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After Years Of Record-High Borrowing, California Reaches Fiscal Milestone
Reuters
Posted: 07/10/2014 4:43 pm EDT Updated: 07/10/2014 5:59 pm EDT


By Robin Respaut

July 10 (Reuters) - California has ended its fiscal year with cash left over in its general fund for the first time since 2007.

State Controller John Chiang said on Thursday that California wrapped up June with a positive cash balance of $1.9 billion. This suggests the state has reached a stable financial foothold with enough money in its day-to-day operations budget to meet obligations without borrowing from other state funds or from Wall Street.

The cash-positive balance is another sign of fiscal recovery after seven years of "record-high borrowing just to pay our everyday bills," Chiang said in a news release. But he added, "We should remain laser-focused on paying down the Wall of Debt, reversing the many accounting gimmicks to which we've become addicted and keeping the State as liquid as possible to avoid experiencing the payment delays and IOUs that plagued our State during the Great Recession."

During the fiscal year ended June 30, the state controller's office collected $101.6 billion in revenue, or 2.1 percent more than Governor Jerry Brown had projected in his January budget release. Personal income taxes totaled $66.2 billion, or 2.6 percent higher than expected. Corporate taxes hit $8.5 billion, 9.3 percent higher, and retail sales and use taxes reached $22.2 billion, 1.8 percent more than expected.

A state particularly susceptible to swings in the economy, California has enjoyed the U.S. stock market's five-year surge. But "another down cycle in the economy is inevitable," Chiang said. "We should be vigilant about preparing for that day while we celebrate the great progress we've made to date."

Last month, in another positive reflection of the state's finances, Moody's Investors Service upgraded California's general obligation debt to "Aa3" from "A1," citing the state's improving financial position and employment growth.

kalm wrote:Other states should take note.

Grizalltheway wrote:Following in Dem-controlled Montana's footsteps.

Baldy wrote:

Grizalltheway wrote:Following in Dem-controlled Montana's footsteps.

...and a decade behind Texas.

Baldy wrote:

Grizalltheway wrote:Following in Dem-controlled Montana's footsteps.

...and a decade behind Texas.

kalm wrote:

Baldy wrote: ...and a decade behind Texas.

Yeah...but it's Texas.

Spoiler: show

BTW, I know it takes about 12 hours to cross Texas at it's widest points.

Ibanez wrote:

kalm wrote:
Yeah...but it's Texas.

I oppose any state that if you start at one end, and drive 12 hours, YOU'RE STILL IN THE FUCKING STATE!

Spoiler: show

BTW, I know it takes about 12 hours to cross Texas at it's widest points.

Grizalltheway wrote:

Ibanez wrote: I oppose any state that if you start at one end, and drive 12 hours, YOU'RE STILL IN THE FUCKING STATE!

Spoiler: show

BTW, I know it takes about 12 hours to cross Texas at it's widest points.

Montana only takes 10 hours if you're doing the speed limit. And it's a lot more scenic.

Grizalltheway wrote:

Ibanez wrote: I oppose any state that if you start at one end, and drive 12 hours, YOU'RE STILL IN THE FUCKING STATE!

Spoiler: show

BTW, I know it takes about 12 hours to cross Texas at it's widest points.

Montana only takes 10 hours if you're doing the speed limit. And it's a lot more scenic.

Ibanez wrote:

Grizalltheway wrote:
Montana only takes 10 hours if you're doing the speed limit. And it's a lot more scenic.

SC is about 3 hours. All interstate.

andy7171 wrote:

Ibanez wrote:
SC is about 3 hours. All interstate.

"The only thing you see on the interstate is interstate". Movie?

Skjellyfetti wrote:

After Years Of Record-High Borrowing, California Reaches Fiscal Milestone
Reuters
Posted: 07/10/2014 4:43 pm EDT Updated: 07/10/2014 5:59 pm EDT


By Robin Respaut

July 10 (Reuters) - California has ended its fiscal year with cash left over in its general fund for the first time since 2007.

