UPDATE: There is a state that is working. It is called Texas, and the Economist has a report.
The French king, Louis XV, is said to have predicted that “the deluge” would follow his reign. His great grandfather, Louis XIV, the “Sun King” had reigned for 72 years, from the age of five. he left France glorious but financially ruined. One wit of the time said if the courtiers could be convinced to put paper on their walls and gold in their pockets, the kingdom would be far better off. They did not and profligacy continued. Finally, it all ended with the hapless grandson of Louis XV when he ( Louis XVI) and his young wife, Marie Antoinette went to the guillotine.
Something like this is happening in California as the public employee unions are determined to prevent any attempt to rationalize the state’s finances. Now, they will try to block insolvent cities from filing bankruptcy.
Mendoza’s bill would not only empower the commission to regulate bankruptcy filings but allow it to impose conditions on the filings they do allow, which is the nut of the issue. Local governments that file for bankruptcy may be able to abrogate their labor contracts, but if AB 155 becomes law, the debt commission could – or at least the unions hope they would – block abrogation.
You’d think IOUs would be enough to convince them of the seriousness of the problems. Louis XVI wavered and almost was persuaded of the necessity for financial reform but his arrogant nobles were convinced they could overcome the rabble.
Tumbrils, anyone ?
Tags: bankruptcy, California, unions
Did you see the LA Times’ useless “tool” to describe how to balance California’s budget? It’s supposedly an interactive graphic that allows one to choose ways of cutting spending or raising taxes. But the spending cuts are described with language minimizing its effect. I was surprised that the language for tax increases noted that taxes on the wealthy are higher here than elsewhere — a refreshing bit of honesty.
Still, the tool makes it appear as if balancing the budget is impossible, and that’s just not the case. The options given are very limited. For example, I’d like to see what happens if the prevailing wage law was eliminated.
They could lay off the new state employees hired since 2004. That would probably do about half of it. However, there is no plan to do anything that sensible. Instead, they will lay off firemen (My son is getting unpaid days off) and stop fixing infrastructure. All the talk about health reform complains about insurance company profits. California shows us how efficient non-profits are.