Here are two examples of why California is going broke.
This is a true story, as they say. The names of Jose and Maria have been changed to protect the innocent.
Jose is a gardener. Maria works at a produce company. They have three children raging in ages fom1 to 8.
Three years ago they bought a home in Bakersfield.. They paid $229,000. Last year the house was foreclosed at $74,000.
I buy a copy of Turbo Tax and every year I do about ten returns for relative and friends.
I happen to be a friend of Jose and Maria. I did their tax return. I was shocked. They received a form known as a 1099C. This form reports loan forgiveness.
On their Federal return due to EIC and additional child tax credit they got a refund of over $5,000. I then did the California return and was shocked to learn that according to California tax laws loan forgiveness equals income.
With an income of $35,000 with three kids, they owed the State of California over $8,000.
According to the geniuses in Sacramento, Jose the gardener and Maria the produce worker had an income of over $100,000.
That is over a 23% California tax rate on an income of $35,000 for a family of five. That on top of the property taxes they paid, the almost 10% sales tax and the doubling of car registrations. When all is said and done their tax rate was probably over 30%.
After going through the pain of losing a fortune on the foreclosure, now they also face the pain of a huge tax bill on income that never came into the family.
And where does the money go? Social services have been cut. University tuition has gone up dramatically. Car registration fees have doubled.
In the Los Angeles Times Sunday edition, on the front page, is an article written by Patrick McGreevy with the headline reading "Overtime May Offset Furloughs".
Our Governator Ahnold tried to cut the deficit by forcing State employees to take three days of furlough during the course of the month.
This at a time when California unemployment rate is almost 13% while the number of State employees grew by 3%.
The saving were supposed to be over 1 billion dollars. The result?
Due to not cutting out overtime, State employees have more than made up for the furlough cuts by working overtime at time and a half.
In one example a nurse (Nellie Larot) working in the prison system making $102,000 would have taken a cut of $10,000 dollars due to the furloughs. She claims in the article that living on $92,000 a year is a hardship for her.
Would you feel hardship at $92,000?
Her solution as she claimed she needed the money, WORK OVERTIME!!
The result is that she made over $177,000 dollars in overtime plus her salary of $92,000 for a total of over $270,000 dollars.
That is more than the $225,000 paid to the head of the entire prison system.
In another example prison guard Lt. Randall Rowland was paid $133,000 in overtime pay.
There were over 50 State employees earning at least $100,000 in overtime pay.
California Highway Patrolman Officer Kerry Comphel earned $127,000 in overtime pay.
The City of Vallejo recently filed bankruptcy when 80% of their budget went to pay pensions of employees no longer working.
In order to renegotiate the union contracts California or Khalifonia as our Governator says should do the same.