budget'

Jun 29, 2009 11:00 pm US/Eastern
N.J. Gov. Corzine Signs $29B 'Recession Budget'

Taxes on New Jersey's top earners, smokers and wine and liquor drinkers will go up this week under the state budget Gov. Jon S. Corzine signed Monday.

Some homeowners also will not get their usual property tax rebates this fall, and state workers will have to take 10 unpaid days off under the new tax and spending plan.

The Democratic governor, who is up for re-election in November, had to slash spending because of a sharp decline in state tax revenue.

The budget, adopted last week by both houses of the state Legislature along party lines, calls for the state to spend $29 billion. That's $4 billion less than the budget Corzine signed a year ago.

"I'm the only governor of New Jersey since at least 1947 to cut the size of government," Corzine declared at a ceremony outside the State House on Monday.

The tax increases and other budget provisions take effect Wednesday.

Republicans have criticized Corzine for raising some taxes, refusing to lay off state workers and accepting $2 billion in federal stimulus money to help balance the budget.

They say Corzine's cuts are not deep enough for the state to avoid future budget problems.

"The tough decisions this budget passes on to hardworking New Jerseyans is a stark reminder our governor is unable to manage state finances or keep control of state priorities," Republican gubernatorial candidate Chris Christie said in a statement.

Corzine had proposed deeper cuts even after he introduced his budget in March. At one point, he called for canceling all property tax rebates this year.

But the state brought in $725 million in a tax amnesty program -- enough to save rebates for homeowners earning under $75,000, along with senior citizens and disabled voters.

Corzine said Monday that if more money comes in through tax amnesty or higher-than-expected income tax collections it will go toward further tax relief.

High-income taxpayers will see their taxes rise to 10.25 percent up .75 percent -- on all income above $400,000. That means the tax bill for someone earning $500,000 would rise by $750.

Taxes on cigarettes will go up 12.5 cents, making the total state tax $2.70 per pack.

Taxes also will go up on wine and hard liquor -- but not beer -- by 25 percent. That will raise the cost of an average bottle of wine by around 3.5 cents.

Lottery winnings over $10,000 will also be taxed. There had been no income tax on lottery winnings in New Jersey.

One of the few areas in line for more money is spending in the state's public-school classrooms.

It was no surprise that lawmakers adopted the budget last week and Corzine signed it before the July 1 deadline. Still, the signing avoids any possibility of a government shutdown, like the weeklong one three years ago.

Pennsylvania - 7 Years, No Budget

Pennsylvania - 7 Years, No Budget

Pennsylvania's state government is poised to begin a seventh straight year under Gov. Ed Rendell without a spending plan in place, a reality that many have come to grudgingly accept.

When the new budget year begins Wednesday, the state will have a curtailed authority to spend money, and both chambers of the Legislature will be in session, rather than on the two-month break from Harrisburg that had been traditional before Rendell took office.

This year's stalemate, however, may be the most entrenched of Rendell's six-plus years in office, as the recession-wracked economy caused a $3 billion budget deficit. The governor met with senior lawmakers to review the budget at his residence late Monday, hoping for a breakthrough in budget talks, but no agreement was reached.

Democratic leaders in the General Assembly back Rendell, but they and the leaders of the GOP-controlled Senate are billions of dollars apart on their budget proposals and are squaring off over Rendell's request for a three-year income tax increase of 16.3 percent. The increase would mean a Pennsylvania resident making $40,000 a year would pay an extra $200 in income taxes.

"It has to go off the table," Senate President Joe Scarnati, R-Jefferson, said Monday. "That's an onerous, large tax. ... Members of the governor's own party are publicly and privately telling us that they're not voting for a tax increase."

Rendell has traveled the state warning about the local property tax increases and state service cuts that he says will result if the state cuts spending on crucial programs, including school subsidies and services for the sick and disabled.

He also has insisted on substantially increasing funding for public schools, pressing for another $418 million, a 7 percent jump, at a time when state revenue collections have fallen 8 percent from last year.

The governor has challenged Republicans to show how the budget can be balanced without raising taxes. Rendell wants to increase or add taxes on income, natural gas extraction, health care premiums and tobacco sales, while delaying the scheduled phase-out of the capital stock and franchise tax that businesses pay.

Rendell said he hoped Monday night's budget review would prompt Republicans to agree that program cuts would be far more painful than tax increases.

"There's pain, but the pain is relatively small," Rendell said earlier in the day. "Let's suck it up and do the right thing."

The state's poorest families, as well as the unemployed and retired, would not pay the income tax increase, leaving one of every two adults to pay it, Rendell said.

Scarnati said he understands the impact of the cuts, and has already combed through the budget.

"We've done that," he said. "Our position is we need to go line by line through the revenue, what we have to spend."

Without a budget in place, many state agencies won't be able to pay bills or otherwise spend money to operate starting Wednesday. The impact, at first, will be slight, Rendell said, as many vendors are expected to extend credit to the state for a period.

Legislators will miss their July paychecks, which normally go out on the first of each month. Tens of thousands of state employees will receive only partial pay on July 17 and July 24, before their paychecks are entirely withheld.

By law, welfare payments, debt payments and pension checks will continue to be sent out as usual. State parks, at least at first, will remain open. Many highway projects will continue, since they are already paid for with dollars from the soon-to-end budget year.

Copyright Associated Press / NBC Philadelphia

Mississippi - Special session extends into second day

Special session extends into second day

Posted: June 29, 2009 10:57 PM

Updated: June 30, 2009 12:16 AM
Special session still being debated

By Roslyn Anderson

JACKSON, MS (WLBT) - Day two of the special session found lawmakers battling it out at the state capitol late into the evening.

Tuesday at midnight the fiscal year ends and a budget must be set.

The house and senate continued working well into the night Monday trying to come to an agreement on the state's nearly $6 billion dollar budget.

Monday morning Governor Haley Barbour added general fund bills to the special session.

"I believe we will have a budget for all of the general fund agencies. Most of the special agency bills passed last night. Whether or not we'll have a budget an a operational bill for medicaid by July 1st is a little bit more of a question, but we're certainly working toward it," said Barbour.

By early evening House Speaker Billy McCoy was hopeful that talks with the senate and governor's office were clearing the way for a final settlement on Medicaid.

House Medicaid committee members reported that they were finalizing details of an agreement.

"I think that before the night is over we'll have an agreement on Medicaid and the governor will add it to his call. Considering Medicaid's budget is close to a billion or into the billions of dollars, and we are less than $5 million dollars apart," said House Medicaid committee vice president Rep. Robert Johnson.

