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  1. #1
    Senior Member JohnDoe2's Avatar
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    Stimulus deal could mean $26 billion for California

    Stimulus deal could mean $26 billion for California

    By Richard Simon and Evan Halper
    February 13, 2009

    Reporting from Sacramento and Washington -- The $789-billion economic stimulus bill headed toward congressional approval is expected to pour $26 billion into California -- building roads, upgrading schools and launching other projects intended to create or save jobs.

    The expectation is that the federal government will funnel at least $9.2 billion directly to the state treasury, mostly for education and healthcare, in the next 18 months. Millions of Californians will get a tax cut aimed at promoting consumer spending.

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    But the money will only go so far in easing the state's financial pains.

    In Sacramento, lawmakers are gearing up to vote in the coming days on a state budget package that will hit Californians with nearly half a dozen new taxes and deep spending cuts in almost everything state government does. The federal windfall won't stop that from happening.

    The state's deficit through mid-2010 is $41 billion, and not all of the federal money can be used to help erase it. Some won't arrive on time. Some is specifically directed to other purposes.


    Still, lawmakers say the legislation's effect will be profound. "California cannot do without this bill," said Rep. Lois Capps (D-Santa Barbara).

    The austere budget package in the works in Sacramento already assumes that the federal assistance will wipe out nearly a quarter of California's deficit. If it falls short of that, Californians are in for even more financial carnage; about $1 billion in extra program cuts and tax hikes would be triggered under the budget plan.

    The extra cuts would apply to welfare grants, aid to the elderly and disabled, and Medi-Cal. State colleges and universities would also lose money, as would the court system.

    The stimulus bill would also affect how much income tax Californians pay. A new surcharge proposed on annual state income tax bills would jump from 2.5% to 5% if California does not get all of the federal funds that budget experts anticipate.

    The estimate that California would receive $26 billion comes from a preliminary analysis by the Washington-based Federal Funds Information for States, which studies how federal decisions affect states.

    Included in that estimate is about $6 billion that California is projected to receive from the "state stabilization fund," designed to help states avoid layoffs and cuts in services while also creating jobs by funding projects to modernize schools and colleges.

    State and local officials are eagerly awaiting the money, which is supposed to begin flowing once Congress approves the federal package of spending and tax cuts that President Obama has called crucial to turning around the economy.

    The House is expected to vote on the bill today, with the Senate following shortly thereafter. Obama could sign it within a few days.

    The measure has its critics. Rep. Jerry Lewis (R-Redlands), who is expected to be joined by most if not all of his fellow California Republicans in Congress in opposing the measure, said it would "spur permanent growth in government programs and spending that will hamstring future budgets and plunge our nation further into debt every year."

    But some state officials say they are prepared to move swiftly once the federal funding arrives.

    "Because California has a significant amount of work that's ready to go, we anticipate we'll be able to get projects out very quickly," Caltrans Director Will Kempton said Thursday.

    With the state expected to receive more than $4 billion for transportation projects, Kempton was already looking at what shovel-ready projects might be funded by the bill. Among those under consideration: a project to upgrade a portion of the Long Beach Freeway. A carpool lane on Interstate 405 on Los Angeles' Westside. A railroad improvement project in Orange County.

    Funds also may be made available to advance high-speed rail projects running from San Diego to San Francisco and from Southern California to Las Vegas -- the latter a priority for Senate Majority Leader Harry Reid (D-Nev.), who played a key role in writing the final bill.

    Los Angeles County could get as much as $700 million for transit and highway projects, but transit officials need to examine the bill before knowing for certain, said Marc Littman of the Los Angeles County Metropolitan Transportation Authority.

    The White House said the measure would create or save 396,000 jobs in California.

    "Our plan will provide urgent aid to states to save and create jobs," said Rep. George Miller (D-Martinez), chairman of the House Education and Labor Committee. "It allows states to invest in renovating, repairing and modernizing schools and colleges."

    In a key area where California benefited from its increased clout in the House, the state will receive an estimated $11 billion in Medicaid funds -- about $650 million more than it would have received under the Senate version of the bill.

    That was the result of language inserted by the House Energy and Commerce Committee, chaired by Rep. Henry A. Waxman (D-Beverly Hills), to give more money to states such as California where the unemployment rate has significantly increased.

    The Senate bill would have given California less money in order to provide more funds for other states, a reflection of the influence wielded by lawmakers from less-populated states in that chamber.

    But with Waxman, who served as a negotiator during the writing of the final stimulus bill, lawmakers roughly split the differences between the House and Senate bills.

    Of importance to California, the final bill also authorizes $198 million in payments to Filipino veterans of World War II.

