Although I don’t live in California or ever get a refund anymore, I would not be too thrilled with this:
California’s budget meltdown is about to hit home for millions of taxpayers awaiting their refunds and people who depend on the social safety net to survive, a top state finance official warned Friday. Controller John Chiang, who is responsible for managing the state’s cash flow, plans to delay $3.7 billion in payments starting next month in response to lawmakers’ failure to fix a projected $40 billion deficit through mid-2010. Among those who won’t get paid on time: taxpayers who file their returns early and are awaiting refunds; families who depend on welfare and aid for the aged, blind and disabled; and programs that serve developmentally disabled and mentally ill patients.
Sure, it’s not enough to not give people back their own money, but why not take away the money meant for the aged, blind, disabled, and mentally ill too…after all, if anyone doesn’t need help it’s definitely people who cannot help themselves. Meanwhile, the state plans on keeping a $2.5 billion cushion in their savings account and will continue to pay government employees (of course) with the tax dollars California residents are owed…and better yet may start offering IOU’s to people. Yes, the state of California is about to hand out IOU’s. I wonder if Schwarzenegger will write them out by hand?
For the 15 years I lived in Los Angeles there always seemed to be a budget crisis, but the people and the government never wanted to change the one thing I think that could have fixed it all – repealing Prop 13. Prop 13 became law in 1978 and set limits on property taxes, so that people living in million dollar mansions for a long time pay barely any real estate taxes compared to say someone who bought a reasonably priced house today:
Under Proposition 13, the annual real estate tax on a parcel of property is limited to 1% of its assessed value. This “assessed value,” however, may only be increased by a maximum of 2% per year, until and unless the property undergoes a change in ownership. At the time of the change in ownership the low assessed value may be reassessed to full current market value which will produce a new base year value for the property, but future assessments are likewise restricted to the 2% annual maximum increase of the new base year value.
My old boss, whose house cost $350K 15 years ago and is now worth $1.3 million, pays less taxes than people buying a much less expensive home today. This proposition supposedly reduced tax income by a whopping 57% in the state – money that should be going to pay for schools, roads, libraries, etc.. In fact, once that law was set, California’s ranking in nationwide education statistics plummeted – there wasn’t enough money to keep them at the top of the pile. There are consequences for such drastic tax reduction strategies, and this has contributed to California’s woes for a very long time.
So, is there any surprise in the fact that California is once again facing a budget crisis? Except this time they don’t even have enough money to pay you back your own money. What do you think of this plan by California?