Budget Deficit after SVB Collapse

[blameyourself]

Originally Posted by 2sleepy

In California bond measures can't be used to make up for funding shortfalls, only for repair, construction or replacement of school facilities

Not to mention, bond measures are voted on by the public (the state doesn't decide it). And as mentioned, during down turns, property values/taxes can and do go down.

Proposition 8 is codified by section 51(a)(2) of the Revenue and Taxation Code. A decline in value occurs in any year in which the current market value of real property is less than its adjusted base year value as of the lien date, January 1.

[AnythingOutdoors]

Originally Posted by blameyourself

Hmmmm?

Are we heading for a recession? That's certainly a topic up for debate.

If we are I'm pretty sure raising taxes isn't the remedy for getting out of it. I don't believe Congress has done that since at least WWII.

In the event Economists do call it a recession....

Is Medicaid still exempt from being impacted during recessions? I'm pretty sure it is.

People still getting Social Security during recessions?

Do property taxes in California increase during recessions as you claim? I'm thinking not. Didn't people actually get a reduction during the pandemic (Prop 8)? Should we move the goal posts back and say that home values will not decrease now?

I know sales and use tax rate decreased by 1% from 2009 to 2011.

What else you got? Will I wait in line longer at DMV or can I just do that stuff on the internet?

How long has the Federal Government been in a deficit? Shouldn't the country be on its last legs right now?

I constantly hear the bashers on here say California overspends. If that's the case, wouldn't a spending cut make sense if the budget is bloated?

Texas supposedly has a nice surplus. Will my property taxes go down (not looking likely but we'll see)? What will I notice now that the state is rich when I drive to work every day and go to the store.

Bonds get passed after recessions to pay for deferred maintenance.

Does CA overspend? I guess it depends on who you ask. I think CA doesn't tax enough for the services it tries to provide, largely because of Prop 13.

Newsome was right to reign in spending from the more progressive wing of his party when the budget was looking flush. California's reliance on taxing the income of the rich means the state swings from deficit to surplus, and vice versa, quite quickly.

The state has about $21B in its rainy day fund. That's a very good thing and may save the state from having to make much more painful budget decisions. So OP's question, whatever their intent, is quite valid: Will SVB's collapse compound the budget issues, blowing past the rainy day fund?

Originally Posted by blameyourself

The vast majority of people will see virtually no change in their lifestyle regardless if a state is in a deficit or a surplus, despite the people that want to obsess with this. It's simply another thread started by an OP with a history of regurgitating talking points. Threads like these are fun though to reference back when people talk out of both sides of their mouths or make erroneous claims (which is often the case).

Unless you're a state/local employee. Or you depend on certain social services. Or you care about what gets funded. Or you enjoy visiting State Parks.

Budget deficits matter. They have actual impact on people's lives. If it didn't matter then why pay taxes in the first place?

[TheseGoTo11]

Originally Posted by blameyourself

Cool story bro. So how will a deficit or surplus impact the average Joe?

I know if I were to dig out an old Economics book, Keynesian theory would say that budget deficits are actually good during down cycles (which we are now in). On the other hand, surpluses are better during prosperous times. Seems like CA has it right and states like Texas are backward on this one.

Personally, I can't recall a time when either a surplus or deficit has impacted my everyday life.

That applies to Federal deficit. Unlike the US government, California can't print money and is required to balance its budget. It can also lead to credit downgrade which the "average joe" is on the hook for in terms of higher interest rates.

[blameyourself]

Originally Posted by AnythingOutdoors

Bonds get passed after recessions to pay for deferred maintenance.

Does CA overspend? I guess it depends on who you ask. I think CA doesn't tax enough for the services it tries to provide, largely because of Prop 13.

Newsome was right to reign in spending from the more progressive wing of his party when the budget was looking flush. California's reliance on taxing the income of the rich means the state swings from deficit to surplus, and vice versa, quite quickly.

The state has about $21B in its rainy day fund. That's a very good thing and may save the state from having to make much more painful budget decisions. So OP's question, whatever their intent, is quite valid: Will SVB's collapse compound the budget issues, blowing past the rainy day fund?



Unless you're a state/local employee. Or you depend on certain social services. Or you care about what gets funded. Or you enjoy visiting State Parks.

Budget deficits matter. They have actual impact on people's lives. If it didn't matter then why pay taxes in the first place?

Right, so the private sector will do what they do and there will be limited cuts to government workers which typically happens during a down turn. As for Yogi....big deal. It's not the end of the world if a park or two has a temporary, short term closure which is all these things generally are.

Interpretation: a surplus or deficit is going to have little impact on the every day life of the Average Joe.

As for the other things that you ignored....

Medicaid will remain unchanged.

Social Security will be paid.

Some houses will actually have a property tax decrease (not an increase as you implied).

And of course, Prop 13 is going nowhere.

And if a bond is passed, so what. That's people voting themselves a tax increase which is absolutely fine. The same applies to Prop 13. If that's what the voters want, no problem and I really don't care if the minority want to crow.

Originally Posted by TheseGoTo11

That applies to Federal deficit. Unlike the US government, California can't print money and is required to balance its budget. It can also lead to credit downgrade which the "average joe" is on the hook for in terms of higher interest rates.

Could you sensationalize any more? A budget is simply an estimate on needed funds which so many people like you claim is bloated anyway. I always laugh when politicians claim they cut spending because they didn't spend as much as last year. It's really quite foolish as that doesn't really address if the previous number was needed. What should be used is a zero based budgeting method where every current expenditures needs to be justified. Ultimately, if indeed the politicians of the state are drastically overspending, there might not be a budget deficit at all. And in situations like these, the typical response is to cut spending (it's basically the response of most states, not just California, during recessions). But I know how bashers like to talk out of both sides of their mouths on things like this.