California's economy, with a Gross State Product of about $1.9 trillion, is more than six times the size of Greece's. At $90 billion, the state's budget (excluding the few hundred billion dollars of federal money distributed there) is only sixty percent of the size of Greece's national budget. But, California's budget deficit, estimated at $16 billion for the current fiscal year unless substantial changes are made, represents a stunning 17.5 percent shortfall and a huge miss from January predictions of a $9.2 billion deficit. Greece is now anticipating a deficit under 7 percent of GDP, but even allowing for typical politician optimism, the Greek deficit problem is arguably small compared to California's.While both places are full of union members and socialists (pardon my redundancy) focused on preventing cuts in government spending, California does have one advantage: it is not full of people who make a full-time job of tax evasion as is the case in Greece. According to a fascinating article on the subject, "the gap between what Greek taxpayers owed last year and what they paid was about a third of total tax revenue, roughly the size of the country's budget deficit."
California Governor Jerry Brown is proposing certain spending cuts (including cuts to higher education and to programs for the poor) and tax increases (a massive income tax rate hike -- from 10.3 percent to 13.3 percent on those earning over $250,000 -- and a 0.25 cent increase in the state's sales tax.) Even so, his budget calls for a more than 5 percent increase in state spending, including a 16 percent increase to public school spending, over the prior fiscal year, giving a new meaning to "austerity" and emphasizing the power of teachers unions over Democrats.
Brown is taking the tax hike part of his plan directly to voters, using the typical Democrat threat of cuts to public education if the hikes are not passed. It's time to call his bluff, at least if California wants to stop hemorrhaging people, jobs, and talent.
If you enjoy this movie, take heart, there will soon be a sequel: Illinois' state budget website says that "Illinois faces a budget shortfall of more than $11 billionÂ… Spending growth consistently exceeds revenue growth [and it is] getting worse each year."