Medicaid officials said the agency's budget is $5 billion dollars.

Sixteen percent of which is paid for by the state.

The rest comes from federal funding.

Buddy Bynam, Governor Barbour's communications director, said late Monday that the governor had not yet added Medicaid to the call, but he said both the house and senate were proceeding with good faith.

Negotiations will continue Tuesday morning.

Arizona - Legislature crams months of work into 2 days

Legislature crams months of work into 2 days
State budget deadline, vacations push lawmakers to pass bills

by Mary Jo Pitzl - Jun. 29, 2009 12:00 AM
The Arizona Republic

As Arizona lawmakers enter their 24th week of work, things don't look all that different from when they started Jan. 12: A gargantuan budget deficit. Scores of bills. Difficult relations with the governor. And not much to show for all the time and effort.

With the deadline for a state budget looming Tuesday, Arizona will see if its elected officials can essentially cram six months of work into two days.

If not, there is a possibility of a government shutdown, or, more likely, week-by-week funding to a shrinking number of state services. The governor and Legislature would have to agree to a continuing resolution to fund government services.

So far, the 49th Legislature's tangible achievements have been few in number. It has fixed the current-year budget twice (and it's still upside down), sent seven mostly budget-related bills to Gov. Jan Brewer and continued a scholarship program for foster children and disabled students, even while cutting services to the broader disabled population.

Work on the hundreds of bills that were introduced earlier this year moved at a steady pace in the House, but was non-existent in the Senate until June 8. That's because Senate President Bob Burns, in an effort to focus attention on the state budget, would not allow any work on legislation until a budget was complete.

The result: A blizzard of bills that lawmakers have shoveled through since June 8 as they work toward Tuesday. On Saturday alone, the Senate took action on 35 bills, including measures to legalize certain fireworks and to ban photo enforcement on state highways.

The House is scheduled to debate 44 bills today.

The end of June is the deadline for budget bills only. In theory, the Legislature can continue its session indefinitely to debate other bills. In reality, though, the end of June becomes a deadline for all other bills, too, because many members plan to leave town after then.

Lobbying continued behind the scenes Sunday to line up the needed votes for the $8.4 billion budget compromise that the Republican governor and GOP legislative leaders unveiled Friday. It hasn't been an easy sell. Expectations that the plan would breeze through once Brewer, Burns and House Speaker Kirk Adams had resolved their differences (a dispute that took a detour through the state Supreme Court) evaporated Saturday when a House budget committee halted its consideration of the budget package after nearly six hours of work.

The hang-up: A move to give voters a choice on a temporary sales-tax increase, which Brewer has said is paramount, and an eleventh-hour proposal to convert the state's graduated income-tax system to a modified flat tax. The two elements were a key part of the compromise. Conservative lawmakers oppose the idea of a sales-tax hike; to win them over, leaders added the proposal to start a flat tax in 2012.

Work will formally resume this morning when the Senate Appropriations Committee starts its review of the budget package and its House counterpart completes its disrupted Saturday agenda.

After that, approval from the full House and Senate is needed to enact the budget compromise.

While few were predicting a vote would happen Monday, there was still widespread belief that Arizona won't be pitched into its first government shutdown.

"I'm still cautiously optimistic we can get this done," Adams said Saturday.

Indiana Gov't Shutdown

Daniels prepares for a
gov't shutdown

Updated: Monday, 29 Jun 2009, 10:57 AM EDT
Published : Friday, 26 Jun 2009, 11:58 AM EDT

* Jim Shella
* Edited by Hyacinth Williams

INDIANAPOLIS (WISH) - Governor Mitch Daniels says he's prepared to keep essential services such as public safety and some social services running if lawmakers don't pass a new budget by the time the current one expires at midnight Tuesday.

Daniels says he'll use emergency powers to make sure state police and prisons continue to operate.

Here's a list of emergency services/agencies that the governor anticipates would continue:

* The five outlined in the LSA memo -- Indiana School for the Deaf; Indiana School for the Blind and Visually Impaired; Indiana Veterans' Home; Plainfield Juvenile Correctional Facility; state mental hospitals
* Public Safety -- State Police, no reduction in coverage; Department of Correction facilities; Department of Natural Resources Conservation officers
* The National Guard, Department of Homeland Security and Department of Health would be on emergency standby
* Unemployment benefits, child support payments, welfare for those currently eligible

Examples of services that would not continue without a budget by July 1:

* State parks would close
* Casinos, racinos, horse tracks would discontinue operations
* Road construction would stop
* BMV branches closed
* Non-emergency state agencies will close ; most state employees would be furloughed
* No tuition payments to schools, no financial aid to college students

States brace for shutdowns

States brace for shutdowns
Time is running out for the legislatures in Arizona, California, Indiana, Mississippi and Pennsylvania to solve budget gaps.
By P.J. Huffstutter and Nicholas Riccardi

June 30, 2009

Reporting from Indianapolis and Denver — The last time Indiana missed its deadline for passing a budget and had to shut down the government was during the Civil War.

But on Monday, as lawmakers raced to hammer out an agreement over school funding, state agencies began preparing 31,000 workers to be temporarily out of a job. Republican Gov. Mitch Daniels has warned residents that most of the state's services -- including its parks, the Bureau of Motor Vehicles and state-regulated casinos -- would be shuttered unless a budget is passed today.

Indiana is one of five states -- along with Arizona, California, Mississippi and Pennsylvania -- bracing for possible shutdowns this week as time runs out for lawmakers to close billion-dollar gaps in their fiscal 2010 budgets.

Of the 46 states whose fiscal year ends today, 32 did not have budgets passed and approved by their governors as of Monday afternoon, according to the National Conference of State Legislatures.

Although the majority of those are expected to pass eleventh-hour budgets, the fiscal futures of a handful remain uncertain, said Todd Haggerty, an NCSL research analyst.

"It's a lot of states that are coming down to the wire," Haggerty said. "It's far more than we've seen in the past, and it's because of the state of the economy."

Since 2002, only five states have been forced to shut down their governments. Some of the closures were brief: In 2007, Michigan's doors were closed for four hours before lawmakers passed emergency measures that bought them time to close a $1.75-billion deficit.

"What's different now is that the recession has eroded tax revenues across the country," Haggerty said. Collectively, he said, states are wrestling with budget deficits totaling $121 billion.

In California, state finance officials will begin issuing IOUs on Thursday if lawmakers and the governor cannot agree on a way to close a $24-billion shortfall. The IOUs would go to local governments, vendors, taxpayers and college students receiving state financial aid. California has issued such IOUs only one other time -- in 1992 -- since the Great Depression.

