patrick.net

Roll back the budget to the last year that matches current revenue.

Unfortunately, this will have a massive feedback effect since the money the state spends is largely redistributive and is what keeps the economy going.

Thanks everyone here for the interesting comments so far. I like Troy's idea, although I wonder if it would be enough.

California offers more social service programs than most other states - and I've seen a lot of fraud. People who live in other states but collect calif ssi benefits. For starters, I'd offer a reward for turning someone in. A $200 reward is less than the amount California kicks in each month for this fraud.

I'd also cut back on the layers of fat in the social service programs - oversight, etc - as well as cut back on some of the programs or fund some leaner non-profits to run the services instead.

California disability is also an only in cali thing - even tho people pay into the program, it costs more than it takes in.

And I'd do a pay for performance program for medicaid providers. If they're consistently getting substandard marks, they should have their pay docked.

Oohhh, ooohhhh, I got one.....how about we:

1. Cut the pay of all state workers
2. Cut the amount of state workers employed
3. Cut the amount of teachers paid for by the state
4. Cut all services by 25% or to a number where the budget we have now will support those services
5. Increase DMV, parking, parks & rec, other variou state fees.
6. Stop paying for services we no longer can afford
7. Cut back state run unemployment programs
8. Cut back state run social welfare programs if any
9. Stop fighting the war on drugs, let them smoke all they want as long as they dont harm anyone

This one came out in the LA Times:

http://www.latimes.com/news/local/budget/

I like the idea of reducing the prison population 25% and letting out non-violent offenders. This could save a bundle. More services could charge a use fee perhaps?

For now, raise taxes. It's not that bad.

There isn't room to cut spending in California at this point. They already cut a lot. But if and when the economy comes back and employment goes back up, lower taxes then. If they cut education spending further they will have to make bigger clsssrooms because classes are already way too big, or they would have to cut teacher pay.

I think in mine I probably let too many prisoners out.

I'd peg all the salaries and pensions and services to private sector with keying off the revenue.

So that if private sector goes up so will public, and of course on downturns both go down.
And Keying off revenue would mean pensions, salaries and spending cannot go above what is taken in.

So yes, salaries and pensions and services would become basically flexible and tied to economy resulting in the state never going over it's budget.

As a state we need to figure out why this is one of the few places where it costs more to live in than most other states. In Florida or Ohio I can live off a small fraction of what it would cost here.

Clarence 13X says

Oohhh, ooohhhh, I got one…..how about we:
1. Cut the pay of all state workers
2. Cut the amount of state workers employed
3. Cut the amount of teachers paid for by the state
4. Cut all services by 25% or to a number where the budget we have now will support those services
5. Increase DMV, parking, parks & rec, other variou state fees.
6. Stop paying for services we no longer can afford
7. Cut back state run unemployment programs
8. Cut back state run social welfare programs if any
9. Stop fighting the war on drugs, let them smoke all they want as long as they dont harm anyone

I agree with all of the above except for #5, and where he says cut back, I'd eliminate for #7 &8. that and I'd cut state pensions and make existing employees get a 401K, or at least a defined contribution annuity.

Legalize marijuana, tax it, and task our agencies with promoting it's sale to other states in the same way we pimp our other products. It's probably better classed with wine than agriculural products. We could open a side industry in "pot tours" of the Emerald Triangle.

Here is another one:

http://www.mercurynews.com/san-mateo-county/ci_17323577?source=patrick.net

Could California cut some of the higher salaries down as well as reducing some of the high pension payouts until this crisis is over?

Pensions are for the most part a red herring. It's like social security. If they raise the ages a couple years for teachers at which the multiplier increases, and possibly raise our contributions slightly (we pay in to our pension funds instead of social security).

