Social Question

Blondy's avatar

Why is California bankrupt?

Asked by Blondy (150points) January 27th, 2010
28 responses
“Great Question” (3points)

How and why did it happen? If you lived there would you leave? Did you live there and left?

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UScitizen's avatar

Because the United States Government has allowed the State to be invaded by foreign nationals that do not pay their share of taxation, while sucking social services from the State coffers.

HankMoody's avatar

I live here and no, I’m not leaving. Everything will be fine once we legalize pot and tax it.

grumpyfish's avatar

Lots of people blame lots of things. Honestly, the state nearly turned me into a Republican. I left a year ago.

Here’s the deal, in my opinion:
– Tons of state services & programs, and most are mandated (e.g., the state has to pay those before its own bills, fix the roads, etc.)
– Direct democracy (i.e., voter initiatives) which always lower taxes & increase services.

It’s estimated that the illegal immigrants cost california something like 10.5 Billion annually, which is only 1/6th of last year’s budget deficit, ergo not the only problem.
Additionally, it’s well known that the agricultural industry relies on the low wages it can pay illegal immigrants, so the state would be (in theory) worse off economically without them.

Legalized pot would only bring in about 1.4 Billion in additional revenue.

The problem with California, IMO, is that the general population wields too much direct power, making it impossible to make hard decisions (like cutting social services, or rewriting the constitution) to bring the state back from the brink.

However, I suspect all of this will be forgotten as we move back into a boom cycle and California’s coffers fill.

Blondy's avatar

WOW. Great answer, grumpyfish. Very thoughtful and informative. Glad I don’t live there.
Things are much better for you since you’ve left?

grumpyfish's avatar

@Blondy Well, the state I’m living in now didn’t send out IOU’s for tax refunds, the roads are in good repair, our social services serve those in need (but are not so cushy as to encourage vagrancy). =)

marinelife's avatar

I think a lot of California’s problems stem from a combination of 1977’s Prop 13, which reduced property taxes to 1% of property values and the recession.

john65pennington's avatar

Illegal immigrants. they pay no taxes. they do not pay for healthcare. they go to emergency rooms of hospitals for their healthcare at taxpayers expense. they do no believe in banks. they hide their money and send it illegally across the border. they contribute nothing to the economy of the State of California or America. Florida is about to be in the same position.

grumpyfish's avatar

@marinelife Indeed! I’m paying 3% here, and it’s well worth it.

@john65pennington “California agriculture is nearly a $36.6 billion dollar industry that generates $100 billion in related economic activity.” ?

Sarcasm's avatar

I’m going to suggest prisons as a reason.
Prison population between ‘82 and ‘00 increased by 500%. The most recent number I can find says that 616 out of 100,000 Californians are in prison (We’re #17 in the race to imprison everyone). Half of these are for violent crimes. 20% are for drug offenses.
The average Californian prisoner costs $35,000 per year.

MissAnthrope's avatar

Some good answers here already, I want to throw in that the highest percentage of people on welfare are in CA (or so goes the statistic I heard).

susanc's avatar

Californians have consistently voted themselves out of paying taxes for how many decades now? It’s not just illegal immigrants who don’t pay taxes. No one pays taxes. Where was the money supposed to come from?
“Not me”, said the cow,
“Not me” said the sheep,
“Not me” said the pig.
Where is the Little Red Hen when we need her?
most of you guys have probably never heard this childhood story

shilolo's avatar

I agree with Grumpyfish. Two things have to change, pronto, for things to improve.
1. Get rid of propositions. I always vote NO, irrespective of the proposition, because I think they are an awful way to run a state that is the world’s 6th largest economy. Not one of us has the ability to be able to balance the spending with the income when faced with simple questions like:
“More money for roads?” Sure.
“More money for schools?” Sure.
“More money for prisons?” Sure.
“Raise property taxes to normal levels?” Hell no!
Where is this money going to come from?....Not my problem.

We, the people of California, have voted ourselves into this mess. Illegal immigrants don’t vote, but they sure make convenient scapegoats. It is the moron(s) down the street (who is probably in a huge amount of debt owing to the housing/credit crisis and an inability to balance his own budget) who has voted to increase his services without thought for where the resources will come to pay for those services. That, in a nutshell, is the major reason for the bankruptcy. By the way, this applies to both Democrats and Republicans.

2. Needing a ⅔ majority to pass a state budget. Nothing gets done without major infighting between the parties and the special interests. Change the system so that a simple majority is necessary, and go from there.

My wife and I are seriously thinking about leaving the state with the situation as it is, and we are two highly successful, tax paying (lots) people. The brain drain will be very bad if things don’t change soon.

susanc's avatar

@shilolo: come to Washington (the state, not the District). I’ll sell you a nice house in Olympia. Everyone will be happy to have you here.

