How Would You Balance the California Budget: On-Line Tool

The LA Times has an interactive feature that lets you devise a plan for balancing the California budget with program cuts and tax increases. My solution avoided major tax increases and cuts to education, while slashing much else. See it here.

Comments

[sam]

"My solution avoided major tax increases and cuts to education"

Hmmm. Protect those oxen.

[Slope Oaks]

I noticed that your solution intends to save some money by selling California's last-resort Workers' Compensation insurer. As a property/casualty broker myself, and based on my knowledge of the rampant mismanagement of the WCIF and the resultant "entitlement" mentality of California employees, the LA Times' comment that this step "might be impossible" is probably dead-on.

The Fund loses money because it pays out far too much in benefits for a far too loosely-defined collection of workplace "injuries". California has long been a problem-child state for WC coverage/benefits/costs, and merely selling the problem to a third party will only make the problem worse. Current beneficiaries will immediately sue to ensure continued (and ever growing) benefits, leading to an even worse claims-cost scenario.

In my (admittedly, from a distance, like the east coast) perspective, the state will first have to rein in the claims cost overruns, and then sell the plan only after a sale is actually attractive. Many other states use an assigned-risk mechanism, in which open-market insurers compete for the assigned risk business, relying on the insurers' economies of scale and ability to manage the costs. The current California entitlement mindset will never be saleable to any reasonable vendor.