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About this blog: I am a native of Alameda County, grew up in Pleasanton and currently live in the house I grew up in that is more than 100 years old. I spent 39 years in the daily newspaper business and wrote a column for more than 25 years in add...  (More)

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State budget hinges on earnings of the 1 percent

Uploaded: Dec 6, 2016
A majority of the state’s voters easily approved continuation of the temporary income tax surcharge on the rich that Gov. Brown convinced voters to approve in 2012 as California was struggling to dig out of its huge budget hole.
The irony of the passage is that it continues the state’s vulnerability to major budget hiccups if the wealthiest residents have a bad year financially.
The Sacramento Bee reported that the passage of Proposition 55, backed heavily by the state teachers’ union and other public employee labor groups could make the fiscal situation more fragile. The measure extends the “temporary” taxes that were set to expire in 2018 to 2030—in effect making them permanent.
About one-third of the state’s revenue comes from just 1.5 percent of the taxpayers, according to the Legislative Analyst’s Office. The budget this year is $122 billion so you can see the challenge.
Estimates on what the income tax surcharge will generate range from $4 billion to $9 billion annually. That’s a fair spread, but the overall situation almost guarantees a boom-and-bust cycle when the economy turns south. Gov. Brown, throughout this year, has cautioned about spending because the current expansion (as anemic as it has been across much of the country) technically has run since President Obama’s first year in office (89 months)
The governor warns that expansions do not last forever—there is a business cycle.
There is some good news in this—the rainy day fund that voters established at the governor’s request two years ago now has about $8 billion in it. The governor convinced the Legislature to put more money away that the statute required this year.
The post-election fiscal update by the Legislative Analyst’s Office projects the budget will remain in the black for the next four years, but echoes the governor’s concern about “considerable uncertainty” about the economy.
Mix in a new Republican administration that has pledged to repeal and replace Obama care and to take a hard look at tax cuts and the outlook is foggy. The report intentionally did not address those possibilities.
The LOA report did note that the state was prepared to weather a mild recession, according to the Bee.
Revenues have fallen short of projections, coming up $706 below estimates on June 30. Four months into the new fiscal year, revenue is off $595 million.

Voters passed the ban on plastic grocery bags this month. The East Bay Times ran a graphic that showed the communities where the bag ban will be new. Check these out: Hillsborough, Woodside, Los Altos Hills, Monte Sereno, Saratoga, Scotts Valley and Gilroy. Except for the latter two, it’s difficult to find more affluent small towns in the Bay Area.

Comments

 +  Like this comment
Posted by Ann Katzburg, a resident of San Ramon,
on Dec 7, 2016 at 1:28 pm

Why did the voters overwhelmingly pass Prop. 55? It's going to help stabilize our state budget. Our voters care about our children, and know that without this funding source our schools would have faced BILLIONS of dollars in cuts to our public schools. Prop 55 simply extended the income taxes on the wealthy imposed by voters with Prop 30 in 2012. Because of the funding from Prop. 30 our schools in the San Ramon Valley Unified School District have been able to bring back counselors, keep our libraries open, reduce class size for our students and provide a robust, comprehensive professional development program for our educators that has implemented training in the common core standards, newly adopted science standards, and an abundance of other areas preparing our educators for 21st century learning. A child only has one chance at 2nd grade. As a society we owe it to our children to provide an opportunity to get the best education possible. Let's remember the riches this tax will do for our children and continue to build revenue sources that support our children. Our children deserve this!


 +  Like this comment
Posted by Arnold, a resident of Another Pleasanton neighborhood,
on Dec 7, 2016 at 6:32 pm

"Why did the voters overwhelmingly pass Prop. 55? It's going to help stabilize our state budget. Our voters care about our children, and know that without this funding source our schools would have faced BILLIONS of dollars in cuts to our public schools."

Pension reform would have helped stabilize our budget while also help slow the fiscal bloodletting of our middle class. Californians are paying an additional five-six billion per year just to help prop-up the teachers pension fund - which has been abused the by the teachers to the detriment of taxpayers.


 +   1 person likes this
Posted by Michael Austin, a resident of Pleasanton Meadows,
on Dec 7, 2016 at 7:39 pm

Michael Austin is a registered user.

Parents no longer parent.
Given, both parents may work, and not available to parent.
It is todays standard that too many parents leave the raising of their children to the school districts.
if parents would parent like parents of fifty years ago, schools would not have a need for counselors.


 +   1 person likes this
Posted by FrequentWalkerMiles, a resident of Another Pleasanton neighborhood,
on Dec 12, 2016 at 11:54 am

FrequentWalkerMiles is a registered user.

"Why did the voters overwhelmingly pass Prop. 55? It's going to help stabilize our state budget. Our voters care about our children, and know that without this funding source our schools would have faced BILLIONS of dollars in cuts to our public schools."

you forgot the most important part: the average voter figured he or she won't be impacted if the taxes are ostensibly levied on only the rich.

At the end everyone pays, everything will get more expensive as businesses increase prices to account for the "soak the rich" tax. And of course no one is asking where all the property tax from Pleasanton or San Ramon is really going once it gets into the respective county's general funds.

I an not impacted by the prop 30 taxes directly, but I was taught by a generation of parents who told their kids "there is no free lunch".


 +  Like this comment
Posted by pokem23, a resident of Amador Estates,
on Dec 14, 2016 at 9:48 pm

pokem23 is a registered user.

You have been able to generate the pokemon go hack at Web Link just for having some pokecoins online.


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