Finance | California Policy Center

To the Public Sector Unions, California is now the model for America

Ever since California’s voters approved the Prop. 30 sales-and income-tax increase on the November ballot, liberal commentators have been gloating about the resurgence of the Golden State after many years of predicted doom and gloom. Their evidence: Higher taxes seem to have cleared up the state’s budget deficits. As New York Times columnist Paul Krugman wrote recently,...

By Steven Greenhut

Judge Rules Stockton CA Bankruptcy is Valid, City Acted in Good Faith

Today a judge ruled that the city of Stockton California is indeed bankrupt and that the city acted in good faith. Creditors asked the judge to void the bankruptcy, saying the city could raise taxes instead. I have been watching this story for a while. Here is some background on the Stockton bankruptcy as reported by Arizona Central....

By Mike Shedlock

Union Greed Drives California to Bankruptcy

Few non-local people pay much attention to the goings-on in Stockton, a hard-pressed Gold-Rush-era industrial city of 300,000 that sits in the agriculturally rich San Joaquin Valley at the eastern edge of the California Delta. But bondholders, taxpayers and government officials throughout the country will be listening to U.S. Bankruptcy Judge Christopher Klein’s expected ruling...

By Steven Greenhut

Politicians Prefer Scare Tactics to Genuine Reform

Not many of my friends or neighbors are sitting on pins and needles, worrying that the world as we know it will end as the federal government “slashes” spending as part of the automatic sequester cuts mandated by a previous budget bill. And not many people have been thinking, “Geesh, there’s nothing we need more...

By Steven Greenhut

GASB Loopholes Created Illusions of Solvency

What if most of the public employee compensation enhancements of the past decade or more in California were based on inaccurately optimistic government financial statements? Or to be blunt, what if government decision makers thought they could afford these compensation enhancements, because the information they relied on used accounting gimmicks that would land a person...

By Edward Ring

Hard To Keep Up With Economically Illiterate Proposals

Editor’s Note: In a provocative recent book “The Great Rebalancing,” economist Michael Pettis writes “thanks to the internet, much of the best writing and debate has taken place in the modern equivalent of the nineteenth century’s pamphlets, broadsheets, and coffeehouse discussions – economic blogs. For many years the development and understanding of economic theory was...

By Mike Shedlock

Higher Taxes and More Government Borrowing Will Not Grow the Economy

As if taking a cue from California’s Governor Brown, President Obama has presented a 2013 budget to Congress that spends, taxes and borrows. It includes $1.9 trillion in new taxes and adds trillions more to our nation’s debt. Budgets which have as their foundation more government spending regardless of economic conditions, debt load or taxpayers’...

By Jon Coupal

Update on Detroit’s Looming Bankruptcy

The hollowing out of Detroit is nearly complete. All that’s left is a bankrupt shell of a city with no services and scattered citizens that do not pay taxes. The Detroit News reports Half of Detroit Property Owners Don’t Pay Taxes Nearly half of the owners of Detroit’s 305,000 properties failed to pay their tax...

By Mike Shedlock

God Gave Us Rain and You Figured Out How to Tax It

On Tuesday, March 5, the residents of Los Angeles went to the polls to vote on Proposition A, the PERMANENT half cent increase that will raise our sales tax to a whopping 9½%, one of the highest rates in the nation. This ballot measure, rushed to the ballot in less than two weeks without any...

By Jack Humphreville

Paradise Lost – California is not too big to fail

One early December morning, Las Vegas police moved in on the Silverton Hotel and Casino, just off the Strip and known for its 117,000-gallon aquarium. There, having located a getaway black Audi with no license plates, they arrested 31-year-old Ka Pasasouk—a Laotian immigrant with a violent history who had eluded deportation as well as imprisonment....

By Shawn Steel

The Misleading and Incomplete Financial Disclosures of Public Institutions

Last week the California Public Policy Center published a study assessing the impact of new regulations issued by the Government Accounting Standards Board. The new ruling will require public entities to recognize unfunded pension liabilities on their balance sheets. This is a major reform. But it points to a larger issue. California’s state and local...

By Edward Ring

Public Employee Compensation Reform is Vital

Individuals who oppose comprehensive and fundamental reform of public employee compensation can only be considered to be in denial. Almost every government agency in the country is going broke right now. Almost all are cutting back services and reducing staff. Government is diminishing at the state and local levels before our very eyes. Our streets...

By Lanny Ebenstein

California Tax Revenue Surge Turns Out to be One-Time Anomaly

Last month writers were all aglow on the state of finances in California. For example … The Christian Science Monitor reported Surprise! California has a budget surplus Reuters reported California Governor’s budget has surprise: a surplus Accounting Anomaly Today we learn the surprise $5-billion bump in revenue in January is likely an accounting anomaly as...

By Mike Shedlock

Accounting Standards, Not Elections or Litigation, Will Finally Enable Reform

“Apres moi le deluge” Louis XV If accounting standards were peasants with pitchforks, then this quote from the last King of France to die with a head on his shoulders might well describe what lies before us. Because history may remember 2013 as the last year that public entities could hide their debts and deceive...

By Edward Ring