California Budget Cuts Coming – Expect Union Fearmongering

California’s “Fantasy Land” budget finally comes to light of day. Jerry Brown said “We’ve been living in fantasy land. I’m shocked. The mess is much worse than I thought.”

In turn, educators and unions were shocked by Jerry Brown’s and state treasurer Bill Lockyer’s statements “cuts are coming”. Brown promised more cuts but no tax increases without voter approval.

The LA Times reports Brown wants to fast-track budget agreement within 60 days.

Gov.-elect Jerry Brown said Tuesday that he wants to complete a budget agreement within two months of unveiling his budget, an accelerated timeline that would allow a late-spring special election for potential tax increases or other revenue generation.

“We’ll present a budget on Jan. 10. It will be a very tough budget, but it will be transparent,” he said. “We’ll lay it out as best I can. We’ve been living in fantasy land. It is much worse than I thought. I’m shocked.”

A spokesman later sought to play down the timeline, calling it “an ambitious goal.”

Brown has refused to publicly discuss his budget plans, but he has met privately with lawmakers and interest groups. People involved in the meetings expect him to enact an austerity budget in the spring, then hold a special election in which voters can decide whether to raise taxes or other revenues in order to restore services. He pledged during the campaign not to increase taxes without voter approval.

“This is really a huge challenge, unprecedented in my lifetime,” Brown told hundreds of educators, union representatives and parents who had gathered at UCLA. “I can’t promise you there won’t be more cuts, because there will be.”

“The day of reckoning is upon us and I’m determined to bite the bullet, get it done in whatever way the consensus of California can be built,” he said. “Fair, transparent and enduring — that’s my goal.”

Expect Union Fearmongering

Jerry Brown sounds serious, but does he mean it? The unions are whining already. No doubt they will put every available penny into fearmongering in support of higher taxes. I sure hope the governor puts this to a vote.

The most encouraging sign at the conference came from State Treasurer Bill Lockyer who said “So far, I’ve heard good ideas about how to spend more money. Great. It ain’t there. It’s time to make cuts, I believe deep cuts. I’d do the 25% across the board and just say those who wanted less government, you’re going to get your wish. In other communities that are willing to put something on the ballot to make up that difference, they’re going to have a higher service level.”

Educators were horrified of course.

No Meat on the Bones

“There is no more meat on this bone to carve, the only thing left is amputation,” said David Sanchez, president of the California Teachers’ Assn. “If we do what Mr. Grinch wants us to do, the possibility of shutting down schools is a reality. Is that really what we want to do?”

Of course there is meat on the bones. Not a single has to teacher lose their job. All they have to do is grant reasonable concessions on union wages and pension benefits, then rein in absurd administration costs. That’s it. Instead they will whine and bitch and moan begging for more handouts from taxpayers.

In one sense, David Sanchez is correct. There is no meat on the bones, taxpayer bones. Should it come to a vote, taxpayers should tell David Sanchez and the California Teachers’ Association to “Go to hell”.

By the way, massive state cuts are coming one way or another. The states can do it the proper way and stick it to the public unions, or states can rob taxpayers like they usually do. Either way it will be a hit to the economy. The first way would be a short-term hit for a long-term gain; The second way, raising taxes to fund union greed, would be a long-term disaster.

About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.

1 reply
  1. Annette says:

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