The hoped-for April spike in personal income tax revenues for the State of California fell again below the assumptions used to get the budget to “balance.” Instead of $9.4 billion, the state collected only $7.4 billion. A 21% shortfall! Corporate taxes were also below forecast. Red in ink for fiscal 2012 is nearly $12 billion. And yet, California has a mega-project.
“The US is one of two major beef-exporting countries with no comprehensive traceability system,” said Erin Borror, economist at the Meat Export Federation. The other country is India. The issue was Bovine Spongiform Encephalopathy, or Mad Cow Disease. Humans contract it by eating contaminated beef. It’s always fatal. Lack of traceability “places the US at risk if an outbreak occurs in this country,” Borror said. That was last November.
While all eyes are on Europe, California is hobbling along its own path to, well, a tsunami of last-minute bills. 665 bills are scheduled to be debated by policy committees from Monday through Thursday, the final days for 2012 legislation to get off the ground. California has some issues—its fiscal and economic policies haven’t been a raging success recently. Hence, numerous crucial proposals in that pile of bills. For example, a strip club tax.
Tuition at the California State University will be double of what it was in 2007-08. But it’s still not enough. Now CSU threatened taxpayers and prospective students with stunning enrollment cutbacks, unless—this smells of extortion—it gets its tax increases on the ballot and passed. University of California is also jacking up tuition and cutting enrollment. And yet, a lavish multi-billion-dollar building boom continues on campuses around the state.
Republicans are trying to tar President Obama with gas prices that are creeping up on $4 a gallon and are shooting for an all-time high. The strategy is working. Obama’s approval rating on handling gas prices has plunged. In San Francisco, gas is already $4.50. Yet across the Bay are five oil refineries that together are the largest exporters of petroleum products in the nation.
Optimism has always been the hallmark of California—especially when it comes to tax-revenue projections. Now the independent Legislative Analyst’s Office laments that Governor Jerry Brown’s budget is another extravaganza of optimism, particularly the projections of how much moolah can be extracted from wealthy residents. Which the Governor expects to skyrocket, magically.
There never was that “giant sucking sound” that Ross Perot had warned about during his quixotic presidential campaign in 1992—the sound that manufacturing jobs would make as they head south to Mexico. Turns out, he was wrong. The jobs went south silently. However, yesterday in San Francisco, there was that sound. From money going east. Lots of it. From fundraisers.
High-speed rail works if it links big urban areas and has lots of riders. The most successful is the Tokyo-Osaka Shinkansen: 150 million passengers per year. Even Amtrak’s slower route between New York City and Washington DC is profitable, though the rest of Amtrak is not. In theory, California’s High-Speed Rail Project falls into that category. In Reality, it has turned into a scandal before construction has even started.
California is broke again. The “balanced” budget last summer turned into a pile of overoptimistic assumptions. Out-of-money date is March 8. $3.3 billion must be dug up, pronto. Last fall, California had to borrow $21 billion to make it to April. Now all eyes are on Facebook. Its IPO will singlehandedly solve all budget problems forever—just like Google’s IPO had done.
With IPO hype blowing like a maxed-out hairdryer into my face, I Googled … Friendster—the shining star of social networking that everyone had drooled over. Turns out, in 2009, Friendster was bought for a pittance by MOL Global, a Malaysian company. In 2011, it discontinued social networking activities and rebranded itself as a gaming site. But there is one valuable asset it still has: user information.