Monday, October 20, 2014

California - When will it run out of money?

Fortunately for California there are plenty of deep pocket democrats, liberals, environmentalists, and technology companies that it might pay it's bills for a while. Unfortunately for the citizens of California, unemployment will remain high (still one of the highest in the nation), taxes and fees will remain high (still one of the highest in the nation), regulation and government intervention will be high (still one of the highest in the nation) the cost of living will remain high (still one of the highest in the nation), and the quality of life will not be all that good (high traffic, crime, and other issues of the like).

I think where California will run into trouble is if real estate and stocks drop in price once again. Much of California's "income" comes from property taxes and capital gains taxes. So if the real estate markets and the stock markets take a dive (which I think they will any time soon), California will have a deficit once again. One other thing that California has working against it is that the state and local governments keep spending more and more. Though the state has a balance budget, it has spent every dime it has taken in and has very little in reserve. One nice downturn and California is going to be hurting.

Well, that was a long way to say that if the economy is fine, California is fine. If the economy tanks, California is going to be in a world of hurt.

One more thing. There has been an exodus of people from the state, but it has mostly been productive conservative individual and businesses. So there is not much left of a conservative base here in the state to keep the politicians from spending as much as they want or get whatever they want (though there has not been many conservatives for many years, there were enough to defeat stupid ballot measures, but that is now gone). So the state keeps digging a whole when it comes to finances and obligations. California's unfunded liabilities are huge and basically will never be paid. There is just not enough money to pay for it all. In the long run, California is doomed. It's not a guess, it's math!