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The Manhattan Institute’s Steven Greenhunt on the state of California’s economy.
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S California has a huge budget deficit we knew that its voters are being forced to choose between higher taxes -- big cuts in services knew that.
Both may be necessary though.
Two fix the State's problems the state does not have a plan so what's the future for what I -- the formally Golden State.
Joining us now Stephen Green -- from a can you tell me how this thing is gonna play out in simple direct easy to understand English language.
Well it's hard to know how it's gonna play out but kept the California legislature it's hopeless.
And the governor believes the only solution is it has to keep raising taxes.
But I'm actually a little bit optimistic about the possibility for reform.
-- because if we look at the local level and in the June 5 elections received major pension reform measures passing in a very liberal areas San Jose.
And in in San Diego which has a democratic majority so we're gonna see reform in California yet but I'm gonna have to abide.
-- heads exploded here -- I just don't know what's gonna happen next.
They got these tax increases on the ballot for November.
They've got -- what it's a separate billion dollar deficit was seventeen billion dollars I don't know what it is -- the got a huge deficit 1616.
Billion dollars.
Pick up plans to cut services raise taxes.
What -- how does this play out -- -- that I want you to tell me at all -- boss.
Do they grovel for.
Some of bailout from the Fed's.
What's the end -- Well yeah that voters are probably -- rejected tax increases.
And the Democrats have not you know really had a plan B.
And notice how they're cutting programs for the poor but they refused.
Two to reform public sector unions which -- the major problem in the legislature.
So what yeah we're gonna we're gonna look for a bailout from that from the federal government probably.
And but eventually we're gonna have to get some adult leadership I mean Bakken in Rhode Island and a dramatic statement went through weight once it then what happens we -- we are back.
Happen.
We are state that we we have our own brand of exceptional ism and we just think that the normal rules don't apply and we've I I'm not I think not the average Californian but -- there the leaders the democratic leaders and now the Republicans are completely.
Cut out of the budget process.
Because that the legislature can pass a vote without two thirds majority to just so it's hard to say exactly how.
But eventually we have to get adult leadership I -- I think we're gonna end up with the initiative processes you know in 1978 -- -- -- I mean -- aware that Dick did they run to they've run out of money -- have to issue IOUs all dupe people stopped lending the money so they've run out of money.
All want let me walk I I just don't want -- what is the end game because I don't know.
Well I.
Don't think that the folks in charge know at the end game is they think double raise taxes which may may happen we may end up with some sort of tax increases will keep.
Cutting programs.
And -- we'll have another fiscal crisis we -- -- from fiscal crisis to fiscal crisis.
Eventually the end game is eventually we get some adult leadership in the state.
And we got some sort of reforms and if we look closely I mean who there's been threats about cutting the state parks for instance -- just a good example.
But none of these parts are actually gonna closed because now we're having some privatization efforts.
So what's needed there are various privatization and reform of the populous -- and I'm -- will.
Happened I'm reading between the lines via a what I hear is ongoing fiscal crisis no matter walks just muddling through looking from one crisis to another as California's economy just sinks and stinks and since that's what I'm hearing.
You'd be.
Well great we were rated as but -- yes we've been greater the last stock eighth year in a row for for business and eventually though.
Things are gonna get bad enough that we're gonna get a better business climate we need to get some some leaders that that need to realize the reforms that need to be made well we're not there yet so and I went on yes somewhere admitted unless I mean -- I just want to know what's gonna happen Steven -- Manhattan institute joining us from California thanks -- thanks very much appreciate it.
