California -- America's first failed state?

Not exactly. Texas has the option to raise taxes a little and fix the deficit, they just don't want to. California, on the other hand, has extended itself as far as it realistically can.

 

Fail is fail, no matter how you define it. The way you've explained it makes Texas sound even worse, its politicians willing to watch the state circle the drain even though they have the means to make it stop.

 

Circle the drain? They've got a $12.5 billion/year budget deficit in the worst case scenario, and $35 billion in state debt, in a $1.2 trillion economy.

California has a $25 billion/year deficit, $87 billion in debt and $500 billion in unfunded liabilities in a state economy of about $1.8 trillion.

So California has a 50% larger economy, 100% larger deficit, 150% larger debt and the ridiculous amounts of unfunded liability.

There's no comparing the two, other than to show how incomparable they are.

 

Point is, Texas, with presumably more resources at hand, has a state government that is in terrible fiscal shape -- maybe not as bad as some states, but still bad. And, yeah, if you have a $25 billion deficit and are cutting government services beyond the bone to make up for it for fear any tax increase, in the slightest, will get you thrown out of office, you may well be circling the drain.

 

The question is, how can Texas be in this position? According to Meg Whitman during the California gubernatorial campaign, Texas was the shiny city on the hill that California needed to emulate: Texas had no unfunded mandates, no loony-left propositions forcing required funding, no union medling, and no massive safety net. Oh, yeah, plus it has a business-friendly tax and regulation environment. And yet, $25 billion in the hole?

 

$25 billion over two years, and that's the high end of the projection. $21 billion is more likely. The fact that they use a two-year budget is odd and partially contributing to the problem.

An interesting look at how and why it happened:

http://www.stateline.org/live/details/story?contentId=521130

 

"But the roots of this year’s shortfall can also be traced back to 2006, when the legislature changed the way the state’s public schools are financed. Before then, school districts relied primarily on local property taxes, which were capped at $1.50 per $100 of assessed value. A group of districts sued, arguing that reliance on the local property tax was not enough for them to provide an adequate education. The State Supreme Court agreed and tasked lawmakers to come up with an alternate way of funding school districts.

Lawmakers lowered local property taxes down to $1.00, but allowed school districts to raise them to $1.04 with a vote of the school board and to $1.17 with a local referendum. The legislature agreed to make up the difference in funding and increased the state’s corporate income tax accordingly. Those tax revenues have not met expectations, however, and state officials have found themselves responsible for a larger share of school funding than they had hoped. "

So they lowered everyone's property taxes to keep their asses in office.

We lowered your taxes!!!

It will eventually come to this in America - We will stop having school buses.

 

As long as the government can keep printing money to cover all this, we can all keep our services and our low taxes, right? No comeuppance?

 

103K jobs were created in December and unemployment dropped to 9.4%.

No need to worry, the recovery is on.....

 

125k people entered the workforce, more than the jobs created.

Unemployment "dropped" because a number of people gave up and therefore the government doesn't have to count them in the official statistic.