California Governor Arnold Schwarzenegger will know within a month whether a $1.1 billion drop in revenue collections is part of a growing budget shortfall or an isolated event, his budget spokesman said.
Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.
“The culprit here appears to be estimated quarterly personal income tax statements,” H.D. Palmer, the governor’s budget spokesman, said yesterday. “The numbers are cause for concern, but the issue now for us is to determine if this is a one-time event or whether it has more long-term implications.”
To translate from the governmentese: “oh, shoot: this is falling apart faster than we expected!”.
The way a government should budget is this:
1. What were the actual revenues from two years ago?
2. Next year’s budget should spend 10% less than that.
3. If there’s a surplus – whoopee! You can spend it or rebate it.
4. If there’s a deficit – too bad, but at least you won’t have to borrow as much to cover it as you would have with a budget which presumes increased revenues.
Repeat each year.
Government is a lot simpler than we make it out to be – of course, those who run government make it as complex as possible? Why? Well…
1. A large portion of the people manning government simply don’t know enough to realize when they’re being rolled by professional bureaucrats and lobbyists.
2. Another large portion of such people know that the screwier they make it, the less likely they are to get caught in their grafting.
Meanwhile, the few who know what they are doing and are honest are left to issue repeated warnings, which are then calmly ignored. Think of it like this – in response to the various rip-offs by banks via credit cards and payday loans, Obama has proposed to add another layer of government bureaucrats to the mix. Much simpler to merely pass a law saying that no APR may be higher than 20% and that no APR may be increased by more than 1 percentage point per year – banks will stop loaning to the people they charge 29% to because people who have that sort of lousy credit won’t qualify for an APR less than 20% and, meanwhile, people who get in a bind won’t find their APRs jumping from 9.99% to 18.99% for being late, once. And we don’t need a single new bureaucrat to enforce such a thing – the current law enforcement agencies are sufficient to easily monitor this, and banks are highly unlikely to attempt to break such a law. The demerit in this, for government, is that it would be easy for everyone to understand – it’d also be fair to both banks and consumers and that right there would kill the deal.
New people are needed – new people with new ideas.
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