In Arizona, which has never missed its constitutional budget deadline, officials are battling over how to resolve a $3-billion gap.

Republican lawmakers and the state's GOP governor, Jan Brewer, fought for months over her proposal for a temporary sales tax hike to preserve some government services. In a compromise unveiled Friday, legislators agreed to ask voters to approve the tax in November. But when a key committee was unable to muster a majority Monday for the compromise bill, lawmakers began drafting resolutions that would let the government function for at least a week.

Some services would go dark right away. Over time, the number of agencies still able to operate would shrink.

In Indiana, the budget fight revolves around how to allocate the state's shrinking revenues and how much of its $1.3-billion surplus fund to tap.

Democrats in the state House and Senate are pushing for more spending on schools, particularly in economically troubled and urban areas. GOP legislators, on the other hand, are advocating that extra funds be directed toward charter schools and that scholarship donors to private schools be given a tax credit.

Another key sticking point is whether to help bail out the Marion County Capital Improvement Board, which manages the sports and convention venues in the state's capital. Lawmakers from outside the Indianapolis area are furious over the idea of state money being used to bridge the board's $47-million budget deficit, rather than spent in a way that would benefit more Hoosiers.

By late Monday evening, after months of debate and several budget drafts, legislators left the Statehouse with glimmers of hope that they could avoid a shutdown.

"No matter what, we're going to vote on something" today, said a visibly weary House Speaker B. Patrick Bauer, a Democrat from South Bend. "Will it pass? I don't know."



Times staff writer Evan Halper in Sacramento contributed to this report.

Washington to California: Drop dead


With California’s state government deadlocked over a $24 billion hole in its budget, the Golden State is hurtling toward financial apocalypse.

Washington’s response? Deal with it yourselves.

California is the world’s 8th-largest economy, home to one out of every eight Americans and the holder of 55 electoral votes. The state enjoys incredible sway on Capitol Hill — witness Friday’s passage of the climate change bill championed by House Speaker Nancy Pelosi (D-Calif.) and House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) — and it may hold the key to President Barack Obama’s re-election: California’s fiscal pain could imperil the economic recovery of the entire nation.

But the Obama administration and the state’s powerful congressional delegation say they just can’t hold the state’s hand through this one.

And some of the toughest love is coming from California’s own.

“Why would we bail out the state when it’s like giving drugs to a drug addict?” said Rep. Devin Nunes, a Republican who represents parts California’s San Joaquin Valley.

Asked if the federal government should be helping California with its budget crisis, Democratic Sen. Dianne Feinstein — the state’s senior senator — shot back: “Do you know what the state is getting in stimulus money? $50 billion.”

Rep. Zoe Lofgren, the chairwoman of the state’s 33-member Democratic delegation, said California’s budget quagmire is largely a result of structural process in the budget process: It takes a two-thirds majority in both houses of the state legislature to pass a budget or raise taxes, which effectively means that no one can do anything unless majority Democrats, minority Republicans and the state’s Republican governor, Arnold Schwarzenegger, agree.

“If we [in Congress] had to do what the California legislature does, we would never send a bill to the president of the United States,” she said. “That’s a problem. But I can’t solve that problem. . . . Ultimately the voters of California are going to have to confront what’s happening in their state and figure out what to do about it.”

The White House echoes this can’t-save-California-from-itself sentiment.

“We’ll continue to monitor the challenges that they have. But this budgetary problem, unfortunately, is one that they're going to have to solve,” White House spokesman Robert Gibbs said earlier this month.

In May, when State Treasurer Bill Lockyer asked the Obama administration for aid in the form of federal guarantees for the short-term bonds the state needs to sell to pay its bills this summer, the White House said no; Treasury determined that such assistance would help only at the margins.

Some Democrats in the California delegation — including Lofgren — are working with House Financial Services Committee Chairman Barney Frank (D-Mass.) on legislation that would allow Treasury to use TARP funds to guarantee short-term bonds that California and several other states regularly issue to deal with cash flow. But Lofgren said it would be “very unusual” for Congress to move quickly enough to help.

And any kind of California-specific bailout would be politically unpopular outside of the Golden State. The TV spots all but write themselves: Think shuttered auto plants in Michigan side by side with chardonnay-sipping San Franciscans and starlets by the pool at the Beverly Hills Hotel.

A May Rasmussen poll found that 66 percent of voters nationwide opposed the federal government guaranteeing California’s loans. And 48 percent said it would be better to let California go bankrupt than to hand the state a federal bailout.

Helping out California would open a Pandora’s box of policy headaches for the administration. How do you justify helping one state — even if it’s the biggest — when dozens of other state legislatures and governors have managed to make the wrenching budget cuts necessary? Granting special assistance could be seen as rewarding the worst actor – and set a dangerous precedent that might tempt other states to shrug off budget pain in hopes of getting a bailout.

Another option would be a second stimulus to help all severely cash-strapped states and counteract the economic drag their budget cuts are having on the recovery. But Obama was asked about the possibility of a second stimulus last week, and he made it clear that he wasn’t ready to go down that road.

There are plenty of good reasons California’s congressional delegation isn’t wading into the state’s budget morass, either.

Read more: http://www.politico.com/news/stories/0609/24266.html#ixzz0J qMUihZG&C

FEMA wants its trailers back

From a different perspective: 5/12/09

Thousands of people who lost their homes during Hurricanes Katrina and Rita are about to lose their homes again.

More than 5,000 people in Louisiana, Mississippi and Alabama were living in temporary Federal Emergency Management Agency trailers and in hotels financed by the agency as of May 1. Now FEMA says its housing program has officially come to an end, and the agency plans on evicting all residents by the end of the month. But many residents say they have nowhere to go.
And these residents have little help coming their way.

According to the Times:

Thousands of rental units have yet to be restored, and not a single one of 500 planned "Katrina cottages" has been completed and occupied. The Road Home program for single-family homeowners, which has cost federal taxpayers $7.9 billion, has a new contractor who is struggling to review a host of appeals, and workers who assist the homeless are finding more elderly people squatting in abandoned buildings.

Nonetheless, FEMA wants its trailers back, even though it plans to scrap or sell them for a fraction of what it paid for them.

Gulf Coast advocates are not surprised that FEMA has yet again failed to be responsive to the needs of those struggling to rebuild their lives in the region. From the beginning, Gulf advocates have pointed out that FEMA's response to the housing and relief needs of Katrina survivors has been inadequate, ineffectual and full of delays and bureaucratic red tape.The 143,000 FEMA trailers provided to residents after the hurricane was the largest undertaking in the agency's history, but the delivery of the trailers was sluggish and inefficient. Moreover, many of the trailers were later found to contain dangerous levels of formaldehyde, a health crisis that FEMA was also slow to respond to.