JessicaisinLove's avatar

Gray Davis sucked California dry of funds. What I find amazing is he is never mentioned
anymore as being the main culprit and the beginning of California’s downfall.

Ruallreb8ters's avatar

@JessicaisinLove Gray Davis was only a scapegoat… having him impeached and the election that followed was a joke. Overspending on welfare, illiegal immagrints and bad fiscal policies caused the downfall. During the 90s California had almost limitless money and a thriving economy, that all changed but the spending did not. As for leaving, hell no… Californias broke, Im not…

Blondy's avatar

My goodness, people, don’t hold back, LOL

HankMoody's avatar

Yep, I remember when they hung this whole thing on Gray. When the economy was thriving, they put a clause in there that the DMV Registration fees would double or triple if there was a shortfall. Nobody figured that day would ever come, but guess when it happened? Right after 9/11. Economy is in the toilet and fees go up? Everyone wanted to hang Gray Davis.

California’s broke, I’m not…I like that. I’m staying too…

shilolo's avatar

Why pay 10% state taxes for dwindling services? I know that I’m finding it less and less appealing. Then, of course, there are furloughs and pay cuts for state employees as well as for people employed by the UC system. I don’t like it. I’m leaving.

YARNLADY's avatar

There are thousands who pay no taxes, and fail to support the system in any way, yet suck up the services like a hungry vacuum cleaner. People have given up their right to rule to a never ending line of likeable but totally incompetent legislators who have no idea what they are doing.

There are also thousands of state employees who see nothing wrong with treating their jobs like a money tree, for them to just pick freely, and spread around among their friends and relatives.

With the rampant incompetence and corruption, the taxpayer becomes disgruntled and votes down every tax increase because their tax money is being thrown down a bottomless well.

Then to top it all off, along comes a horde of lenders who get greedy and give out bad loans with high interest rates, which they sell to unknowing investors. When the mortgage holders can’t pay, the entire system collapses like a huge picture made of dominoes, while the lenders disappear with their ill gotten gains.

Judi's avatar

They recalled Gray Davis because they wanted to repeal increased vehicle registration fees.
Now we’re bankrupt and the fees have returned. Maybe if we had been paying the fees during our prosperious times we would be weathering these hard times better.
Arnie is an idiot.

YARNLADY's avatar

@Judi Actually, Gov S is not an idiot, but his ideas on how to turn California, which worked in his business, could not work at the state level, because they require cooperation of all parties concerned.

shilolo's avatar

@YARNLADY It is a fallacy to suppose that the people who pay no taxes and state employees are to blame. The cold hard truth is that all of the people of California are to blame, but mainly, the people who supported the proposition creating fixed property taxes (even though the value of property has skyrocketed) as well as the people who continue to support spending beyond our means. Basically, California maxed out its credit cards while not working hard enough to raise more income (i.e. property taxes). The tax burden thus falls unfairly on those who don’t own property.

YARNLADY's avatar

Like I said, among other reasons, People have given up their right to rule to a never ending line of likeable but totally incompetent legislators who have no idea what they are doing. I beleive that very few properties are still being taxed at their pre Prop 13 rates. Enough have changed hands to render that original rule less important.

As with the rest of the country, people want benefits, but they don’t want to pay for them.

shilolo's avatar

@YARNLADY That is true, except the “people” that want “benefits” are all of the people that voted yes for all of the propositions over the past 30 years that mandated increased spending. That encompasses everyone, democrats and republicans. To shift the blame to anyone else (i.e. illegals, welfare moms, corrupt state employees) is simply scapegoating to the nth degree.

By the way, people don’t vote for tax increases not because they are disgruntled at so-called corruption, but rather, because they simply don’t want to pay more taxes. There is one word to describe this: selfishness.

Pandora's avatar

Just a guess, but maybe too many lawyers and high paid accountants.

Judi's avatar

@YARNLADY ; I still maintain Arnie is an idiot. While I understand the concept of furloughs, he is forcing some employees to still work but not pay them for it. The court has said it is illegal and he continues to do it.
Furloughs are fine for departments that can just shut down for a day, but when peoples lives are at stake (correctional officers) they just don’t make since. Since it would be dangerous to send the employees home he just makes them work for free.
Of course, his personal security service the CHP are exempt.

YARNLADY's avatar

@Judi Good point, the more desperate he gets, the worse the choices he makes. I wish I could be in charge. I would simply declare that the state would do exactly what it did the previous year, and send the legislature home without pay for the rest of the year. That would save a heap of money.

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