Too Big To Fail

The implications of, and options for addressing, California’s current budget crisis boggle the mind of seasoned budget watchers. Our Wednesday blog post outlined options for raising revenues to narrow the gap and additional cuts will certainly be part of any final package. As we work through the numbers, it’s becoming clear that more “solutions” are needed. My op-ed in today’s San Diego Union-Tribune argues that direct federal assistance is needed to prevent California from delaying a national economic recovery and to prevent harsh cuts to public services that would hinder the state’s future competitiveness, as well as the well-being of low-income Californians.

–Jean Ross

4 thoughts on “Too Big To Fail

  1. You have posited clear and consistent arguments for the need to acquire federal loan guarantees both to help CA out of its cash crunch and lower future debt-servicing costs. I don’t know of a time when CA has ever defaulted on a debt obligation.

    I also agree that CA needs to repeal the single sales factor corporate tax scheme as well as corporate family credit swapping and carryback losses. However, I am confused by the legislative voting requirements to repeal tax cuts. Does repealing a tax cut constitute a tax increase, thus triggering the supermajority vote requirement? If this is case, would a voter initiative be an alternative route? Thanks for your thoughts and principled arguments.

    1. Yes. Scaling back or repealing any of the three tax breaks we wrote about would require a two-thirds vote of the Legislature.

      –Jean Ross

  2. What about a ballot initiative? It is probably too late to put a referendum on the ballot repealing the tax cuts, but could an tax cut repeal initiative be put on the ballot and pass with a simple majority?

    Could an initiative be put on the ballot to introduce a “split roll” property tax?

  3. I do not understand why federal help is not being aggressively pursued. We send more money to Washington than any other state. We are also such a large economy that preventing us from going splat would benefit the nation as a whole. We need more time to find ways to cut our budget without throwing our economy into a further tailspin or putting vulnerable citizens in jeopardy. We also need time for our citizens to become more informed, and to provide input to their representatives regarding exactly what they want to see cut before they will consider also increasing revenues. Right now, extremists have had much of the media coverage, the citizenry is not informed of the need for a balanced perspective, and how all of this can possibly be accomplished by June 15 is very unclear! Federal help would give us the time we need to address our budget problem wisely.

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