Fiscal savvy

It’s déjà vu all over again for citizens of California, as the state opens 2008 with yet another (or is it the same?) giant budget gap. To celebrate this now-annual tradition, we offer this quick test of your relevant fiscal savvy. (Scroll down for answers)

(1) True or false: When Gov. Arnold Schwarzenegger rode into office after the recall vote in the fall of 2003, he vowed he would “cut up the credit card” and dig the state out of its budget deficit of $14 billion. Four years later, after the passage of many bonds, the state is back in a $14 billion hole and no longer has the option of borrowing.

(2) Why is California in a seemingly perpetual fiscal crisis?

A. Some 30 years ago, passage of Proposition 13 slashed property taxes by more than half and locked in spending levels.
B. California’s prison population has grown almost eight-fold in the past 30 years, largely due to passage of three-strikes laws and the political power of the California Correctional Police Officers Association.
C. California’s fiscal operation runs on boom-or-bust roller-coaster revenue cycles and multiple layers of voter-approved ballot measures that remove the budgeting authority from elected leaders.
D. All of the above.

(3) Which of the following is not what respected Legislative Analyst Elizabeth Hill offers as practical advice on how California legislators can rein in spending in line with revenue?

A. Reduce the size of automatic cost-of-living increases in various state programs
B. Get rid of tax credits
C. Charge more fees for services
D. Raise taxes
E. Urge everybody to move to Oregon

(4) Match the statement to the person who said it:

A. “Democrats ran for office to solve problems, and you can’t solve problems without money.”
B. “Never again will government be allowed to spend money it doesn’t have. Never again will the state be allowed to borrow money to pay for its operating expenses.”
C. “It will be the year of low expectations. And those probably won’t even be met.”
D. “There is no question this is going to be a tough year.”

1. Garry South, Democratic consultant who worked for former Gov. Gray Davis
2. Dan Schnur, Republican consultant who worked for former Gov. Pete Wilson
3. Gov. Schwarzenegger (right), Jan. 2004 State of the State address
4. Steve Maviglio, Assembly Speaker Fabian Nunez’s chief of staff

(5) Match the dollar figure to its relevant definition:

A. $14 billion
B. $3.3 billon
C. $6 billion
D. $3.1 billion

1. Amount of revenue the car tax (the one Schwarzenegger rolled back when he entered office) would have brought into state coffers this year
2. The state’s budget shortfall for the coming 18-month period
3. The current budget’s revenue shortfall
4. Amount that would be generated annually if the governor reinstated the 11 percent tax bracket (as Republican Governors Pete Wilson and Ronald Reagan did when times were tough) on individuals with taxable incomes of more than $250,000 and wealthy couples with taxable incomes of more than $550,000
































ANSWER KEY: (1) true; (2) D; (3) E; (4) A-4, B-3, C-1, D-2; (5) A-2, B-3, C-1, D-4