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Will California become the first state to go into federal receivership?

Original post made by Kevin, Midtown, on May 15, 2011

California is on the verge of true bankruptsy, which is illegal, well at least it is illegal to not balance our state budget. Will the federal government take over, and appoint a receivership judge? This has never happened before, but what is the realistic alternative?

Please don't mention Prop 13 or increased tax rates. Just focus on the reality that that we will not tax our way out of this mess. Also, don't bother with major budget cuts, they won't happen.

I see no other alternative than federal receivership. Do you?

Comments (32)

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Posted by Alfred E Newman
a resident of Atherton
on May 15, 2011 at 4:05 pm

Kevin: "Just focus on the reality..."

That's a funny request to make in light of your fantasy discussion about something that is not "reality."

It's not legal for California to declare bankruptcy.


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 15, 2011 at 4:21 pm

Besides, why wouldn't Texas go first, in your fantasy state bankruptcy discussion?

Texas claimed they were doing great, everyone should follow the "Texas Way", and then their 2 year budget cycle popped up.

Oops!


 +   Like this comment
Posted by Kevin
a resident of Midtown
on May 15, 2011 at 4:48 pm

"It's not legal for California to declare bankruptcy"

I thought I had said as much, but to the point: Will California go into federal receivership?

I am talking about the state I live in, not Texas, not New York, etc. Those states will need to handle their own problems, their own way. I am asking about California.

No more federal bailouts....

Will California become the first state to enter federal receivership?


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 15, 2011 at 5:00 pm

Your fantasy, your rules, eh?

Your answer:

"No."


 +   Like this comment
Posted by Kevin
a resident of Midtown
on May 15, 2011 at 5:07 pm

"Your answer:
"No.""

That is a real fantasy answer. Kind of like a drug addict being asked, "are you willing to go cold turkey?" Answer: "No, I can handle it, my parents are rich".


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 15, 2011 at 5:35 pm

What was that last line about? How odd: "Kind of like a drug addict being asked, "are you willing to go cold turkey?" Answer: "No, I can handle it, my parents are rich". "

You asked and answered your own fantasy premise: "This has never happened before, but what is the realistic alternative?"

Hasn't happened. Won't happen here.

You disallowed discussion points by your "rules". So there ya go.

"No."


 +   Like this comment
Posted by Kevin
a resident of Midtown
on May 15, 2011 at 6:07 pm

"Hasn't happened. Won't happen here."

Yes, by my rules, since there are no other realistic alternatives. Prop 13 will not be overturned, and there will be no increased tax rates, and there will be no major budget cuts and there will be no more federal bailouts. No more rich daddy to take care of the addiction. What's left?


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 15, 2011 at 6:21 pm

"Yes, by my rules... What's left?"

Plenty. We leave your fantasy world of your rules and enter reality, where all options are on the table.

Unless you are indeed the God of all things economy, in which case your rules continue to apply.

Get back to us on that...

Start by turning off Fox.


 +   Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on May 16, 2011 at 4:56 am

Walter_E_Wallis is a registered user.

What options, Alphie?


 +   Like this comment
Posted by svatoid
a resident of Charleston Gardens
on May 16, 2011 at 8:36 am

"What options, Alphie?"

Why is it, Walter, that you cannot engage in civil discourse?
Why is it that when you disagree with someone, you feel the need to make fun of their name?
You are a real piece of work.


 +   Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on May 16, 2011 at 8:53 am

Walter_E_Wallis is a registered user.

Some discourse should not be civil; for instance when responding to a definitely uncivil statement.
"Why is it that when you disagree with someone, you feel the need to make fun of their name?"
I assume I was making fun of a pseudonym, not a name.


 +   Like this comment
Posted by svatoid
a resident of Charleston Gardens
on May 16, 2011 at 8:56 am

"I assume I was making fun of a pseudonym, not a name."

And you assume that it was a pseudonym and regardless, you feel it is okay to make fun of it because you disagree with his statements.


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 16, 2011 at 9:07 am

svaty,

Wally's okay.

But thanks for rising to my defense.

xoxo,

Alfie


 +   Like this comment
Posted by curmudgeon
a resident of Downtown North
on May 16, 2011 at 10:32 am

Take away our subsidy for wealthy commercial real estate interests and make them pay their own way - repeal Proposition 13.


 +   Like this comment
Posted by options
a resident of College Terrace
on May 16, 2011 at 11:41 am

I'll bite, Mr. Neuman.

What are the options? Do you anticipate a combination spending cut and tax increase sufficient to prevent receivership?


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 16, 2011 at 2:13 pm

options:

Thanks for asking. In violating "dear kevin's" dictatorial rules, two things:

- I don't see "receivership" happening. Period. So to move the conversation forward...

- yes, personally, I think it's time to balance out the sacrifice with spending cuts and revenue increases until we can (both locally and nationally) build and employ our way out of this Great Recession.

Prop 13? I've spoken before of removing the commercial property side of Prop 13, not personal residences, from the equation.

California used to have prop tax revenues that were 60% commercial with 40% residential.

Prop 13 has flipped that ratio, to the benefit of big commercial property owners. Time to have them share in the sacrifices we are all making.

Will any of the above happen? Not likely.

Similar to the receivership scenario.


 +   Like this comment
Posted by Perspective
a resident of Meadow Park
on May 17, 2011 at 6:18 am

Sure AEN: Let's remove the "commercial property" portion of Prop 13..go ahead, destroy more businesses and thus jobs.

Love how liberals think. Keep punishing the producers!!


 +   Like this comment
Posted by Anon.
a resident of Crescent Park
on May 17, 2011 at 6:35 am

I guess it doesn't punish the producers if the state goes broke and no one can afford anything? Just looking at one side of things is no more realistic just because it is done by a self-described conservative.


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 17, 2011 at 10:22 am

pers:

"Keep punishing the producers!!"

But in your mind it's okay for our families to be punished to let corporations pay less taxes? "Punish the families!!"

You ignored how Prop 13 has turned the ratio upside down, going from 60/40 to 40/60. It's time to close a simple loophole that lets commercial property owners make improvements without paying increased taxes.

Why don't corporations share the sacrifice in keeping our state great?

"...to eliminating the loophole that lets commercial property owners make improvements without paying increased taxes, because the property rarely changes hands. ...there's been a complete flip in property tax contributions as a result of Prop 13. In the 30 years since the initiative passed, property tax contributions have flipped in San Francisco from 59 percent paid by commercial property owners and 41 percent by homeowners, to 43 percent and 57 percent respectively."

pers: why do you want to punish families?

A local example:
"When asked how he would respond to businesses that argue they should be included in Prop 13 because they create jobs and improve the economy, Ting had a ready answer. He said Prop 13 was sold to Californians as a local measure to protect residents, but "consumers get no subsidy" from the tax break to commercial property owners. He gave an example fro nearby Menlo Park. "Draeger's (an upscale supermarket) pays $66,674 in property taxes, while Trader Joe's pays about $7,000 because the people who own Trader Joe's land have handed it down to their heirs who live in Massachusetts." Not only is the tax break going out of state, but local residents get no benefit, said Ting. Plus, a gallon of milk at the Trader Joe's in San Jose doesn't cost any more than a gallon of milk at the Trader Joe's in Menlo Park, even though that one is paying so much less in taxes."


 +   Like this comment
Posted by Kevin
a resident of Midtown
on May 17, 2011 at 12:10 pm

"Will any of the above happen? Not likely."

Alfred, you have just agreed with me...none of that will happen. Your logical disconnect is that you offer no other realistic option, since you take federal receivership off the table. When the state IOUs are rejected by the banks, and the bond rating agencies grade CA bonds as superjunk, what's left?


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 17, 2011 at 12:40 pm

"since you take federal receivership off the table"

Who put it ON the table? When's the last time it happened to a state?

This year? Last year? The last decade? The last century? During the first republican Great Depression?

The 1800's?

The late 1700's?

It's a fringe-rightwing fantasy to try and bust unions. If you like that idea, move to Wisconsin and help support Walker before he's recalled next year.

"Not likely" is not "none of that will happen". I offered a reasonable way out. Fix the commercial loophole in Prop 13. Protect families over commercial property owners. You want to take the great state of California and give it to an unelected "receiver."

How American of you.

your: "When the state IOUs are rejected by the banks..." - When will that be? Give us a date.

Or any actual facts.


 +   Like this comment
Posted by Kevin
a resident of Midtown
on May 17, 2011 at 3:57 pm

Alfred,

You are huffing and puffing, but you provide no realistic alternative to federal receivership.

Prop 13 will not be changed anytime in the the next several years, and very unlikely then. I am talking about THIS fiscal year, and the next. There is NO way that CA can avoid fiscal hell.

We have been through the IOU dilemma before, and some of the banks startd pulling out...until an accounting trick was found to kick the can into next year. Those tricks are now as dead as the dinasours, especially since the bond-rating agencies are happy to delcare this state junk.

Extreme leftwing thinking, like yours, will only drive this state into a deeper financial/social hole.

The serious question is: What will federal receivership look like? As far as I can tell, it will make the state vendors to take a bath. This means that any future state vendors will charge a LOT more for the same product...thus deeper into the hole we go.

To any serious person: What is the alternative to federal receivership?


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 17, 2011 at 4:07 pm

"The serious question is: What will federal receivership look like? "

No, I asked you serious questions, and you ignored them because you haven't any answers:

1. "take federal receivership off the table" Who put it ON the table?

1a. When's the last time it happened to a state?

2. Why do you like to talk about taking the great state of California and give it to an unelected "receiver"?

3. "When the state IOUs are rejected by the banks..." - When will that be? Give us a date.

Or any actual facts.

Funny you brought up "huffing and puffing"...


 +   Like this comment
Posted by Kevin
a resident of Midtown
on May 17, 2011 at 10:02 pm

"When the state IOUs are rejected by the banks"

That already happened. My brother, who worked for the state, and got paid in IOUs was rejected by his bank from making deposits. Time to get up to speed, Alfred. Where have you been?

