2009 May 21 Thursday
California Budget Crisis Yields Some Benefits

California's budget crisis will push more illegal alien criminals into federal prisons from which they can then be deported.

To close the California budget gap, funds for education will now have to be slashed by $5.3 billion, and $2.8 billion will be cut from health and social programs, the governor said. Mr. Schwarzenegger also said the state would move about 19,000 illegal immigrants to federal facilities and transfer more than 23,000 nonviolent offenders to local jails to cut costs.

Regards the illegal alien criminals: This budget crisis creates a bigger incentive for states to identify illegal aliens amount those in prison. Sounds like any prisoner who is an illegal alien can be turned over to the federal government. So why aren't states already trying harder to identify illegal alien criminals? This would lead to their eventual deportation. Much better for us in the long run.

It takes a huge multi-year budget crisis with a $21 billion dollar budget gap to get the state of California to shift non-violent prisoners from expensive (read: staffed by high priced labor) state prisons to cheaper local jails. This is why I'm not sympathetic to the state government. It makes me wonder what else the government resists cutting that does not change quality of service delivered to the citizens of the state.

Back when Shwarzenegger's predecessor Gray Davis was in office Davis made a deal with the state prison guard union to give them large wage increases in exchange for big campaign donations. This is a major reason why those local jails cost less to run than the state prisons.

I think a severe fiscal crisis (and hopefully bankruptcy) in California will basically cut down on the amount of parasitism that has built up in the system. Nothing less than a severe crisis will shake loose well entrenched parasites.

Consider the University of California's bloated administration.

Sen. Jeff Denham, R-Merced, pointed to the University of California's administration as ripe for spending cuts.

"Does the UC president's office need 1,000 employees or can he do it with 500?" Denham asked. "Do we need to have presidents and chancellors that are making $400,000 plus per year?"

I'm thinking the UC president could run the UC with far fewer people. I'm also thinking the cost of instruction could be lowered with lots more video recording of lectures and web-based delivery of tests. Cut labor costs more more automation of education.

A San Jose State University political science professor is eager to fix the state's financial problems with lots of new taxes.But he's facing big state university cuts. I say video record lectures of political science professors and employ fewer of them to deliver lectures.

A small upper income elite pays a large fraction of all government costs in California.

The top 1 percent of the richest taxpayers typically pay about half of all personal income taxes in California. More than 55 percent of the state revenue last year came from personal income taxes, followed by the sales tax with 27 percent.

As long as times are good, this arrangement works because as people splurge on big-ticket items and make profits, they send large infusions of tax revenue to the state. But when the economy takes a tumble and people tighten their belts and corporations’ profits fall, the state’s primary source of revenue takes a precipitous drop.

“California is unique in that it so dependent on such a small portion of the population,” said Mark Baldassare, president of the Public Policy Institute of California, a nonprofit in San Francisco that does independent research on the state’s economic, social and political issues.

Low skilled immigrants - both legal and illegal - pay little in taxes because they have little earning power. If we deported them and greatly raised the standards for legal immigrants we could get far fewer but higher earning immigrants. This would both lower the cost of government and increase revenue available to fund government.

There'll be less financial aid for college.

Also potentially on the chopping block is CalGrants, a financial assistance program that offers cash grants to lower- and middle-income college students each year. The governor's proposal would eliminate the 77,000 in new grants awarded each year at a cost of $180 million, but that saving would eventually grow to more than $900 million as students graduate and the program is phased out.

A cut in the buying power of students will reduce prices of tuition at private colleges. Rather than spend $900 million per year in grants to students why not spend a much smaller sum to record college course lectures and shift more courses onto the web? Cut costs rather than fund inefficiency. That's the way it goes in private industry.

Share |      By Randall Parker at 2009 May 21 10:47 PM  Economics Government Costs


Comments
James Bowery said at May 22, 2009 8:45 AM:

The top 1 percent of the richest taxpayers typically pay about half of all personal income taxes in California.

Why bother distinguishing between obviously similar quantities like wealth and income? After all, conflating force with momentum didn't prevent the Greeks from achieving great things and Newton eventually sorted it out anyway so, what's the big deal?

Anonymous said at May 22, 2009 11:43 AM:

I would like to see figures (maybe from Steve Sailor) on CA state income tax compliance by race, ethnicity, and immigration status. Do recent immigrants file state income tax returns at the same per capita rate as natives ? Do immigrant merchants make deposits of sales tax money at the expected rate, based on comparable businesses ?

The reason for my questions is that as CA becomes more 3rd-world, state financing problems are increasing. Is the legislative spending the only side of the problem ? Or is there a problem with tax compliance ? I think if there is, the state government will conceal it.

Rohan Swee said at May 22, 2009 3:34 PM:

CA cutting all positions, departments, and offices that have the word "diversity" in the title would probably save a not insignificant amount, without contributing to any decline in worthwhile services.

Randall Parker said at May 22, 2009 5:58 PM:

James Bowery,

I agree. The language is imprecise. Still, it tells us something about who pays to fund the welfare state.

Rohan Swee,

Yes, get rid of all offices that do racial preferences enforcement. The result would be an improvement in the quality of governance and greater economic efficiency.

bob said at May 27, 2009 10:19 AM:

Two ways CA can better tax illegals:

Cut the income tax and raise the sales and gas tax, which unlike the income tax they can't avoid.

Start enforcing the car tax. Go into their neighborhoods and start writing tickets on the many vehicles there that don't have current registration tags.

Adam said at May 28, 2009 9:58 PM:

Good points, but two things you have to remember two though. First California normally raises the majority of its income from Sales Tax receipts. Last year was very unusual, Up until this recession, 20% of these receipts were from automotive purchases (which are down considerably), and the vast majority of other consumer goods purchases are down as well. It is true, that California does have an income tax, and of this income tax, about 95% of it is payed by the top 5%, but this does not account for the majority of the state's typical income, which normally comes from Sales taxes.

As for the University of California System. It is true that the University of California system does indeed have a lot of employees, and it is also true that the University of California system pays the people who work for it (some of them at least) a lot of money. But two things must be remembered, first of all the UCs compete with other major universities for students, research funding, and prestige, and thus must pay competitive salaries in order to ensure competition.

The second, and in my opinion most important point, is that the University of California gets a very small percentage of its funding from the state. At the University of California at San Diego, which is about tied for 3rd in state funding with Davis, State and Federal funds combined pay for merely 9.3% of the entire school budget. The remainder of the funds come from private donors, student tuition, and research grants.

The funding the state gives the University of California makes up less than 5% of the state's total budget. It used to be much more, but it's been cut considerably over the past 40 years, and other funding sources have been sought in order to compensate for this.

The main reason for the reduced state funding (and the increases in the state budget) is Prop. 98 mandatory funding minimums, skyrocketing H&HS funding, and overpopulated prisons (California has 3% of its population in prison).

--Adam


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