California Dreaming

Mish put up a post with an update on the California fiscal train wreck, careering down the track with the public employee unions driving towards collision with a massive pile of unfunded liabilities.

In Feb 2012 income tax receipts are down $328 million y-o-y, or 16.5%. Ouch!

What about retail sales taxes? CA had a “temporary” sales tax hike of one cent that expired last July. Adjust the data to reflect that change, it looks like sales taxes in February are $400 million y-o-y +/-, a decline of about 12.4%. Double ouch!

That doesn’t sound like robust growth to me.

Or to me either. This is the one to watch folks, as it epitomizes the “something-for-nothing” entitlement mentality of liberal politics and government. Watching the short term, where over-compensation and under-delivery are the main factors is just listening to the overture. The curtains will come up and reveal that public employee pension and retirement benefits haven’t been funded – and can’t be. Then the screaming will start. Sure, they’ll raise taxes. But revenue won’t go up – there is a limit to what people will put up with. California has tried this before, it didn’t work then and it won’t work now. And as California goes, so go the other blue states.

Industrial production was flat this morning and maintains a clear downtrend. But that doesn’t matter, does it, when there is a new Chinese-made iPad shipping to eager consumers? Leaving aside another report today, that real hourly wages declined (again) in February. Move along, please, nothing to see here. We’ve got an election to win for the boss.

Edit: Stockton.

Today, Stockton’s unfunded pension obligations total $450 million. And, to hear City Manager Bob Deis tell it, these costs are what are really killing Stockton’s budget: “Multiyear labor contracts with escalating costs … simply cannot be paid with anticipated revenues in the foreseeable future. … Absent some negotiated adjustments to the city’s financial obligations, the city will be insolvent and will have no alternative than to seek bankruptcy protection.”

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