Any serious people out there? How about Steve Levy? He must have something to say about federal receivership.


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 17, 2011 at 11:09 pm

Again, you refuse to answer the basics:

1. "take federal receivership off the table" Who put it ON the table? (besides you)

1a. When's the last time it happened to a state? (c'mon Kevin, the answer is REALLY easy!)

2. Why do you like to talk about taking the great state of California and give our decision making to an unelected "receiver"?

3. "When the state IOUs are rejected by the banks..." - When will that be? Give us a date. (you answered about an event in the past, your "brother" went to the wrong bank; this question is about your current claim, the question is when will it happen again?)

- - - - - - -

You claim I am "extreme left wing" because I offered a solution of moderate cuts and revenue increases compared to your hope of receivership.

Let's find out where you are on the spectrum. The big question nationally (just ask Newt how current it is) is the following, where do you stand?

*** Do you support the Ryan/Gop budget bill, passed a couple weeks ago, that privatizes Medicare, asks for sacrifices from the majority of Americans, while giving tax breaks to millionaires and billionaires?


 +   Like this comment
Posted by Kevin
a resident of Midtown
on May 18, 2011 at 12:50 pm

Steve Levy:

Any comments on federal receivership for CA?

I am looking for a serious answer. You are a guru of California budget issues. There are others, but I would appreciate your take on it, since you are from Palo Alto.


 +   Like this comment
Posted by Alfred E Newman
a resident of Atherton
on May 18, 2011 at 1:12 pm

Kevin:

I gave you hints for the answers and you still are not serious enough to even try, because you know that receivership is a fringe right red herring.

You are on the far right fringe, and now everyone knows it.

Answer the current GOP litmus test for candidates:

Do you support the Ryan/Gop budget bill, passed a couple weeks ago, that privatizes Medicare, asks for sacrifices from the majority of Americans, while giving tax breaks to millionaires and billionaires?

Newt failed on Sunday, and is now CRAWLING back his epic fail, much to the humorous delight of many.

What about you?


 +   Like this comment
Posted by al norte sm
a resident of another community
on May 18, 2011 at 6:24 pm

kevin:

Your savior, Mr Levy, posted another thread. Didn't see any mention of receivership.

Post over there, maybe he'll throw you a life preserver.

Until you come up with answers for AEN's simple questions, you'll need it.


 +   Like this comment
Posted by Answers
a resident of Community Center
on May 18, 2011 at 8:56 pm

1. "take federal receivership off the table" Who put it ON the table? (besides you)


The state constitution. We are required to balance our budget, and are unable to.

1a. When's the last time it happened to a state? (c'mon Kevin, the answer is REALLY easy!)

It's irrelevant. The first time a government fails is its first time.
Cities have failed; DC has failed.

2. Why do you like to talk about taking the great state of California and give our decision making to an unelected "receiver"?

Can't answer for him, but for me, it's in order to raise the realization that we really ought to do something about our imbalance of income vs. spending.

3. "When the state IOUs are rejected by the banks..." - When will that be? Give us a date. (you answered about an event in the past, your "brother" went to the wrong bank; this question is about your current claim, the question is when will it happen again?)

Unpredictable, but certainly neither unimaginable nor of infinitesimal probability.


 +   Like this comment
Posted by al norte sm
a resident of another community
on May 19, 2011 at 3:29 pm

Receivership has never happened at the state level, and if it ever does, it will be some red welfare state that is in worse shape than California.

Red state welfare?
Those states that get the most return for every dollar they send to the feds. California gets way less than a buck back. The top ten red welfare states get almost two bucks. Web Link

When the feds cut back, if ever, those are the states dumb enough to go into receivership.

- - - - - - - -

If receivership's in the state constitution (or the federal one) kindly show the link.


 +   Like this comment
Posted by HUTCH 7.62
a resident of Old Palo Alto
on Jun 11, 2011 at 10:41 am

Hopefully Federal Receivership will BE the final Nail blow to drive out the masses and bring the housing prices back into the realm of reality. Our liberal state legislature has been diligently working on killing the economy of Kalifornia for twenty years in the name of their salaries and the enviroment.


 +   Like this comment
Posted by Anon.
a resident of Crescent Park
on Jun 11, 2011 at 11:08 am

> Our liberal state legislature has been diligently working on
> killing the economy of Kalifornia for twenty years in the
> name of their salaries and the enviroment.

These kinds of statements are worse than useless.

No one is working on killing the economy of CA.

Though that may be the effect of what some groups
are doing, there's the details of facts and proof about
it.

The message board mode of democracy or town square
forum as it is being called does not work because
instead of people sharing what they know and how they
see the facts presented to them honestly in good faith,
we get pointless, irritating sarcastic know it all comments
of such a general and unproven nature even if there were
good facts and opinions here they are often swamped and
covered up by the know nothings who seem to speak
the loudest. Most often these comments are meant to
drive out other ideas and attempt to intimidate.


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