Thursday, November 06, 2008
If things go according to plan, my wife and I will be moving another 550 miles north to Eugene, Oregon sometime next spring. That decision is looking increasingly sound, particularly in light of what looks to be a huge increase in the California state sales tax.
While it's not clear that things will be better in Oregon in the years ahead, they will certainly not be any worse than in California where unemployment is rising along with crime and the foreclosure rate as the state's finances rapidly spin out of control with at least one city having already gone belly-up.
Earlier today, Governor Arnold Schwarzenegger announced that an $11.2 billion hole has been blown in the sham of a budget that was signed into law just six weeks ago (lots of accounting sleight-of-hand) and, as a result, spending cuts of $4.5 billion have been proposed along with a hike in the sales tax which is expected to raise $4.4 billion.
More spending cuts and more tax increases are likely to follow, this report from Bloomberg filling in some of the details:
Schwarzenegger, a 61-year-old Republican, issued an order calling lawmakers immediately into a special session to consider ways to close the gap. He proposed increasing the state's tax by 1.5 percentage points for three years as well as increasing oil severance and alcoholic beverage taxes and motor vehicle fees.The bigger the boom, the bigger the bust - over the last ten years, nowhere have the booms been bigger than in California.
``We have a dramatic situation here,'' Schwarzenegger told reporters in Sacramento. ``We must stop the bleeding.''
California has been hard hit by the housing-market rout and the worst financial crisis on Wall Street since the Great Depression. The state leads the nation in foreclosures and its unemployment rate reached 7.7 percent last month, the fourth highest in the country. Double-digit declines in stock markets have sapped tax revenue from income and capital gains the state relies upon for its budget.