I have heard that currently 3% of California's budget goes in to pension funds. Sure they could put in caps, and maybe make police and fire pay in a little longer. The big unfunded liabilities simply require some major tweaks. But pensions are almost entirely independent of Californias budget woes. Just an excuse by certain well funded propagandists to go after the unions, because the current economic environment is the only time they might get away with such total BS.

Now that many of the public are suffering, perfect time to go after the last big unions. I wonder if anyone ever thinks about broader implications. So unions gave many a 40 hours work week, decent pay and benefits, the weekend, etc., but let's just make unions totally obsolete. Until when ? Maybe we wait 50 or 100 years until we are where Egypt is now ?

marcus says

I have heard that currently 3% of California’s budget goes in to pension funds.

Want to back that up with something. I just don't believe that number. All government budgets are designed to obscure the true spending amounts, I don't believe a state like CA in perpetual budget crisis will tell the truth no matter what. There are so many accounting tricks to make the numbers say anything anyone wants to.

@marcus

Even if the amount is small overall, I think it could be a good *symbolic gesture* to cut pensions– at least of those over $80,000/year-amoung many other things. My goodness some people are even talking about bankrupcy of the state here.

SF ace says

That may be true today, but given the nature that pensions are defined benefits, most people including myself believe that the pensions are severely underfunded to meet future obligations. This includes Calsters, Calpers and Calxxx. We also know these pensions are asking less than desired now based on the economic environment and avoid drawing heat.

Most people simply don't understand, that most of the money in pension funds comes from employee contributions. We pay into those funds instead of social security. The state also contributes. In the future, when they make adjustments, increasing our contributions a little, and changing the ages at which the multipliers change, the net present value of all those future billions of input into the funds will be huge.

It's a problem, but not quite as bad as some think.

marcus says

Most people simply don’t understand, that most of the money in pension funds comes from employee contributions.

"In the fiscal year ending in June of last year, CalSTRS received $5.3 billion in contributions based on nearly 21 percent of teacher pay — 8 percent of pay from teachers, 8.25 percent of pay from districts and 4.5 percent from the state."

http://calpensions.com/2010/12/03/calstrs-funding-gap-grows-new-earning-forecast/

"Employee pension contributions increased to 8 to 10 percent of pay, up from 5 to 8 percent depending on the union, while the state contributes 17 to 28 percent of pay."

http://calpensions.com/2011/02/04/pension-reform-brown-proposed-most-options/

marcus says

Most people simply don’t understand, that most of the money in pension funds comes from employee contributions.

Sorry, that is just flat out false. Serously, you guys live in a bubble and you have no idea.

shrekgrinch says

Redistributing money is the equivalent to ‘economic masturbation’ — all fun & games but doesn’t actually produce anything real.

Not sure if you're aware of this, but we do have lots of elderly, and disabled, and children in our society. Since you against redistribution, I can only conclude you're for letting the elderly, disabled, and unemployed live on the streets or starve to death, and let kids who's parents can't afford school or proper nutrition just grow up stunted and illiterate.

Ok, Let's get the facts out.

@SF Ace

Thanks for the analysis!

George

shrekgrinch says

Redistributing money is the equivalent to ‘economic masturbation’ — all fun & games but doesn’t actually produce anything real.

It does if it lowers the wealth disparity. Getting it to people who will spend it will certainly produce something real.

MarkInSF says

marcus says

Most people simply don’t understand, that most of the money in pension funds comes from employee contributions.

Sorry, that is just flat out false. Serously, you guys live in a bubble and you have no idea.

It's basically my social security. I pay in 8% of my pay. My employer, the school district pays in 8.25% and the state (is supposed to) pays an additional 2%. I will grant you, that I consider my employers pay in part of my benefits, but you could say that it's the state. I am not in a bubble. Nor am I listening to the union busting propaganda, that apparently frightens you so.

marcus says

MarkInSF says

marcus says
Most people simply don’t understand, that most of the money in pension funds comes from employee contributions.
Sorry, that is just flat out false. Serously, you guys live in a bubble and you have no idea.