    The provision was inserted in the measure by Senate Appropriations Committee Chairman Daniel K. Inouye (D-Hawaii), a decorated World War II veteran, who called it important to fulfill a promise made to the 15,000 surviving veterans, many in their 80s and 90s. A large number of the veterans live in California.

    richard.simon@latimes.com

    evan.halper@latimes.com

    http://www.latimes.com/news/nationworld ... 3457.story
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  2. #2
    Senior Member JohnDoe2's Avatar
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    We need a way to keep so much a $1. of this money from going to any illegal aliens.
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  3. #3
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    The White House said the measure would create or save 396,000 jobs in California.
    Reallly? California is a sanctuary state, with probably 3-5 million illegals currently living here, with additional illegals crossing the border for CA daily. Without E-Verify, how are we to ensure these jobs will not go to illegals! What's the plan to ensure that not ONE job goes to an illegal?
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    Senior Member Ratbstard's Avatar
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    I was talking with my son and mentioned to him that I thought the 'RUSH' to pass this bill had something to do with saving California from bankruptcy. I told him if California went under the 'Sanctuary' policies could easily be demonstrated to have been a major factor.
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  5. #5
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    The $26 billion will be gone in 6 months (actually, i'm sure it's already spent). Then what? The same sanctuary polices that led to this disaster will still be in place! In other words, this will happen over and over and over, until something is done to solve the root problem which is the tremendous financial burden that unchecked illegal immigration is on this state as well as country!

    California (nor any other state) cannot continue to educate, offer free medical care, social benefits to every border jumper (and their anchor babies) who happen to make it across the border unchallenged!

    This lunacy must end!
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  6. #6
    Senior Member Ratbstard's Avatar
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    Quote Originally Posted by NoBueno
    The $26 billion will be gone in 6 months (actually, i'm sure it's already spent). Then what? The same sanctuary polices that led to this disaster will still be in place! In other words, this will happen over and over and over, until something is done to solve the root problem which is the tremendous financial burden that unchecked illegal immigration is on this state as well as country!

    California (nor any other state) cannot continue to educate, offer free medical care, social benefits to every border jumper (and their anchor babies) who happen to make it across the border unchallenged!

    This lunacy must end!
    Politicians here in NY won't even discuss This Lunacy!
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  7. #7
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    Quote Originally Posted by Ratbstard
    Quote Originally Posted by NoBueno
    The $26 billion will be gone in 6 months (actually, i'm sure it's already spent). Then what? The same sanctuary polices that led to this disaster will still be in place! In other words, this will happen over and over and over, until something is done to solve the root problem which is the tremendous financial burden that unchecked illegal immigration is on this state as well as country!

    California (nor any other state) cannot continue to educate, offer free medical care, social benefits to every border jumper (and their anchor babies) who happen to make it across the border unchallenged!

    This lunacy must end!
    Politicians here in NY won't even discuss This Lunacy!
    Don't think for one minute that the California Reconquista leadership is any better! They will not even utter the words "illegal immigration," much less discuss the role it has played in this states financial collapse.

    Illegal aliens are the huge pink elephant in the room that our state leaders will not even admit is in the room!
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  8. #8
    Senior Member SOSADFORUS's Avatar
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    The funny part their deficit is 42 billion and they must use millions of this on so called shovel ready jobs, medicare, unemplyment etc.

    so this 26 billion is not going to help them very much, not near enough to bail them out! so until they fix some of their problems they are going to keep going down hill, this just slowed the decent a bit!
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  9. #9
    Senior Member JohnDoe2's Avatar
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    Business the big winner in California budget plan

    Firms would get nearly $1 billion in breaks, while the average person would pay higher taxes five ways.

    Republicans say the plan would create jobs, but others dispute the claim.

    By Evan Halper
    February 14, 2009

    Reporting from Sacramento -- The average Californian's taxes would shoot up five different ways in the state budget blueprint that lawmakers hope to vote on this weekend. But the bipartisan plan for wiping out the state's giant deficit isn't so bad for large corporations, many of which would receive a permanent windfall.

    About $1 billion in corporate tax breaks -- directed mostly at multi-state and multinational companies -- is tucked into the proposal. Opponents say the breaks will do nothing to create jobs, and the Legislature has rejected such moves repeatedly in the past. But now, to secure enough Republican votes to pass a budget that would raise taxes on everyone else, the Legislature is poised to write them into law with no public hearings at a time when the state treasury is almost out of cash.


    The tax breaks were inserted into the spending plan during private meetings between legislative leaders and Gov. Arnold Schwarzenegger. Less than 24 hours before today's scheduled vote, the proposals had not yet been printed in bills and made available to the public, but legislative leaders acknowledged them.

