Preliminary reports on the California Budget are really, to put it in beatnik talk from 48 years ago, weirdsville, daddy-o. It looks like the state budget will actually cancel out potential benefits the Federal stimulus bill was suppose to help the state with. Ouch and yuck. Here is what I have heard so far:
The California budget will extract about $30 billion out of our state economy through higher taxes and reduced spending. That is something to annoy both Democrats and Republicans. The vote would (and by the time you are reading this the vote may have already taken place) knocking some of the $80 billion that California is expected to receive when President Obama signs the stimulus package into law either Monday or Tuesday.
Higher taxes mean that California will be less attractive to investments and for business development. Bad idea and bad tax idea. Good idea and great tax idea would be to introduce some incentives to get companies to come back into California instead of have reasons to leave the state, right guys and gals? We are turning the clock back on the state from the year 2008 to 1950 and early. Again, yuck.
To be fair, some analysts think that overall it will be good for the state of California and that business will come to California as we try to balance the state budget. Folks, I’ve lived in California and we use to be able to balance the state budget. We have a lottery that is suppose to help the school systems here and our schools are still suffering. We need some of that change that is trying to get through at the Federal level to come down to the state level.
The White House has tenative projections that the stimulus plan will save or create about 421,000 jobs. I have no idea where the came up with that number at this point and to be fair can’t comment on it other than 421,000 is a small amount compared to the hundreds of thousands of shadow unemployed people who have already rolled off of unemployment and the underemployed people who are starting to get nailed with not being able to make home payments or pay the bills. This holds true in other states as well but California is a big state and it has things here magnified a little bit larger.
Howard Roth, of the State Department of Finance, says that the number of dollars that will be added churning through the economy will be closer to a 100 billion dollars. As one of the State of California’s economists, he should be in a position to know and I hope that it is true and the money churns into the hands of the people that need it and not back and forth between banks to generate interest for them.
In more news from Weirdsville the Federal government is proposing to roll back sales taxes or something similar and the State of California is proposing adding a 1% sales tax. The net effect would be to cancel each other out but I don’t think the changes would be at the same time and it looks like the California sales tax addition would be a temporary one though taxes have a tendency to stay on for a long time (like the phone tax from the Spanish American War that was finally repealed a few years ago).
More on this and other California and Federal Budget news as it develops and as I see details of the State of California budget. Please post your thoughts and ideas and remember to fire away any tax related questions. I am looking for clients as well. If interested, drop me a post through the website. Be safe, healthy, and happy!
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Kim Isaac Greenblatt
California Budget Is Weirdsville
Tags: budget, Business, California, stimulus, weirdsville
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