Barack Obama in his inaugural address observed that “the time has come to set aside childish things”—that the time “of protecting narrow interests and putting off unpleasant decisions…has surely passed.”
That rhetoric is sound advice for Californians who just last November, in the midst of an economic recession and rising budget deficits, voted to approve a 10 billion dollar high-speed rail program designed to get folks from Escondido to San Francisco in three-and-a-half hours--for only $67.
The childish aspect of this proposal was right there in the proposition voter guide, which declared IN CAPS that the 10 billion dollar project (20 billion according to opponents) would be funded “without raising taxes.” Well, if billions in bond indebtedness is a tax-neutral event, why not fund the state government with bonds—in perpetuity?
As the proposition’s “adult” opponents pointed out in the voter guide, the “full faith and credit of the state of California” is pledged for the payment of these bonds—a pledge with profound fiscal implications for a state sporting a budget deficit projected to reach forty billion dollars by June, 2010.
The city of San Diego was only recently able to float infrastructure bonds after starting to get its pension-happy finances in order. And North County residents should be familiar with the huge cost overruns associated with construction of the Sprinter.
Those children who believe there’s “free money” available to build a really fast choo-choo probably also believe that governments can (as candidate Obama frequently promised) create “five million green jobs” with the stroke of a pen.
As for the state’s yawning budget gap, the Governator has no good options. Higher taxes are sure to depress an already bad economy and send even more residents scurrying out of state. (During the last fiscal year 135,173 more people moved out of California than moved in from other states.)
On the other hand, cutting business taxes isn’t going to stimulate growth soon enough to balance the books—which is mandated by law.The only realistic solution is to muddle through with smoke and mirrors--tactics (like fees and accounting gimmicks) that represent the legislative equivalent of bonds unrelated to taxes.
For the long run, “adult” solutions might include undoing the auto-pilot budgeting that’s been put in place for education and other items by California voters, developing the state’s energy reserves (including offshore drilling), providing tax incentives for businesses, and implementing policies aimed at reducing costs associated with illegal immigration.
Based on passage of the high-speed rail proposition, however, I’m not optimistic that California voters and legislators will be adopting the aforementioned suggestions in the near future. Instead, I anticipate more “green” taxes and fees that are magically expected to generate thousands of “green jobs” as opposed to creating an even longer wagon train of U-Hauls headed out of state.
I also expect the kids in Sacramento to throw tantrums to get their hands on bailout funds dispensed by the teenagers in Washington D.C.