The Brian Sullivan Blog
  • December 23, 2008 11:51 AM EST by Brian Sullivan

    If California Goes Broke, Will American Taxpayers Pick Up The Tab?

    Scary story of the day: California may be broke in two months.

    According to the AP:

    California's chief financial officer warned Monday that the state would run out of money in about two months as hopes of a Christmas budget compromise melted into political finger-pointing by the end of the day.   Republican Gov. Arnold Schwarzenegger began the day on a cheerful note, suggesting that negotiations with Democratic leaders could lead to a budget deal as early as this week to help close the $42 billion shortfall that is projected through June 2010.Let's repeat that: $42 billion dollar budget shortfall.   That is about 2.5 times the loan just provided to GM and Chrysler.    And one wonders if the outcome - begging for a federal bailout - will be the same as with the automakers.   As much lobbying power as the automakers have, can any group have more lobbying power than the government itself?

    If the Federal government has to step in to help with jobs, payroll and pensions it will be a tall and expensive task.   According to the State Controller's Office, California has 238,816 employees on the payroll.    The monthly payroll disbursement in October was $1.595 billion dollars.   Simple math tells you that the average payroll check = $1.595 billion / 238,816, or about $80,000 per year for each California state employee.    That is the average, indicating many in the state make much more.   And the generous state pensions guarantee much of that income is going to be paid for life.

    The billion dollar question then is: if California does go broke, will the U.S. taxpayer be on the hook for those salaries and pensions?

    Let's hope not, because the burden is substantial.   The Golden State has a leaden problem in payroll, especially as many of the biggest departments in terms of number of workers are those that are related to public costs and tax collection and disbursement.    Tax money being used as payroll for those who figure out how to collect and spend more tax money.   Circuitious at best, frustrating at worst.

    The 11 biggest departments in the State by total number of employees are as follows, listed by number of employees as of October 2008:

    • Transportation (across 12 districts & administration) 20,675
    • Higway Patrol 10,805
    • Motor Vehicles 9,514
    • State Insurance Fund 8,068
    • Employment Agency 7,772
    • Franchise Tax Board 6,484
    • Forestry & Fire Protection 5,750
    • Corrections Administration 5,532
    • Justice 5,222
    • Parks & Recreation 4,730
    • Board of Equalization 3,950

    The oddly-named Board of Equalization is the department that collects sales and use taxes and helps disburses the money.   Taxes propogating more jobs related to taxes.

    By the way, the California Alternative Energy Senior Financial Authority is a department of just one, and the Commission on Aging emplys just three persons, despite that fact that dealing with energy and demographic trends are some of our biggest challenges.

    While I don't have the link embedded, be sure to go to our video page and check out my interview this afternoon with State Controller John Chiang.

    On a side note, here's a marketing tip to the UAW: Instead of complaining that foreign automakers got "unfair" tax breaks by the U.S. southern states to build plants there as the primary response to public anger over the $17.4 billion dollar rescue loan, a better public relations move might be to discuss the pay scales of government employees.   At least the UAW is making cars.

RON

Go into any well run (cough, Cough,) State Agency and see the lines of people waiting and 5 people clustered together talking and one person manning the counter, and that describes Our beautiful Golden State. Take that same premise and work down to County and City as well. Come to think of it, it sounds like all banks and other large institutions. The answer, put them all on unemployment and save Billions. When Arnold took over, I think his intentions were honorable, but after he got in office,He got all caught up in the hype and forgot his campaign promise.

December 28, 2008 at 11:38 am

Left in 2000

Born in California in the '40's. Lived there most of my life ... saw the State go from "the place to be" to "in the toilet". Finally left in 2000. Couldn't stand it anymore and didn't recognize the State for all BS that had occurred in Sacramento. The demise started in earnest with Willie Brown running the State legislature into the sewer and continues today with the likes of Pelosi, Feinstein and Boxer - the "Give It Away" champions who now are doing their best to "give away" the U.S. The U.S. taxpayers who continue to vote for the likes of these socialist, who have every intention of bankrupting the U.S. (and California), with their "give-away programs" deserve to live in the cesspool they have created and I hope they rot in their own stench for what they have done to a once great nation (and state).

