California's budget surpluses (Nice: closing, taxes, train)

[Tulemutt]

Originally Posted by Woody01

There it is, IMHO. I don't wanna argue tonight, I've got a nice glass of whiskey going......let's agree to disagree - you think I'm wrong and I'll think you're wrong, deal...?

I am right. I nailed it, in fact. You are certainly entitled to disagree. But as Daniel Patrick Monyihan enlightened us: “Everyone is entitled to his own opinion, but not to his own facts.”

The fact that you, once again, are unwilling to defend your opinion makes Monyihan’s wisdom apropos here.

Fact: debt is only meaningful relative to income and potential to repay.

Fact: California’s debt to income ratio is better than average among states.

Fact: California has more revenue (by far and away) than any other state, and more than all but 4 nations in the world. It is the world’s leader of innovation / development of technology and AI as we find ourselves in the Tech Revolution Age.


Yes, Woody, fortunes change. Nations rise and fall. Etc. And yes, Woody, at this time: California is a juggernaut. Unfortunately. It’s choking on its success. When the Chinese overtake us all in the west, they will own California and today’s debt won’t even matter.

[BB_210]

The "repayment" as you call it is taxing. Funneling more money through the government is not a good thing. As I've pointed out, you make excuses for the ineptness and corruption of the government instead of questioning it. That's a fact, that you keep writing in internet stone.

[Tulemutt]

Originally Posted by max210

The "repayment" as you call it is taxing. Funneling more money through the government is not a good thing. As I've pointed out, you make excuses for the ineptness and corruption of the government instead of questioning it. That's a fact, that you keep writing in internet stone.

Lol max. What’s to question? Ineptness is endemic. Always has been. The task is to constantly monitor it, plan for it, adjust for it. What’s funny is: you think you can beat it ... and especially that you can beat it by voting in / supporting the biggest huckster, carnival barker, con man, thief, liar, sociopath in the history of American politics.

An intellectually mature person studies human nature and lives a happy life by adjusting for realities. Part of that includes the never ending role of watchdog and civic participant in managing the messy, corrupt process. And part includes not whining constantly in anger.

[bad debt]

Originally Posted by NJ Brazen_3133

Arent expenses supposed to be calculated into equation to give you a surplus?

In other words if you have more expenses, then one shouldnt claim a surplus. You pay your expenses first.

Originally Posted by Woody01

This is CA were're talking about. That would make them look bad. It's amazing how many people crow about the surplus and 5th largest economy and then get a blank look when you mention debt....

Do you guys need me to explain to you the difference between a balance sheet and an income statement? Surplus in this case means that annual revenues exceeds annual expenses. The debt you are referring to is a liability on a balance sheet. Only the annual debt service is reflected on the income statement.

Let me know if this wasn't clear and you guys need additional explanation.

[Tulemutt]

Originally Posted by bad debt

Do you guys need me to explain to you the difference between a balance sheet and an income statement? Surplus in this case means that annual revenues exceeds annual expenses. The debt you are referring to is a liability on a balance sheet. Only the annual debt service is reflected on the income statement.

Let me know if this wasn't clear and you guys need additional explanation.

Curious that they suggest business experience, yet don’t understand the role and dynamics of debt in the economy ...

[bad debt]

Originally Posted by Tulemutt

Curious that they suggest business experience, yet don’t understand the role and dynamics of debt in the economy ...

It's either willful ignorance and they hope that nobody else on this forum has two brain cells to rub together and call them on it, or they really don't understand accounting 101. As I said earlier, I'm happy to explain basic terminology if they don't get it.

The thing that's really stupid is that California DOES have a serious future problem with the pensions it promised to retirees due to the increases Gray Davis rammed through in the 90's coupled with how STRs and PERs are able to invest. But people on this forum can't articulate that and instead just repeat the latest RWNJ talk radio snippet. There are a handful of people who are REALLY low information types and then others who actually understand the details but post threads and topics primarily for sport. I've got a pretty good read on who falls into which category, but it's sometimes hard to tell especially when it's random people coming in from out of state for the regular CA bashing.

As you mentioned earlier, total amount of debt compared to other states is completely irrelevant. It's debt to income that matters and what % of the annual budget is being used to service debt. The problem with politicians like Newsom (unlike Brown) is that they only care about whats right in front of their face today. There's no planning for 10 years down the line once they're out of office and when the roaring economy finally takes a dump.

[Tulemutt]

Originally Posted by bad debt

It's either willful ignorance and they hope that nobody else on this forum has two brain cells to rub together and call them on it, or they really don't understand accounting 101. As I said earlier, I'm happy to explain basic terminology if they don't get it.

