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The Dansville Online
  • California's 'miracle' budget surplus

  • California seems to be experiencing good financial times with a budget surplus - but will existing debt and insatiable desires to spend waste it away?
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  • Things are looking good for California. According to Bloomberg, "California Governor Jerry Brown proposed a record $106.8 billion budget as state coffers brim with the biggest surplus in more than a decade, setting up a fight with fellow Democrats who want more spending." "This year the news is very good, but by no means are we out of the wilderness yet," Bloomberg reported Brown said at a briefing at the beginning of the year. "We must be very prudent in how we spend public funds." The New York Times said: "While Mr. Brown called for an 8.5 percent spending increase, he also proposed spending $11 billion on debts and liabilities, including a $6 billion deferred payment to schools and roughly $4 billion to pay down economic recovery bonds issued by his predecessor, Gov. Arnold Schwarzenegger." The Wall Street Journal identified where the money is coming from: "A resurgent stock market and a voter-approved tax increase has given California a windfall of several billion dollars, resulting in a rapid turnaround from the state's massive budget gaps of recent years." Investor's Business Daily said who is fueling the state's income: "Personal income taxes from California's top 1 percent of earners account for roughly 27 percent of all general fund revenue, and capital gains are a major portion of that income. Think of all those millionaires and billionaires from Apple ... and other tech giants. A temporary sales and income tax championed by the governor and passed by voters in 2012 exacerbates that imbalance, with the top personal rate at 13.3 percent. ... That means business-cycle ups and downs become periods of huge swings in tax revenue." Investor's Business Daily pointed out that even with the surplus, California still has a huge amount of debt - such as the state teachers retirement system that is $80.4 billion in debt. California also has a jobless rate of 8.3 percent - one of the highest in the country. Still, Rolling Stone called the surplus a "miracle." The question is whether it will be a sustained miracle, or if the extra money will prove too tempting to spend. EMAIL: mdegroote@deseretnews.com Twitter: @degroote Facebook: facebook.com/madegroote%3Cimg%20src%3D%22http%3A//beacon.deseretconnect.com/beacon.gif%3Fcid%3D153978%26pid%3D46%22%20/%3E

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