30 sales- and income-tax increase on the November ballot, liberal
commentators have been gloating about the resurgence of the Golden
State after many years of predicted doom and gloom. