California to US: "Please, Sir, Can I Have Some More?"

Governor Schwarzenegger is really scraping at the bottom of the barrel. Most recently, he has been discussing selling California assets, such as Los Angeles Memorial Coliseum, San Quentin State Prison, and Orange County Fairgrounds, and has suggested it's time to think about legalizing marijuana for purposes of taxation. [With all due respect to my libertarian allies, I am convinced enough of the health and public safety risks of this drug to rule out legalization. I am sympathetic to the idea of government efforts to eliminate a double standard on taxation, i.e., unreported transactions in the underground economy. I do think when it comes to treating the cancer of illicit drug use in our society, you should focus on cutting off the blood supply feeding the tumor and injecting toxic agents in the tumor itself. I also think when it comes to filling a limited number of places in jails and prisons, those decisions should be prioritized on factors such as perceived risk to public safety and the nature and scalability of illicit transactions.]

According to recent polls, Californians going to the polls today will likely vote down 5 of 6 ballot initiatives designed to close off yet another $15B deficit. The only initiative likely is one to freeze legislators' pay when the state budget is in deficit. I have a problem with that one, too: I think the law should CUT legislator salaries when that happens... In fact, let's bring that concept to the federal government, and let's start at the top: for each fiscal year that the President does not propose and enforce a balanced budget, let's cut his salary and any eventual pension in half. I think the California voter is fed up with the fact that with one of the two top state tax burdens in the United States, it's time for an intervention.

I do emphasize with Governor Arnold. Early in his tenure (2005), he pushed some of the most innovative and necessary reforms in California history (e.g., redistricting reform, spending curbs, and education reforms, not to mention a withdrawn attempt at pension reform), only to find the shots blocked down into his face by unions and other Democratic special interest groups. I think he then looked at the constraints of the political status quo and decided his best shot at political influence was to be a player in the game.

But just as many corporations find in terms of addressing their costs, a large portion of public expenses go into salaries and benefits. Of particular note was the compensation package to public safety employees (i.e., policemen and firefighters). In saying the following, I'm not questioning the inherent risky nature of the profession, sacrifice or contribution of these fine public servants. But, as Bobby White noted in the 10/31/08 Wall Street Journal, the local government of Vallejo in a buyer's market for public safety officers basically wrote a check it couldn't sustain in the long term as a deteriorating real estate market, raising the average average police officer salary by 2008 to $121K (plus no employee contribution towards social security and generous benefits on top of that), and economy pushed them into bankruptcy with some $220B in unfunded pension benefits. California back in 1999 (and continuing to the present) set a lucrative program that guarantees 3% of one's last/highest salary per year of service, making it possible for a safety officer to retire at age 50 and draw 90% of his salary for the remainder of their lives. Daniel Weintraub in a 1/25/05 Sacramento Bee article pointed out the average California state employee salaries were highest in the country, 30% higher than average (according to a Wisconsin study) with the most generous pension plan on most indicators (percentage per year, ranging from 2 to 2.5%, starting at age of 55, and various other factors--highest year basis versus average 3-year, plus social security benefits, each at the highest/most generous across other state employees).

I have no doubt that California feels that with the largest number of electoral votes (55) cast for Obama, it is entitled to a political payback, a generous Obama/Democrat bailout of its financially irresponsible but politically popular decisions. I can only imagine how the private sector employers and employees in California feel about having to subsidize salaries and benefits (including Cadillac pension benefits) they themselves can't afford to give or receive. But to ask other Americans, and their children, and their grandchildren, to pay for California's reckless spending, given the fact of past real estate corrections, is unconscionable. It's time to get real, time for an intervention, time to just say "no".