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The Los Angeles Times had an interesting story Sunday about the state’s chronic budget problems and the fear of states around the country that they’ll become another California. (An online news journal assures them they won’t.)

Reporter Evan Halper writes that while the “oft-cited waste and abuse is a problem,” the “deficit is bigger than the entire state bureaucracy.” From the story:

California could fire every state employee — including well-paid prison guards and university professors — close every government office, stop all travel and even cease the purchase of paper clips without closing the budget gap. The government would be gone but the deficit wouldn’t.

The article lays out five recommendations for reform that are likely to surface, including changing a tax structure that depends heavily on personal income taxes. Halper writes:

It is a source of cash that is unpredictable and subject to huge swings. When the stock market is soaring, it is great for the state.

California’s millionaires and billionaires contribute wads of capital gains taxes in those good years, and the state has consistently used that money to grow programs.

The richest 1% of residents end up contributing half of all the personal income tax the state collects.

As soon as the economy takes a dip and the stock market stalls, the money stops flowing and the state plunges into a crisis.

Local municipalities are watching California’s budget calamities closely, as the state government is considering taking from city coffers to balance its budget.

RANI GUPTA

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