California has run huge budget deficits for the last decade. Recently voters passed Proposition 30 as a $6 billion state income tax increase on top earners in hopes of rescuing schools by balancing the state budget. But according to the California State Controller’s just released December financial statement, state spending is $900 million over budget and state tax revenue is at least $360 million under budget.
For the last 35 years, California politicians have been forbidden from jacking up property taxes by the 1978 voter approved Proposition 13 Initiative. The initiative has been so popular with homeowners that it has been referred to as the third rail of California politics. But as the CPPC study demonstrates, the annual cost of pensions will soon increase from the equivalent of about 50% to 100% of these counties’ net property tax income. With the state already running new deficits on top of the highest income taxes in the nation, it is my belief that California politicians will soon try to over-turn “Prop 13.”
Monday, January 14, 2013
California Pension Death Star Approaching
Proposition 13 is the canary in the coal mine.