It’s a Game of Chicken on the Budget
Who’s going to blink first?
That’s what California’s budget battle has come down to as the Legislature and the governor try to reach some agreement that will allow the state to pay its bills next week with cash and not just promises.
Gov. Arnold Schwarzenegger is about the only person in Sacramento still looking for the immediate perfect compromise that will close the state’s $24.3 billion budget gap and hopefully end the fiscal squabbling until January, when his 2010-11 budget is due.
Everyone else is pretty much resigned to putting together a stopgap plan that will keep the state from having to issue IOUs next week, clearing the way for more weeks of talk and budget stalemate.
On Thursday, the Assembly managed to vote out a bipartisan package of bills that would provide the state with about $4.5 billion in needed cash, enough to stave off the IOUs for most of the summer.
The Circular Firing Squad
They are dropping like flies lately – promising Republicans from the national scene, that is. As one after another falls victim to the vicissitudes of marital infidelity, bathroom encounters and other tawdry gossip column details, the reference to the Circular Firing Squad, which Democrats used to have a lock on, must now officially be expanded to include both of America’s political parties. It is clear that neither has the monopoly on hypocrisy, smugness, arrogance, or stupidity now.
Before I continue in this vein, let me make clear that I am a political agnostic – I believe in political parties, I just haven’t found one that covers all my bases – some might say that I am socially liberal and fiscally conservative, but, this is not about me. I have written before for F&HD on the subject of America’s dire need for a viable third party for the 21st Century. The thought popped into my head again after watching Gov. Sanford set new records for the meaning of “off the reservation,” and how not to handle one’s extracurricular love life in that televised press conference of dizzying insanity and abject stupidity that we were all treated to this week.
Where Have All the Jobs Gone?
Congratulations are in order to members of the California Legislature, California Air Resources Board, no growth advocates and others. According to a study released this week, the tourism industry is Los Angeles County’s number one job generator. This follows news of earlier this week from the Milkin Institute about the continuing loss of manufacturing jobs in California.
According to the Los Angeles Times, “Trade and manufacturing generally pay higher wages than tourism” and that “…economists have long worried that the region’s employment base is in danger of getting too many low-paying jobs.’ But don’t fret, in addition to the good news about California’s newest growth industry (prior to the closure of all state parks), it should be noted that sweeping up garbage at Southern California amusement parks can be classified as some of the “green jobs” we have all been promised.
Silver Linings in the Tourism Industry
After months of doom and gloom news about major losses in the travel industry, there’s no better time to focus our attention on the light at the end of the recession tunnel.
There are encouraging signs that consumer confidence may be foreshadowing a better year than originally anticipated, which could mean positive news for tourism. According to the U.S. Conference Board, consumer confidence increased considerably in April and May. That confidence is reflected in travelers’ intentions for vacations and business trips in the next 12 months. In November 2008, only 10% of travelers foresaw increasing their travel in the next 12 months compared to the previous 12 months; in April 2009, that figure rose to 21%.
The converse is true as well – the percentage of those planning to decrease travel in the next year compared to the prior year has fallen significantly between November (34%) and April (24%). (Travelocity’s Traveler Confidence Report)
Good and simple?
Recently, another round of calls started up to raise taxes to plug the yawning hole in the state budget. A powerful union even began running ads on television suggesting new levies. The tax-first-and-ask-questions-later crowd picked some vulnerable and tempting targets for new taxes: cigarettes, alcohol, card rooms and the like.
The rationale is compelling. The state could get money from undesirable activity and therefore would not penalize good behavior. And if the higher taxes cause people to stop smoking or drinking, well, that’s a social benefit to California. All good and simple, right?
Alas, not quite. Aside from the fact that such taxes disproportionately hurt the poor, such taxes also fall heaviest on small businesses. Many convenience stores, for example, depend on cigarettes and liquor for much of their sales and a bulk of their profits. Those shopkeepers have families to feed, too.