The thing that's really stupid is that California DOES have a serious future problem with the pensions it promised to retirees due to the increases Gray Davis rammed through in the 90's coupled with how STRs and PERs are able to invest. But people on this forum can't articulate that and instead just repeat the latest RWNJ talk radio snippet. There are a handful of people who are REALLY low information types and then others who actually understand the details but post threads and topics primarily for sport. I've got a pretty good read on who falls into which category, but it's sometimes hard to tell especially when it's random people coming in from out of state for the regular CA bashing.

As you mentioned earlier, total amount of debt compared to other states is completely irrelevant. It's debt to income that matters and what % of the annual budget is being used to service debt. The problem with politicians like Newsom (unlike Brown) is that they only care about whats right in front of their face today. There's no planning for 10 years down the line once they're out of office and when the roaring economy finally takes a dump.

Mostly agreed. Well, all agreed, but with caveat on the “serious future problem”. The future problem is / will be burdensome without question. But that’s kinda the way the monetary economics system is rigged - er, works. The challenge for some parts of the tax base is enrichment for other parts. In any case, the financier class can’t actually kill its golden goose ... so they will always accommodate by squeezing as much blood from our stones as possible without fully shattering the paradigm.

But you know, back in the old days it was the same. The royalty / chieftains took most of the bushels of wheat and most of the cattle - leaving just enough to keep the farmers and shepherds farming and shepherding.

[bad debt]

Originally Posted by Tulemutt

Mostly agreed. Well, all agreed, but with caveat on the “serious future problem”. The future problem is / will be burdensome without question. But that’s kinda the way the monetary economics system is rigged - er, works. The challenge for some parts of the tax base is enrichment for other parts. In any case, the financier class can’t actually kill its golden goose ... so they will always accommodate by squeezing as much blood from our stones as possible without fully shattering the paradigm.

But you know, back in the old days it was the same. The royalty / chieftains took most of the bushels of wheat and most of the cattle - leaving just enough to keep the farmers and shepherds farming and shepherding.

I agree it's always just different ways to slice the pie. However, in this case it's not about whether the chiefs are going to throw some scraps to the peasants. For the the pensions it's going to be a redistribution of wealth away from school and road budgets (or other parts of the general fund) to pay six figure amounts to law enforcement and other municipal employees when they retire at age 45. The question of course is will the public stand for it and if so will the electorate be willing to either 1) cough up more money or 2) take other budget shortfalls to cover the retirement spending.

[NJ Brazen_3133]

Originally Posted by bad debt

Do you guys need me to explain to you the difference between a balance sheet and an income statement? Surplus in this case means that annual revenues exceeds annual expenses. The debt you are referring to is a liability on a balance sheet. Only the annual debt service is reflected on the income statement.

Let me know if this wasn't clear and you guys need additional explanation.

I am all ears

Originally Posted by Tulemutt

Curious that they suggest business experience, yet don’t understand the role and dynamics of debt in the economy ...

I did later mention most states, and even businesses will run a deficit, and as long as they keep earning.

[bad debt]

Originally Posted by NJ Brazen_3133

I am all ears

So think of it like you would someone taking out a loan buying a house. Every year that person brings in income from wages, investments, and other various sources of income. From that there are various living expenses, taxes, and debt payments. Anything left over at the end of the year would be savings. I have shown a chart below for example purposes.



So in this example the home owner has approximately $30,000 in profit/savings every year. He is not bankrupt. He has a decent cushion to service his debt payment every year and can even put savings away in a rainy day fund. This would be comparable to the the annual budget right now in the state of California. Every year there is more revenue than there are annual expenses.

Now let's move on to the balance sheet. Guy #1 who is the home buyer and has $1,000,000 house (with a $800,000 mortgage on it) and $120,000 in savings.



So he has debt that exceeds his equity, but his liabilities don't exceed his assets. i.e. he could sell his house today and pay off the mortgage.

Here's another possible situation. Guy #2 who is a home owner and has $1,000,000 house (with a $800,000 mortgage on it) and $2,000,000 in savings.



Here's another possible situation. Guy #3 who is a home owner and has $600,000 house (with a $800,000 mortgage on it) and $0 in savings.



So the three different guys could have the same Income/Expenses and have three completely different balances sheets. What do you think California looks like? The issue that everyone talks about is the pension funds and the payouts offered by CalSTRS and CalPERS. Where do you think those show up on California's balance sheet? Does the state have an obligation to pay? If so, how much? How much is that obligation compared to the State's overall balance sheet? Can the state service that payment from current state revenues? These are the questions you should be asking and if you were to go to a credit rating company that gives out ratings to state issued bonds this is what they look at.