December 29, 2008 at 2:24 am

Andy K

Hotel guest CA is an angry person. maybe she should be mad at their leaders and not the rest of us. You would look pretty thin if not for the mid west feeding you. You would have to ride a bike if not for the b3. We all pay taxes to Washington and dont like it,so dont gripe about not getting anything in return. I will say cal. is a pretty state, but there is no way it can sustain enough food, manufactured products and military security to cover the entire population. Nebraska has a surplus.Go figure. Dont spend more than you have. Dont ask for us to help you in a time of greed. Americans all will help in a time of need. There is a big difference.

December 29, 2008 at 9:43 am

Andy K

I was just assuming hotelguestca was a she. My mistake if wrong

December 29, 2008 at 9:46 am

David P

It's worth pointing out that while CA is going broke, it's still subsidizing the rest of the country - and massively so. In 2005 Alaska got $1.84 for every dollar they paid into federal coffers. North Dakota got a $1.68. Oklahoma got $1.36. Texas at least made a positive contribution to the rest of the country with a return $.94. California? California got $.78 per dollar they paid in federal taxes. The country's largest economy ($1.7 trillion GDP, 13% of the nation or about 44 Nebraska's) is getting bled by the federal government so the middle of the country can have farm programs and bridges to nowhere. So how about before we all pile on CA's apparent lack of fiscal responsibility the rest of us try pulling our own weight?

December 29, 2008 at 11:28 am

Paul

I say AZ, CO and NV charge all of the Californians who have moved to those states a relocation tax, then turn around and give it to California. Then we need to build a wall around California to keep them in because God knows I don't want them moving to my state. Or maybe California needs to keep track of all the illegals (Chinese, Russian and those Armenians) and make sure they are paying taxes, if not, ship em out.

December 29, 2008 at 5:37 pm

Steve Casman

California's financial problems are NOT due to excessive government employee salaries or pension benefits; the salaries and pensions are NOT excessive. Nor are they due to California's economic relationship with the rest of the country, "socialism," etc. They are simply due to the state's politicians being unwilling to give up partisan politics for the sake of the government's financial stability, and their stubbornness is unbelievably extreme. I certainly hope that Californians do not expect the rest of the country to bail them out, because we won't. The financial problems of California are of California's own making. Californians would do well to vote their current politicians out of office and elect people who are actually willing to work TOGETHER for the good of the state.

December 30, 2008 at 2:11 am

Blake

How about this for a novel idea: Roll back governments at all levels--from coast to coast--by 50%. All problems solved.

December 30, 2008 at 8:46 am

Denis

What I want to know is why California still refers to the area between San Fransisco and San Jose as "Silicon Valley". California no longer produces silicon chips as it's high taxes and high cost of living has driven all of these companies out of the state. In fact businesses and middle class residents have been leaving the state in large numbers for many years. The middle class is disappearing and the smart ones are moving out. It used to be a beautiful state but that was decades ago. There ain't no California Dreamin' anymore.

December 30, 2008 at 11:35 am

JohnC

Before we let CA slide into the ocean, we need to get them pinheads in Wasington to pass a law - "None of them folks will be allowed to move back in.. EVER!

December 30, 2008 at 11:54 am

Comment from Texas

California deserves what is happening to it. One screwed up state and a whole bunch of screwed up people. Between the pot smokers, movie stars and democrats they are a shining example of what the rest of this country will become once the democrats take over Washington and push their agenda on the rest of the country. With our government (includes: local, state and federal) being the largest employers in the US who produce nothing; now add welfare, social security recipients, medicare and illegal aliens to this, just how long will the rest of us sustain them with our taxes? We Americans are pretty stupid!

December 30, 2008 at 12:19 pm

about this blog

  • Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block. Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.

most popular posts