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Watch California

December 31, 2022, 10:08:58 am NilsFor1611 says: blessings
August 08, 2018, 02:38:10 am suzytr says: Hello, any good churches in the Sacto, CA area, also looking in Reno NV, thanks in advance and God Bless you Smiley
January 29, 2018, 01:21:57 am Christian40 says: It will be interesting to see what happens this year Israel being 70 years as a modern nation may 14 2018
October 17, 2017, 01:25:20 am Christian40 says: It is good to type Mark is here again!  Smiley
October 16, 2017, 03:28:18 am Christian40 says: anyone else thinking that time is accelerating now? it seems im doing days in shorter time now is time being affected in some way?
September 24, 2017, 10:45:16 pm Psalm 51:17 says: The specific rule pertaining to the national anthem is found on pages A62-63 of the league rulebook. It states: “The National Anthem must be played prior to every NFL game, and all players must be on the sideline for the National Anthem. “During the National Anthem, players on the field and bench area should stand at attention, face the flag, hold helmets in their left hand, and refrain from talking. The home team should ensure that the American flag is in good condition. It should be pointed out to players and coaches that we continue to be judged by the public in this area of respect for the flag and our country. Failure to be on the field by the start of the National Anthem may result in discipline, such as fines, suspensions, and/or the forfeiture of draft choice(s) for violations of the above, including first offenses.”
September 20, 2017, 04:32:32 am Christian40 says: "The most popular Hepatitis B vaccine is nothing short of a witch’s brew including aluminum, formaldehyde, yeast, amino acids, and soy. Aluminum is a known neurotoxin that destroys cellular metabolism and function. Hundreds of studies link to the ravaging effects of aluminum. The other proteins and formaldehyde serve to activate the immune system and open up the blood-brain barrier. This is NOT a good thing."
September 19, 2017, 03:59:21 am Christian40 says: bbc international did a video about there street preaching they are good witnesses
September 14, 2017, 08:06:04 am Psalm 51:17 says: bro Mark Hunter on YT has some good, edifying stuff too.
September 14, 2017, 04:31:26 am Christian40 says: i have thought that i'm reaping from past sins then my life has been impacted in ways from having non believers in my ancestry.
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Author Topic: Watch California  (Read 10012 times)
Psalm 51:17
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« Reply #30 on: August 28, 2013, 11:59:46 am »

Why are California cities in fiscal trouble?

My colleagues and I at the Center for Retirement Research are beginning a project to figure out why some localities are facing serious financial problems.  Instead of reviewing the finances of the 2,400 cities and towns in the U.S. Census of Governments, we decided to search newspapers, magazines, wire services and other sources for cities or towns that have been cited in the press as financially troubled.  Our search turned up 34 localities.  Nine of those were tiny towns that had lost a major lawsuit.  The other 25 localities had more pervasive problems, and included the expected larger suspects such as Chicago, Detroit, Philadelphia, and Providence, R.I.  Others were small, like Prichard, Ala., and Central Falls, R.I.  What I found astounding was that 10 of the 25 financially troubled cities were in California.  I guess the bright side is that, excluding California, American cities are not about to topple over like dominoes.  On the other hand, what is going on in California?

According to the Economist, California’s underlying problems rest with its brand of democracy.  Essentially, Californians have adopted a direct and participatory democracy rather than the representative democracy favored by James Madison and other founders.  The California approach opened the way for a major role for voter initiatives.  These initiatives were used sparingly for much of the 20th century, but then in 1978, Californians passed Proposition 13.  It was an anti-tax measure but had vast implications both for taxes and the power of the legislature to respond to economic shocks, such as the financial crisis and Great Recession.

Proposition 13 was a reaction to a doubling of property tax bills, as assessments soared in the early 1970s.  The initiative cut the property-tax rate from an average of 2.6% to 1% in every county.  It also capped the annual increase in assessed values at 2%.  To make sure that the tax cut was not offset by tax increases elsewhere, Proposition 13 required a two-thirds super-majority in the legislature for any tax hike.

With a huge revenue hole, local services faced enormous cuts.  Instead, the state government, which had a large surplus, bailed the localities out.  That one-time transfer became a permanent financing mechanism.  And even the remaining property tax revenues were allocated by the state legislature.  California now transfers 60% to 70% of its state revenues to localities.

In the wake of Proposition 13, two things have happened.  First, of the hundreds of new initiatives that have passed, many have promised a tax cut or an expanded service without compensating financing, so much of the budget was allocated before the legislature even had a chance to negotiate. Second, the requirement for a super-majority for any tax increase made it almost impossible for policymakers to raise revenues. The consensus appears to be that California has become unmanageable.

On the pension front, I know the story.  California is in trouble because a retroactive expansion of benefits in the late 1990s made the state one of the most generous in the nation.  Although unlike Illinois and New Jersey, it is not guilty of deliberately underfunding its plans, some degree of underfunding and the sheer magnitude of the pension commitments are putting enormous pressure on both state and local budgets in California.  It is also a state where it is particularly difficult to modify public pensions by changing future benefits for current employees.

Finally, California was particularly hard hit by the financial crisis and ensuing recession.  Even today, California has higher foreclosure and unemployment rates than most states.  And local government revenue in California grew between 2007 and 2010 by only 3% compared to 9% for the rest of the nation.  Part of the low growth can be explained by an actual decline in state transfers, which increased elsewhere by 10% over the 2007-10 period.

More recently, California has seen some short-term success in stabilizing its finances through spending restraint and a voter-approved tax increase, but the underlying problems remain.  Combine a dysfunctional state government, which cannot raise revenues on its own and cuts back just when localities need help, with very generous pension promises and the devastating impact of the 2008 financial collapse, and California is batting three for three.  No wonder 10 of the nation’s 25 financially troubled cities are located in California.

CORRECTION: An earlier version of this post misspelled the name of the town of Prichard, Ala.
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