    Most of the cost to the state -- or $690 million -- would come from changes in the way corporate taxes are computed, lowering the amount owed by many large companies. Smaller tax breaks are included for Hollywood production companies and small businesses that hire new employees.

    "This is a pure giveaway for the vast majority of corporations that will benefit," said Lenny Goldberg, executive director of the California Tax Reform Assn., a union-backed nonprofit. "They will walk away with a great deal of money at everybody else's expense."


    GOP lawmakers, aided by a small group of Democrats, have been pushing the tax breaks for years, along with such companies as NBC Universal, Genentech and Intel, as well as the California Chamber of Commerce and the California Taxpayers Assn. They say the breaks are an incentive for businesses to expand operations in California -- or at least not to leave.

    The lawmakers have previously sought unsuccessfully to leverage their votes on a state budget, which can pass only with a two-thirds majority, for the tax breaks. This year they had more leverage, because the compromise requires them to support $14 billion in temporary tax hikes on average Californians, something they had vowed never to do.

    Those tax hikes will force most California adults to pay hundreds, if not thousands, of dollars more each year in a combination of higher vehicle license fees, sales taxes, gasoline taxes and income taxes. Dependent-care credits claimed by millions of families would be cut by about $200 annually. The increased taxes would remain in effect for two to four years.

    Assemblyman Nathan Fletcher (R-San Diego), said the proposed corporate tax breaks are intended to keep the recession from spiraling deeper in California while unemployment is soaring.

    "We have a tax code that incentivizes moving jobs out of the state," he said. "It only makes sense to change that. . . . We want to be a state that welcomes job creation. The benefits of this will be substantial."

    Under the proposed changes, companies would no longer be required to pay state taxes based on a formula that includes the size of their workforce, the amount of property they own and their total California sales. Instead, they could pay based on total state sales alone. The idea, supporters say, is to stop penalizing companies for expanding their workforces and building new facilities in California. Under current law, the companies' state tax bills grow when they do those things.

    Supporters note that Genentech and Intel, two big California companies, have both built major facilities out of state, citing California's tax policy as a reason.

    "We need to be able to compete more effectively with other states," said Jim Hawley, senior vice president at TechNet, a coalition of high-tech executives.

    He said that in California the technology industry has been far slower to rebound from the dot-com bust earlier this decade than it has in states that have made the changes lawmakers are considering.

    But a study by the Center on Budget Policy Priorities, a Washington, D.C., think tank, concluded that the cost of the tax break has far outweighed the job-creation benefits in states where it has been instituted. The center researches how tax policies affect low-income Americans. The study said many companies were using the tax formula to lower their tax bills without doing anything they wouldn't normally do to create new jobs.

    Other experts have said the change could also mean that companies that put a heavy burden on -- and extract substantial benefit from -- state services won't be paying their full share for them.

    A study by the nonpartisan Public Policy Institute of California, released in 2005, found that most companies decide where to locate based not on tax breaks but on factors such as the availability of a highly educated workforce. California's proposed plan would cut spending on higher education by hundreds of millions of dollars.

    The $690-million tax break would be embedded in state law permanently. The other breaks would expire after two years.

    The break for small businesses that hire new employees would cost the state $200 million a year. It would provide a $3,000 tax credit for every full-time employee hired by a company with 20 or fewer workers. Republican lawmakers who pushed for the proposal said it would create jobs.

    Some activists called the proposals a giveaway. They argue that $3,000 is not nearly enough incentive for a company to hire a worker it would not otherwise hire. The Obama administration eliminated a similar credit from its federal stimulus proposal for that reason.

    "Businesses are not making hiring decisions based on these credits," said Jean Ross, executive director of the nonprofit California Budget Project, which monitors how fiscal policies affect working families.

    The tax credit for film companies is intended to keep productions from moving out of state. It would deprive state coffers of $100 million a year. Schwarzenegger has been pushing it for years alongside some powerful Democrats from Los Angeles, where much of the film industry is based.

    Proponents say California is losing industry jobs to states that offer such incentives. In the past, a majority of lawmakers have characterized it as a handout to a lucrative industry that already receives substantial tax benefits.

    Said Senate leader Darrell Steinberg (D-Sacramento) of the overall fiscal agreement: "A budget solution of this magnitude contains a lot of compromises."

    evan.halper@latimes.com

    Times staff writer Patrick McGreevy contributed to this report.

    http://www.latimes.com/news/local/la-me ... 7568.story
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  10. #10
    Senior Member JohnDoe2's Avatar
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    What I hear about the higher taxes in CA. is:

    12 cents per gallon increase in gas tax

    the car license fees will double,

    sales tax will increase 1%,

    income taxes will increase 25%.
    NO AMNESTY

    Don't reward the criminal actions of millions of illegal aliens by giving them citizenship.


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