FEMA says it will request the Department of Justice's assistance to "pursue legal action" for people still in their trailers after May 30. The agency also contends it has done everything it can to help those in temporary housing, yet many families say they've received little to no help from FEMA.

In Louisiana, state programs have also done little to help, residents argue. On top of the failed "Katrina cottages" program, the Louisiana Road Home program, which is intended to provide large grants to homeowners for repair, has been beleaguered with red tape, bureaucratic delays and administrative problems, which resulted in a sluggish pace in delivering grants. Grants have also been inadequate for meeting rebuilding needs. Last year the the nonprofit advocacy group PolicyLink found that two out of three Louisianans who received rebuilding money did not receive enough to cover needed repairs. Renters didn't fare any better: A government program intended to repair more than 18,000 damaged rental units resulted in fewer than 1,200 repairs by late March, according to the LA Times. Last year, the Louisiana Recovery Authority was supposed to unveil a more intensive caseworker system for people in temporary housing, but it never materialized, leaving local aid organizations to combat the homelessness and poverty still associated with the storm.

The New York Times calls the FEMA deadline, which ends temporary housing before permanent housing has replaced it, "a stark example of recovery programs that seem almost to be working against one another." Housing advocates have urged FEMA to extend its deadline because the remaining trailer residents are among the Gulf Coast's most vulnerable, having very few or no options once they are evicted. Most of the residents are severely impoverished, mothers with young children, elderly, or disabled, including amputees, diabetes patients, and the mentally ill. More than 2,000 are homeowners who have been trying to rebuild but need more time, having had to to contend with numerous rebuilding barriers including government agencies fraught with red tape and delays.
In New Orleans, nearly 2,000 trailers remain in the metro area. During the past three years, Facing South has reported on the severe affordable housing crisis facing many New Orleans residents. Rental rates in the city have skyrocketed and for many low-income residents the available apartments are simply not affordable. The homeless population has doubled since the hurricane, and case workers continue to find more and more people living in abandoned buildings.

The U.S. Human Rights Network has called on the Obama administration to address the eviction issue and to meet the needs of the still-struggling residents. In fact, in a recent statement USHRN underscores that meeting the needs of Katrina survivors is "an issue of basic human rights":

Monday, June 29, 2009

Comments at LATimes on previous Skelton article

<1. Raising Taxes & Providing STIMULUS is NOT an answer to our current ECONOMIC CRISIS & Budgetary Deficits. Current Economic Crisis is the NEVER Before Type. Very Balanced yet Dynamic Initiative is necessary. This has to be planned very carefully & fully. When one gets stuck in DEEP MIRE/SLUSH we need to pull out wholesale. Our Economy is Stuck and it attracts wholesale treatment while we are currently working on a piecemeal basis. IT WILL NOT HELP & SOON OUR CAPACITY TO PROVIDE ALL THE STIMULUS WILL END SUCH THAT WE WOULD HAVE MISSED THE BOAT. THINK NOW SERIOUSLY.

Submitted by: Mahendra

9:02 AM PDT, June 29, 2009

2. Stop paying the lawmakers over 100K... that is more then other states pay theirs. Take away Prop 13 for businesses. And if you have children, then you pay more, since your little pillow biters are the ones using the schools and parks...

Submitted by: LBCsurfgoddess

8:55 AM PDT, June 29, 2009

3. Skelton, find another topic, PLEASE. How many times do we have to read the same stuff, once a week? You continue writing to limit the voices that are tired of bankrolling the out-of-control government spending. The problem is many-fold. To start, get rid of politicians that pander to special interests that raid revenue from the system, like unbelievable pensions for govt workers, including those of the elected and their staffs! Skelton, try writing about cutting the far-reaching waste and abuse that continues, program inefficiencies and cutting salaries and benefits that aren't sustainable!

Submitted by: BizyLady

8:48 AM PDT, June 29, 2009

4. I'm more amazed at the partisan yelling and the attacks at Skelton than an attempt to solve California's problems. Read most of the responses to the article and you'll see why California is in the mess it's in. People aren't talking to each other. They're screaming past each other. Way to go readers. You're no better than the legislature and government.

Submitted by: Dick Dianond

8:44 AM PDT, June 29, 2009

5. A simple 10% tax surcharge would help a lot. That way everyone would be taxed and it would generally be fair. We are paying petty low taxes for all the services we try to provide. Keep the safety net for the most vulnerable in place.

Submitted by: Mikee

8:26 AM PDT, June 29, 2009

6. Let's also consider limiting the people who work in government from giving themselves far too much in the way of perks, pensions, etc. It is ridiculous that during times of plenty they give themselves generous packages that remain in place when the money is long gone.

Submitted by: Santa Barbara

8:20 AM PDT, June 29, 2009

7. The impact of indecision in Sacramento continues to make matters worse. The system is broken in so many ways only a clean sheet redesign has a chance of succeeding.

Submitted by: Gary in Fresno

8:16 AM PDT, June 29, 2009

8. Flat tax makes sense....so much sense for all.... And saving the California State Parks - something the Democrats have shown they are willing to do - but now the governor plans to veto and close the parks... http://www.thepetitionsite.com/3/save-california-state-parks-from-closure

Submitted by: samuel

8:07 AM PDT, June 29, 2009

9. FACT: California has 12% of the nation's population. FACT: California has 32% of all the welfare recipients in the country. Of course we're going bankrupt. How can 12% of the popluation support 32% of the welfare recipients?

Submitted by: TD

7:42 AM PDT, June 29, 2009

10. Californa must live within it's budget We must expect less and provide better management of the resources we have you can write checks in future that there is no Money do cover. Mervin Evans

Submitted by: Mervin Evans

7:40 AM PDT, June 29, 2009

11. It gets tiring having liberals complain about Prob 13 which just protects those who actually contribute to the economy. Why not instead restrict voting to those who pay taxes and totally ignore all the thieving filth who have done nothing but bankrupt the state demanding services. If we are going to reorganize the state why not do it on a scheme of: If you need something earn it Jack

Submitted by: Jjack Perrine

7:40 AM PDT, June 29, 2009

12. Good article. The intent of the voters, first expressed in Prop. 13, was to hogtie the government. Just like a Reagan solution to reducing fuel expense by junking the motor. Mission accomplished. Extrapolating, imagine a government without legislators or executives.

