Hey Big Daddy,
What are your thoughts on a stimulus package for California?
-Fretting in Fresno
Funny, in my time, we meant something else entirely when we talked about stimulus. But the co-opting of even that most carnal of concepts by the Orwelian language of the new politics is as good a sign as any of just how far we’ve come. And not necessarily in the right direction.
As for bailouts, I’ve already opined in this space about who needs a bailout. But now, it looks like everyone is hoping the federal government swoops in and comes to the rescue. The Assembly speaker says the federal money, if we get any, should replace the idea of cuts, and that we should balance our books just with tax increases and a new infusion of federal cash.
It reminds me of the old dot-com business model of the late 1990s. First, create a half-thought-out idea for a business, and write a “business plan” on the back of a cocktail napkin, somewhere between the third and fourth martini. Then, name yourself CEO and your buddy CTO. Then, go out and raise a bunch of money from assorted venture capitalists. Blow through money holding an epic launch party, and buying foozball machines for the office. Then when the money dries up, go out and raise more money.
This worked for a few good years, driving pretty much any real estate in the 650 or 415 area codes out of the range of most of us mere mortals without dot-com salaries. But the lessons, if there are any, seem to be applicable here.
It’s hard for me to admit this sometimes, but the governor is right. Why should we expect the feds to throw a bunch of money at us, if we can’t even figure out how we’re spending the stuff we’ve got. The state needs to get its fiscal house in order before knocking on the neighbor’s door.
But someone, please, explain to me how we’re supposed to get out of an $11 billion hole (and growing) without a new revenue stream? Up until 1999, Californians paid a 2 percent property tax on their automobiles. When the state was flush with cash, due in large part to the aforementioned ponzi scheme now lovingly referred to as “the dot-com boom” John Burton and Pete Wilson got together and hatched a deal.
The “car tax” as it became known, would be cut to .5 percent, and welfare recipients would receive a cost-of-living increase. Economic triggers were put in place to ensure that the tax cut was only in place as long as the state could afford it. Now, thanks in part to Gray Davis pulling the trigger, and then managing to get himself kicked out of office, the aforementioned trigger was eventually eliminated as one of Gov. Schwarzenegger’s first acts as governor.
So, in some ways, part of this shortfall problem is of the governor’s own doing, and he just can’t fnd a way to put the genie that got him elected back in the proverbial bottle. So there is some poetic justice in all of this.
Now, I’m not saying we need to re-raise the car tax per se. As they say in Star Trek, “Dammit Jim. I’m a phantom advice columnist, not an economist.” But we do need to find some money, and it should be up to the state’s “leaders” to find it without simply slouching toward Washington with their hands out.
Unfortunately for legislators, it looks like the federal bailout talks are moving about as fast as California’s special budget session – which is to say, not at all. It looks like this will be a problem for the new Congress, the new president, and the new Legislature, to wrestle with sometime after the new year.