State Controller John Chiang said on Thursday that California wrapped up June with a positive cash balance of $1.9 billion. This suggests the state has reached a stable financial foothold with enough money in its day-to-day operations budget to meet obligations without borrowing from other state funds or from Wall Street.

The cash-positive balance is another sign of fiscal recovery after seven years of "record-high borrowing just to pay our everyday bills," Chiang said in a news release. But he added, "We should remain laser-focused on paying down the Wall of Debt, reversing the many accounting gimmicks to which we've become addicted and keeping the State as liquid as possible to avoid experiencing the payment delays and IOUs that plagued our State during the Great Recession."

During the fiscal year ended June 30, the state controller's office collected $101.6 billion in revenue, or 2.1 percent more than Governor Jerry Brown had projected in his January budget release. Personal income taxes totaled $66.2 billion, or 2.6 percent higher than expected. Corporate taxes hit $8.5 billion, 9.3 percent higher, and retail sales and use taxes reached $22.2 billion, 1.8 percent more than expected.

A state particularly susceptible to swings in the economy, California has enjoyed the U.S. stock market's five-year surge. But "another down cycle in the economy is inevitable," Chiang said. "We should be vigilant about preparing for that day while we celebrate the great progress we've made to date."

Last month, in another positive reflection of the state's finances, Moody's Investors Service upgraded California's general obligation debt to "Aa3" from "A1," citing the state's improving financial position and employment growth.

http://www.huffingtonpost.com/2014/07/1 ... -francisco" onclick="window.open(this.href);return false;

DSUrocks07 wrote: The obvious response to this is to increase spending and raising taxes sky high to compensate.

First, to use Jerry Brown’s own words, California has a “wall of debt,” which doesn’t include unfunded pension and medical liability – and that wall of debt is NOT included in the budget. The total amount of that debt is somewhere in the $27 billion range and includes over $10 billion owed to the federal government. That money was used to fund California’s Unemployment Insurance Fund, and California seems to have no plan to pay it back – a sort of “reverse” unfunded mandate, if you will.

The fact that California began borrowing that money in 2009 demonstrates the fallacy of the prior claims of balanced budgets. The fact that it is kept off budget, like the other debt mentioned above, demonstrates the fallacy of the 2013-14 budget.

Of course, California has far greater debts than that. One study showed that California governments are over $1 trillion in debt. Most of that is in the form of unfunded pension and medical liabilities owed to state employees. California’s Legislative Analyst told Brown and the Democrat-run legislature to increase the contributions to the state’s teacher’s pension fund by a paltry $4.5 billion to address its announced $73 billion short fall.

DSUrocks07 wrote:The obvious response to this is to increase spending and raising taxes sky high to compensate.

CitadelGrad wrote:It's pretty easy to run a surplus when you stiff the teacher and public employee pension funds.

Skjellyfetti wrote:

CitadelGrad wrote:It's pretty easy to run a surplus when you stiff the teacher and public employee pension funds.

Like I said: beacon of fiscal conservatism.

In 2012, Kansas Gov. Sam Brownback signed a landmark bill that delivered big tax cuts to high income earners and businesses. Less than two years after that tax cut, the state's income tax revenues plummeted by a quarter-billion dollars -- and now Brownback is pushing to use money for public employees’ pensions to instead cover the state's ensuing budget shortfalls.

Brownback's proposal: Slash the state’s required pension contribution by $40 million to balance the state budget. But Kansas already has one of the worst-funded pension systems in the nation. The state was also recently sanctioned by the Securities and Exchange Commission for not accurately disclosing the shortfalls.

Brownback, an icon of tea party economics who was re-elected in 2014, defended his proposal to divert money from the Kansas Public Employees Retirement System (KPERS), telling the Wichita Eagle: “It’s kind of, uh, well where are you going to go for the funds? And I don’t like it, but it’s kind of what’s your other option if you don’t hit K-12 and higher ed with allotments?”