Submitted by: David

7:34 AM PDT, June 29, 2009

13. Your statement that there’s little Sacramento can do about illegal immigration is simply false. The state would save billions if the federal government’s existing E-verify program was implemented in addition to enforcing existing law via the federally mandated 287g program. Thus nearly all of the costs associated with Washington’s rules would not be incurred simply because a large majority of illegal immigrants would not be here to partake of the state’s largesse. Effective enforcement does not require a massive roundups and deportations. E-verify would cause most illegal immigrants to self-deport because they would be unable to work.

Submitted by: Justthetruth

7:32 AM PDT, June 29, 2009

14. Taxes and fees. Fees and taxes. People in California pay taxes they don't even KNOW are taxes. Check your electricity bill. Did you know that in California you currently pay about a 25% tax on electricity for "public purpose programs" so the legislators can give free electricity to illegals? We have taxes here that are passed and people FORGET about them there are so many taxes. I hope (and I mirror opinion of many neighbors) that the state DOES explode come July. We pay a ton and see almost NO value.

Submitted by: Greg P

7:22 AM PDT, June 29, 2009

15. These are good thoughtful observations. I hope they can be a part of serious work in Sacramento to get us out of California's fiscal mess. However, I'm not encouraged by many of the comments posted here. They often reflect the dominance of ideology over information and thought. That in turn seems to drive those sent to Sacramento to "solve" problems. Your column is a step in the right direction. Thank you.

Submitted by: Kent

7:21 AM PDT, June 29, 2009

16. Dear Los Angeles Times: Please stop using headlines like "6 Simples Rules", it makes your articles sound like internet advertising. Thanks.

Submitted by: Ken

7:18 AM PDT, June 29, 2009

17. George is wrong. The problem is that legislators are incompetent & they have no incentive to fix any problem because there are no penalities for incompetence or for violating our State Constitution. Want to fix the problem? Then make not passing a balanced budget by July 1st a CRIMINAL offense. July 1-7 w/o balanced budget - every legislator pays a $50,000 fine or forfeits their seat. If no balanced budget by 7/9, then the entire legislature forfeits their seats and many not run for state office for 10 years.

Submitted by: ernie1241

7:14 AM PDT, June 29, 2009

18. Make EVERBODY - rich and poor - pay income taxes. That way everybody will share the status of "taxpyer" and taxpayers and their representatives will be more reflective before they vote for money-spending measures. When a money spending bill or initiative is proposed, it should accompanied by a statement of how much it will cost each income taxpayer in each tax bracket. For example, if a taxpayer is told that an initiative to build a pointless high-speed train from LA to SF is going to cost him $2,000 personally, he might say "If I have to pay for that I won;t be able to buy my kids Christmas presents or pay college tuition," and vote "no."

Submitted by: John

7:07 AM PDT, June 29, 2009

19. Let's see- we should do-away with the 2/3s rule to make it easier for our legislators and governor to pass budgets with even higher deficits, right? And that nasty Prop. 13-that's got to go too, so we can pay higher taxes for non-functioning schools and illegal alien scofflaws. Sounds like vintage George Skelton to me.

Submitted by: Jack

6:59 AM PDT, June 29, 2009

20. With respect to an independent commission drawing legistlative districts, why not do something more radical. Randomly select an address from a list of addresses in a comprehensive data base - Google Earth for instance. Once you have selected an address start drawing an ever wider circle around that address until you have enough residents to comprise a district. Then select another address. Rinse and repeat. This should remove partianship from the process while maintaining a contiguous district.

Submitted by: Mark

6:58 AM PDT, June 29, 2009

21. Legalize it!... Then get rid of the democrats... and get rid of programs that benefit special interest. oh...and hire more mexicans...cheap labor is good for the economy.

Submitted by: Spanky

6:31 AM PDT, June 29, 2009

22. A very large number of these costly propositions that get passed are pushed by your goverment workers unions and the democrats... Anything that makes sense they generally take the other side of... and you want them to have a free power to raise taxes at will? Are you daft? That 2/3s majority is the only thing keeping us out of the toilet. They just raised taxes and now they want more. The fiscally responsible among us generally vote NO on anything requiring a bond. Look at vote breakdowns, the more liberal the area the more likely they are to vote for loser propositions.

Submitted by: Scott

6:29 AM PDT, June 29, 2009

23. Whatever happens, don't allow our schools to lose out. We don't want illiterate people here like Don in Colorado.

Submitted by: Inland Empire

6:29 AM PDT, June 29, 2009

24. George Skelton has nailed down the problems and solutions faced by California clearly and succinctly. Now, the challenge is for real leaders to push aside the stone age thinking that has dominated California government since the 1960s and rebuild the structure.

Submitted by: Gayle Montgomery

6:27 AM PDT, June 29, 2009

25. On July 1st we will become the third highest taxed state in the nation including: highest sales taxes, second highest personal income taxes, sixth highest corporate taxes, etc. California is ranked 48th in the country as a place to to business because of high taxes and a maze of regulations that not even the regulators understand. The company my wife works for is moving to Texas and taking 450 jobs with it. California is dead. Taxed to death. Regulated to death. Stangled by the politicians.

Submitted by: Tommy D

6:25 AM PDT, June 29, 2009

26. Would someone at the L.A. Times PLEASE do a bit of historical research --- on what the tax rates were between, say, 1955-65? State income, sales, and property taxes? The state seemed to have plenty of money to build new schools, universities, roads, money for state parks, services for the mentally ill (today's homeless), education, etc. But what were the actual tax rates? Were Californians paying higher or lower rates 40-50 years ago? The services certainly seemed a whole lot better then. But what were the actual sales, state income, and property taxes?

Submitted by: David in Los Angeles

6:22 AM PDT, June 29, 2009

27. after one reads the comments written about the opinion piece, it is easy to see what some of the problem is; the crazy ideas and misinformation held by a large part of the public. getting any agreement for anything from them would be nearly impossible, and the legislature reflects their opinions.

Submitted by: ellis

6:18 AM PDT, June 29, 2009

28. The "rich" are going to solve your problem with the tax structure. Soon those with taxable income will have left and the rest will be living on tax exempt income. It's no surprise to see the old canard about Prop 13. You need a new script. Why not just print a graphic showing state spending and population growth ? Paul Gann had it fixed until Willie Brown undid the Gann Initiative. Give me another year and I'll be gone, too.

Submitted by: Mike K

6:03 AM PDT, June 29, 2009

29. Best solution, ban public employee unions at state and local levels. They buy elections -buy politicians,take money(dues) from members that employees could keep as salary.