It’s basically my social security. I pay in 8% of my pay. My employer, the school district pays in 8.25% and the state (is supposed to) pays an additional 2%. I will grant you, that I consider my employers pay in part of my benefits, but you could say that it’s the state. I am not in a bubble. Nor am I listening to the union busting propaganda, that apparently frightens you so.

The problem is that the contributions are based on wildly unrealistic returns on investment. But the benefits are guaranteed, so when the unrealistic returns don't happen, as of course they don't, the taxpayers have to pony up more. So the "employer contribution" from the taxpayers ends up being far more, which is exactly what's happening.

Social security on the other hand doesn't assume any return above the safety of treasuries on investment AT ALL, and doesn't easily allow for early retirement where a recipient is expected to draw benefits for 20 years or more, like public employee pension plans do.

What does propaganda have to do with anything? One just has to look at the numbers themselves to see the pension system is and will be even more crowding out other spending, and is unsustainable.

MarkInSF says

Social security on the other hand doesn’t assume any return above the safety of treasuries on investment AT ALL, and doesn’t easily allow for early retirement where a recipient is expected to draw benefits for 20 years or more, like public employee pension plans do.

Problem with that above statement is that at the current Social Security retirement ages, plenty of people end up living off of it for 20 years or more.

zzyzzx says

MarkInSF says

Social security on the other hand doesn’t assume any return above the safety of treasuries on investment AT ALL, and doesn’t easily allow for early retirement where a recipient is expected to draw benefits for 20 years or more, like public employee pension plans do.

Problem with that above statement is that at the current Social Security retirement ages, plenty of people end up living off of it for 20 years or more.

Right, but the SS retirement age is 65, and it's AVERAGE live expectancy that matters, not the fact that "plenty of people" live 20 years after drawing SS benefits.

Retirement is significantly earlier for a public employee.

People that live in CA need to learn about the 1999 bill SB-400 that substantially boosted public employee pensions, and lowered retirement ages.

http://info.sen.ca.gov/pub/99-00/bill/sen/sb_0351-0400/sb_400_cfa_19990928_142123_sen_floor.html

Lowers retirement age by 10 years, and increases benefits:

....Provides a new retirement formula for state
miscellaneous, university, state industrial and school
members who retire on or after January 1, 2000. The new
formula would have a minimum retirement age of 50 and
would provide a retirement benefit factor of 2% at age
55 increasing to 2.5% at age 63 and above. This formula
will supercede the present 1/50th at age 60 formula
state and school members for both past and future
service and the modified 1/50th at age 60 formula for
state members.

50% bump for state patrol:

....Provides a new retirement formula for state patrol
members who retire on or after January 1, 2000. The new
formula would provide a retirement benefit factor of 3%
at age 50 and would be available as a contract option
for local contracting agencies. This formula would
supercede the present 2% at age 50 formula for both past
and future service.

You also have to remember the retirement enhancement was done during the dot com boom era. Government jobs were considered low-paying jobs - in comparison with the multimillion dollar opportunities to be had from petfood.com . It was completely driven by the employment market which was off the hook at that time. Fast forward 10 years , we all know that not everyone who can spell "internet"makes money just because of that. and those government workers are now on the hook because nobody else is employed at the moment.

marko says

You also have to remember the retirement enhancement was done during the dot com boom era. Government jobs were considered low-paying jobs - in comparison with the multimillion dollar opportunities to be had from petfood.com

Exactly. There was no guarantee in the boom times, and in fact it turned out to be mostly an illusion.

Not so for the public employees though - the boom times were and still are very real. Just the existing government workers at the time were granted an extra $80B in future pension benefits at the stroke of a pen, guaranteed by the state.

marko says

government workers are now on the hook because nobody else is employed at the moment.

What are you talking about? Taxpayers are on the hook. That money cannot be taken back, and the government workers sure as hell aren't going to give it back.