Archived: Editorial: Will the Stimulus Money be Enough?


So what does the state legislature do now?

According to a UCLA economic forecast for the United States and California, unemployment will continue to rise.

The forecast predicts that California’s unemployment rate will probably hit 11.9 percent by mid 2010. In Los Angles County, that number may be closer to 14 percent, say economists.

If they are correct, then more businesses will continue to furlough workers leading to lower sales and property tax revenue. Adding more taxes and fees to businesses and increasing individuals’ tax burden may temporarily raise new revenue, but most economists agree that the short-term solution will have longer term dire, albeit unintended consequences.

Among those consequences? More business closures, higher unemployment rates, and of course fewer people with money to spend.

If the legislature tries to raise state taxes another $50 billion, as some in the anti-tax lobby are predicting, it should be no surprise if California residents’ anger and distrust of their elected officials grows. If they think they can continue to use slight of hand games and gimmicks to raise taxes, voters will certainly seek revenge during elections. Most will only see that services are in short supply during their greatest time of need.

The truth is that there is no clear way out of the pain. Cuts only or taxes only cannot solve the problem. There is going to be pain, and no interest group will be left unaffected. That’s the result of years of bad economic planning.

We believe it’s time that the state’s legislators begin a straightforward honest dialogue with the public on how they want the state’s continuing revenue shortfall to be covered. Truth is, the way things are going, any money the state receives from the stimulus bill may end up only being a drop in a huge bucket of red ink.

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