California govt: So, that budget surplus we mentioned? That may have been a fluke
posted at 6:01 pm on February 19, 2013 by Erika Johnsen
California’s currently super-liberal state government has been eight different kinds of excited about what they projected was going to come in as a budget surplus, exclaiming about how they’ve managed to buck the longtime trend of overspending and proving the haters wrong:
“Right now, in the next four years, we’re talking about a balanced budget. We’re talking about living within our means. This is new. This is a breakthrough. …
“I went up and down the state promising that we’d be good stewards of the people’s money and would they please add to it by the tax measure. We’re also not going to pay the game of spending money we don’t have.” …
“We have to live within the means we have; otherwise we get to that situation where we get red ink and then go back to cuts. So I want to avoid the boom and the bust, the borrow and the spend, where we make the promise and then we take it back.”
The only issue being that, on second thought, that surplus might not be as wonderful as they originally supposed; Gov. Jerry Brown’s budget office has a new report out cautioning that the $5 billion revenue bump in January might just be the result of an accounting anomaly and not any systemic budgeting victory. The LA Times reports:
The revenue bump was historic. But the question for budget experts was whether lawmakers could begin allocating the windfall toward government programs and tax breaks — or whether the money amounted to an accounting anomaly.
Brown’s budget office now advises in an official cash report that it is probably the latter. …
The report says the extra money was “likely the result of major tax law changes at the federal and state level having a significant impact in the timing of revenue receipts.”
I.e., in light of the still higher taxes on the wealthy for which the state voted in November, certain taxpayers were paying off portions of their bills early in order to get some of their income off of the books before the start of the new year — meaning that January’s surge will be offset by an April dip. Oh, how the optimistic budgetary cookies crumble, especially when you’re counting on a highly graduated tax system to not severely alter people’s financial behaviors. California has been hoping to make up for years of multibillion dollar budget shortfalls with Brown’s budgeting scheme, but as Reuters pointed out last month, it relies on the wealthier getting wealthier, as well as an improving economy and high-earners sticking around to pay those heightened taxes — none of which seem like particularly safe bets.
Breaking on Hot Air