NCPA - National Center for Policy Analysis


May 20, 2009

California will be the first state to go bankrupt, says Jack Kelly, former deputy assistant secretary of the Air Force in the Reagan administration. 

In February 2009, Gov. Arnold Schwarzenegger and the legislature "solved" a $42 billion budget deficit with a mixture of tax increases and budget cuts.  But the deal was contingent upon voter approval of 5 ballot measures to extend tax increases, and to permit the state to raid funds set aside for early childhood education and mental health services.  Since the voters said "no" yesterday, California could run out of money as soon as July, says Kelly.

Yet, state spending continues to soar and the quality of public services continues to deteriorate:

  • California's public schools were once among the nation's finest, but a 2004 report showed huge numbers of schools fail to hire and keep qualified teachers, far too many students lack textbooks and other essential materials, many classrooms are severely overcrowded and large numbers of schools are infested with rats and cockroaches.
  • Infrastructure is also crumbling; in 2006, the American Society of Civil Engineers gave California's roads a D+ grade.
  • But the salaries and pensions of state employees are among the highest in the nation; California's budget has exploded chiefly to feed the avaricious appetites of public employee unions.
  • And California's sales and income taxes are among the highest in the nation.

One of the few genuine cuts the legislature made in February was to reduce the state's contribution to the pay of home health care workers.  But President Obama, acting on behalf of the Service Employees International Union, has threatened to withhold $6.8 billion in stimulus funds unless the cuts are restored.

Pay attention to what happens in California.  It's a harbinger of things to come everywhere, says Kelly.

Source: Jack Kelly, "Pay attention to what happens in California. It's a harbinger of things to come everywhere," Jewish World Review, May 19, 2009.

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