Submitted by: ted

5:50 AM PDT, June 29, 2009

30. the federal mandates,cause the majority of our ability to govern.Even now county government laments their inability to save needed services.Due to mandates and threat of fines and denial of federal funds.

Submitted by: j black

5:40 AM PDT, June 29, 2009

31. The usual liberal solutions. Don't spread the pain during hard times but rather make sure tax collections remain high so the consumers of services don't feel the pain, but taxpayers do. If liberals want higher taxes let them pay them.

Submitted by: John

4:20 AM PDT, June 29, 2009

32. Paul Duron #31 has it right: "Everybody should pay the same PERCENTAGE of taxes." It's high time we got rid of the crazy outcomes of Prop 13, where companies that hold on to property pay 0.1% or less, while new companies and homebuyers pay 1%. 1% property tax for ALL!

Submitted by: PQuincy

4:07 AM PDT, June 29, 2009

33. Slash spending to the bone. Period. That is the only way to force everyone, ruled and rulers alike, to put on their grownup pants and decide what they are willing to pay for. Yes this will hit the youngest and poorest the hardest. And yes it will hurt but California is a mess because everybody their lunch for free.

Submitted by: JAIMIE

3:56 AM PDT, June 29, 2009

34. george is at it again. He forgets that fantasy island is no longer on tv.If you were to change prop 13, do you really think that the mess in california would not exist? The budget would be 3 to 4 times larger with all the revenue. The bottom line is that 95% of the people pay little or no taxes. There is your problem. Nuff Said!

Submitted by: joe markota

3:51 AM PDT, June 29, 2009

35. Yeah,I hear that also,the same old worn out line that the rich people are over taxed,same old tired Republican line of scare tatics.The same thing is going on about health care reform,the dammed Republicns are screaming that a public option will put the greedy health care providers out of business.More scare tatics.

Submitted by: D.Woodward,Van Nuys

3:01 AM PDT, June 29, 2009

36. The Marxist Democrats answer to everything is to raise taxes, consolidate power and make it structurally easier to raise taxes and consolidate power. What is the end game here? Serfdom and servitude.

Submitted by: Windfall

2:42 AM PDT, June 29, 2009

37. Running a bit low on cash? Raise taxes. See some shiney new thing you want to run? Raise taxes. Is it a little bit warm outside today? Raise taxes. Your dog keeps messing up the rug? Raise taxes. You wife left you? Raise taxes. Your car won't start? Raise taxes. Your state is loosing jobs every day? Raise taxes. Business hates being here? Raise taxes. You've driven out so many people and jobs that the whole state is collapsing? Raise taxes. It's pretty easy to see that's been our strategy. How's that been workin' out for you?

Submitted by: Jeff Viar

2:32 AM PDT, June 29, 2009

38. what a looser you are...people like you are the reason we are in this mess...How about other ways to bring in money..businesses are moving out of the state at an alarming rate, so are working people. I will be moving out next year, and taking my retirement income/taxes with me, as many others are doing.At one time this state had a huge lumber/logging industry in northern California..GONE..Where is our oil/gas industry-gone. Why do we have over 1,000,000 acres of prime ag land in the valley with no water, while the Sacramento river runs bank to bank full,,,,straight out the delta into the Pacific. 10,000 jobs go by-by...

Submitted by: Jim Melo

1:37 AM PDT, June 29, 2009

39. The POINT is the State has to STOP SPENDING! Not realign tax burdens, find areas of compromise, etc. The State can not continue to SPEND. Prop 13 is a blessing...what percentage of people have not moved in the last 20+ years, very few! Without Prop 13, our wonderful legislature would keep pressing for MORE. Skelton...get some COMMON SENSE....

Submitted by: sstaff

12:13 AM PDT, June 29, 2009

40. A solution. Liberals want higher taxes, conservatives don't. Thus, identify every tax return as liberal or conservitive. The cons. pay the current rate, the libs. pay double. Everyone happy and more money for goverenment!

Submitted by: Don in Colorado

12:00 AM PDT, June 29, 2009

41. Some of the statements in this article are too facile, e.g., the state's outdated tax machine "has been leaning too heavily on rich people." This reads like the usual Republican line. The "rich people" are never identified. Is it comprised of those who pay a fraction of what their clerical staff pay in taxes? This article appears to be a hurried rewrite of something that the RNC or its surrogates may have sent the "author."

Submitted by: Douglas Parker

11:23 PM PDT, June 28, 2009

42. With the two thirds requirement we are already over taxed. Prop 13 was a blessing. Heaven forbid that the Democrats and the Unions eliminate the two thirds requirement to raise taxes.

Submitted by: Alberto Marrero

10:46 PM PDT, June 28, 2009

43. All sounds like good ideas. I think it would towards fixing part of the problem. But I could see these problems years ago, and move to another state. My family still lives there and I hope for their sake the things can be fixed

Submitted by: Mark

10:40 PM PDT, June 28, 2009

44. Your proposals are the same tired old dogs that get trotted out every time there is a desire or perceived need for more money in Sacramento. The state budget has been balanced in years gone by. The problem is a government that spends too much money. I'd suggest the governor and legislature build from the bottom up, defining what roles various levels of government should bear and deciding what is absolute priority. Let the rest go. Frankly, I don't like your "kill the initiative process" proposal. I'm hoping to see a part time legislature initiative on the ballot soon that takes incentives away from all the useless legislators in California.

Submitted by: Thomas Hibbard

10:33 PM PDT, June 28, 2009

45. the solution is quite simple. even an idiot can figure it out but the liberal media keep trying to propose taxes as the solution. californians already pay far more state taxes than other states. the solution is to eliminate all welfare in calif. that includes food stamps, cal grants, free school lunches, senior housing assistance and all the free stuff to illegal aliens. end of story. all those freeloaders that want welfare will be forced move to another state stupid enough to give out all the welfare and finally calif will be rid of the freeloader problem in a few years. budget problem solved. so simple.

Submitted by: joe

10:09 PM PDT, June 28, 2009

46. Duh, my favorite right wing radio host told me to write in and let you know that you and your liberal newspaper deserve to go broke, and that illegal aliens and state employees cause all the budget problems, along with their tax-and-spend democrat friends. It's all just too simple for you socialists to understand...

Submitted by: guity

10:04 PM PDT, June 28, 2009

47. Since the wealthy obviously are not creating jobs, let's tax 90 percent of their incomes over $250,000. Anyone can live on that amount, no? This would take care of our deficit, build a nice reserve and allow government to give viable new business ideas some seed money loans to get going.

