The new California budget:
The big rip-off continues

Aug 2, 2004

After a month of supposed deadlock, California Republicans and Democrats announced an agreement on the 2004-2005 state budget. Governor Arnold Schwarzenegger says that since he promised "no cuts and no new taxes," he had only one choice: to borrow money – to be paid back in the future, with high interest rates and fees, of course. (According to the Los Angeles Times, California paid 231 million dollars to Wall Street firms on loans it took out just last year alone.)

Nonetheless, it's a lie that there will be no cuts or tax increases. Local governments are supposed to "lend" the state 2.3 billion dollars over the next two years. This can only result in cuts to services and raises in fees at the local level. In addition, health care is to be further axed, with a major cut in Medi-Cal for the working poor. Medi-Cal stands to lose at least 400 million dollars next year. School districts are also facing a big cut of two billion dollars, meaning continued cuts in jobs, wages, classes and support services. Schwarzenegger also wants to withhold state workers' raises that are already in the contracts – after several years of wage freezes.

In justifying these cuts, politicians of both parties told the usual lies – that they faced "tough choices" because there was "no money."

No money? In the fourth year of the "recovery"? When big corporations are bragging about record profits? When the average pay of the CEOs of the 500 biggest corporations went up 22 per cent in 2003?

In fact, the main reason for the budget deficits, in California as well as other states, is the huge tax cuts and subsidies state governments have been giving to the big corporations for years. In California, the share of corporate income paid in taxes has fallen from over 9.5 per cent in 1985 to just over 5 per cent today. According to the research group, California Budget Project, tax cuts enacted by California have cost the state more than 50 billion dollars since 1991 – over 25 billion alone since 2001, that is, when California supposedly ran out of money and into deficit.

No, there IS money, and there is plenty of it. It's just that the politicians of both parties are not willing to go get the money where it is – to the rich – to "balance" their budget.