Submitted by: SlimWallet

10:03 PM PDT, June 28, 2009

48. Public Defined Benefit Pensions assume those covered can work for a relatively short time and live on the dole for a long time. The rest of the world has realized entitlements for 30+ years are not sustainable. While many dabble with pensions, no one says increase the retirement age, even though people live much longer. The issue of increasing the retirement age, that would correct the problem, will not even be mentioned as a solution because those who shape the issues would be personally affected. If you are 25, should you be laid off, or social programs be cut, so a 50 year old can play golf for another 40 years on your tab?

Submitted by: Rob P

9:56 PM PDT, June 28, 2009

49. I'm curious---what would that "grand finale" look like? I have heard a lot of talk about how awful things will be, but I'd like to see a story that lays out in detail what this would look like. Maybe then, people will take it seriously---I think that now, a lot of people think it's crying wolf.

Submitted by: LKitsch

9:55 PM PDT, June 28, 2009

50. The problem with the state deficit is simple to fix, at least by half. The illegal immigrant population received free healthcare to the tune of 20 billion dollars paid by the taxpayer in 2008, As the costs incresed this year, this care is not available or limited to actual citizens. Only life emergency care is mandated by federal law, not elective care.

Submitted by: Mick Marcino

9:53 PM PDT, June 28, 2009

51. Personally I have acquired a retirement home in another state.....and....I'm gonna escape w/a small pittance of what I once had. I remember 30 years back when the mantra was "Close the tax loopholes" on those rich people. I think we have about ran out of "Rich" People.

Submitted by: Myron Christopherson

9:53 PM PDT, June 28, 2009

52. Sounds like what the lib's at the Times have advocated for years. "TAX AND SPEND"

Submitted by: Myron Christopherson

9:47 PM PDT, June 28, 2009

53. Mr.Skelton, in what way illegal immigration is a drain on the state treasury? Because they are poor and using state resources where ever they can? Oh, so Legal Americans who are also poor they don't? Illegals work as hard-if not harder-as legal US folks do! They buy goods and services where they pay applicable taxes the same way legals do! Well many of them don't pay income taxes, but it was nicely explained by Aaron Russo that not one cent from income taxes is returned to the US infrastructure! Please enlighten us in what practical way illegals are strikingly different than legals and why are they a significant drag to the state treasury?

Submitted by: tipo

9:46 PM PDT, June 28, 2009

54. Until we stop giving free money in the form of pensions at 100% to government workers, there will never be a balanced budget. The pensions are the problem, why doesn't anybody talk about them?

Submitted by: BillyB

9:46 PM PDT, June 28, 2009

55. Interesting what you are saying about the term limits, hadn't seen them that way before.

Submitted by: Sirene

9:39 PM PDT, June 28, 2009

56. We truly need some technocrats in positions to fix problems using reason and data. I'm sick of the partisan politics and the cute sound bites. Where do we start?

Submitted by: John Gulsby

9:36 PM PDT, June 28, 2009

57. Add to the list public financing of elections. Who is looking out for the common good in Sacramento? No one. We get the government we pay for. Most persons contribute nothing to candidates running for office so we end up decade after decade with leaders responsive to special interests, not the general public. Problems are not resolved, just pushed off to be addressed another day.

Submitted by: Stephen Cassidy

9:35 PM PDT, June 28, 2009

58. Are you kidding,ilegal immigration only a fifth of of the 24 billion-deficit. Ask Mexico for a bailout. The people of California have elected time after time politicians that have supported the open border policy.Now you will have to dig very deep in your pockets try to get out of it.

Submitted by: John

9:31 PM PDT, June 28, 2009

59. What needs is not new taxes or higher property taxes as you suggest, but rather chaning the laws so that you dont have 171000 prisoners, dont push out businesess becuase of the regulations, but since you people at LA times are so smart at running a business into the ground, (in CH 11) your suggestions will do the same to the state. Good luck

Submitted by: Tariq

9:31 PM PDT, June 28, 2009

60. Skelton does not discuss the largest problem facing California -- too many people. What we are witnessing is the exponential power function as it applies too many people outstripping the resource base. The absence of understanding and appreciation of exponential affects is the greatest of all ignorance.

Submitted by: tarwater

9:26 PM PDT, June 28, 2009

61. Great article. I think the most important part is to return control of most issues to local governments. The citizens of California are very diverse, and I think each community should be able to decide at what level they want to fund their schools, roads, etc.

Submitted by: OC CPA dude

9:19 PM PDT, June 28, 2009

62. Leave Prop. 13 alone! The number of homeowners that benefit from Prop. 13 is now less than 5%. Rather re-do the state, county and local government employee retirement formula / system to which those employees contribute nothing - an outdated and overgenerous system that cost the California state taxpayers tens of billion of dollars each year.

Submitted by: Paul

9:14 PM PDT, June 28, 2009

63. "* Elect more pragmatists and fewer ideologues. Bring in some centrists." Here's your fatal flaw George, and this is really the only thing that matters out of all that hot air. California politics revolves around showmanship, ideology and strong people winning elections by pandering to niche voters. That is why term limits and 2/3's majority must stay.

Submitted by: Keith

9:13 PM PDT, June 28, 2009

64. Funny, Skelton used to blame the car tax cut as the problem, that is until the progressives tripled the tax. Skelton ignores the basic, fundamental problem: there is a complete disconnect between the use of services and their cost. The solution: privatize all healthcare and education services. Make people pay a non-profit rate for the services they use. This would more than solve the "dysfunction" and whatever excuse of the day is in fad.

Submitted by: Calvin

9:10 PM PDT, June 28, 2009

65. 1-The Governor, must check the benefits for people who claim social services after been ill, and they continue receiving benefits after they are healthy and sometimes they have a living partner in their houses. Also check benefits for elderly immigrants who never work in this country and receive a monthly check. I am an American citizen by naturalization and work very hard for my family and never apply for benefits in this country (thank God)even when I had little money to raise my two kids.

Submitted by: Rosa

9:00 PM PDT, June 28, 2009

66. Well we agree on most things. About the illegals, though. The state could just tell the Feds to go stuff it and sue Washington. We could go back and quote the old "taxation without representation", as we are forced to spend our own tax dollars to do what we are powerless to change. Or, we could let the Feds sue us and then join with most of the states all the way to the Supreme Court. I think it's time for the Feds to be responsible.

Submitted by: tonyE

8:54 PM PDT, June 28, 2009

67. I have an idea, if a politician pushes for a tax increase the people in that person's district should pay a 5% surcharge on that tax. If the voters in that district have no problem voting in someone who raises taxes, they should pay alittle more for taxing the rest of us. I think this would be fair.

Submitted by: JohnB

8:52 PM PDT, June 28, 2009

68. Any blue ribbon tax "reform" commission should note that poor and middle class individuals pay 11%+ of their income for state taxes while the rich pay 7%+. Any tax "reform" that makes this even more inequitable is out of the question. I would suggest a flat tax on wealth to pay for state government--this would tend to be very stable.

Submitted by: publius

8:47 PM PDT, June 28, 2009

69. By undoing Prop 13, you're saying lets give the politicians more money. They can't even budget what they have now. By raising property taxes you're taking money from people who can least afford the loss. You will see more home foreclosures. Go back and look at the reasons for the passage of Prop 13.

Submitted by: JohnB

8:42 PM PDT, June 28, 2009

70. Everybody should pay the same PERCENTAGE of taxes. Just like when you go to the store. I like a flat tax rate. I would LOVE it for the fed's too, but that will not happen as there are too many special interests groups that would be against it. Namely, my accountant!!!!

Submitted by: paul duron

8:25 PM PDT, June 28, 2009

71. Mr Skelton, I wish we could put you in charge in of Sacto. And I'm not being facetious. Arnold is so out of touch with us commoners. And to think at one time I was hoping that he could become president. What a disappointment.

Submitted by: paulderouin

8:14 PM PDT, June 28, 2009

72. Levy a well head tax on oil being pumped into world supply from California oil wells. California is the only state without such a tax. Alaska has one of the highest tax in US via Shara Palin. Pays too run the state of Alaska. Raise Capital gains on stock trades in the year purchased as apposed to one or two year holding. Add twenty dollars to car tax. Twenty percent cut in all legislators pay and ten percent all staff.No matching fund retirement or paid medical. There's lots more but who's listening ?

Submitted by: Enid

8:10 PM PDT, June 28, 2009

73. "More power has seeped to the special interests." At this juncture, the most significant special interest as regards the budget is the public employees' unions. Nothing will move until we break their power.

Submitted by: Schigolch

8:08 PM PDT, June 28, 2009

74. The "top-two" election system won't change the makeup of the legislature. Washington state tried it in 2008 for the first time. Out of 124 legislative races, only one incumbent lost a primary. Those Republican "ideologues" who won't vote for tax increases are reflecting majority sentiment in their districts. If that weren't true, there would be recall petitions aimed at them, because in recall elections, a replacement is elected simultaneously in a non-partisan election. But people know in their hearts that those anti-tax Republicans reflect popular opinion in their districts, so no one tries to recall them.

Submitted by: Richard Winger

7:37 PM PDT, June 28, 2009

75. Look to entitlements that's where the real money is. Separate the truly needy from the voluntary unemployed.

Submitted by: Michael Goetz

7:30 PM PDT, June 28, 2009

76. The parasite has officially killed the host in CA. Now the parasite has hunger pains and is about to go on a multi year crash diet. Good job liberals.

Submitted by: buz

7:25 PM PDT, June 28, 2009

77. Excuse me, but the State dumping of the mentally disabled onto the streets pre-dates proposition 13--a proposition that prevented even more homeless then would have otherwise happened without proposition 13's halting of extravagant property tax increases. Further, proposition 13 can't be blamed for the states inability to develop off shore and on shore energy resources and taxable revenue there from; you can blame that on Hollywood and the movie China Syndrome, staring Jane Fonda. The current Beverly Hills written energy bill is just more of the same balderdash.

Submitted by: don

7:24 PM PDT, June 28, 2009

78. Excellent ideas. Why don't YOU run and win politcal office and help turn things around. Kibbitzing from the peanut gallery is really easy.

Submitted by: RLee

7:11 PM PDT, June 28, 2009

79. Ah, yes. More taxes. That's always the solution, isn't it? As for initiatives identifying a revenue source, let's take it a step further and do away with all initiatives that rely on bonds. And as for the 2/3's rule, it doesn't seem like the state has had much trouble putting us in the top 5 in tax burden as a percentage of income.

Submitted by: Jeff Viar

7:07 PM PDT, June 28, 2009

80. Just as I expected- Mr. Skelton is parroting Democrat Assembly Leader Karen Bass. She has been everywhere since the special election whining about the 2/3 requirement. Well, guess what? Voters in several states are now CONSIDERING instituting the 2/3 majority because they are being hammered with tax increase after tax increase. Soon we won't be just one of the three states with it; we'll be one of 50! But the real solution to the budgetary morass is easy: require a 2/3 supermajority for ALL spending bills. Those idiots would then have to come together and compromise before spending a dollar.

Submitted by: LJ Pelfrey

6:56 PM PDT, June 28, 2009

81. when need better choices for govenor also, brown and newsome will hurt california. They are terrible choices.

Submitted by: bill

6:45 PM PDT, June 28, 2009

82. Bottom line.... Where is the money to come from if entitlement services and other tax eaters are not reduced? If the people speak and demand no new taxes, do you think the sly left handed tax increase subtly listed in the article will work? The problem there is California is too smart to be fooled into paying higher taxes they do now want to pay. And the real problem causing everything is, the politicians who are backed by the entitlement folks and other welfare services and Unions, want no reduction in services and, to say it plainly,...would like to make the rich pay even more, they need their tax money to give to the non-tax payers.

Submitted by: wodstock1969

6:43 PM PDT, June 28, 2009

83. another raise the taxes or make it easier to raise the taxes article by the LA Times, WHAT A SURPRISE! The FACTS are they have increased spending over the last four years by over 70%. Inflation and population growth EVEN with the immigration influx has not been anywhere near that. Simply cut the size of government back to 2004 levels and we have a balanced budget. As a home owner I'm so glad that prop 13 is there. We are #4 on the all time taxed list as a state now, can you imagine if every homeowner was forking out 3-5 times the taxes they are now. We would all be loosing our houses, not just the poor saps that took out sub-prime loans.

Submitted by: thomas klein

6:29 PM PDT, June 28, 2009

84. This list ignores the central problem in California's revenue stream: Prop 13. This state is only 17th highest in taxes (despite widespread belief its number 1, a lie even the Economist repeated in its Letters page recently). For a start, split the commercial and residential rolls: take business property out of Prop 13. Its bad economics to make the property tax burden much higher on new businesses, and subsidize old ones. Even better, get rid of it entirely, which would free up people to make rational decisions without the distortions of frozen tax assessments. Let markets work without government imposed distortions.

Submitted by: Boraxo

6:28 PM PDT, June 28, 2009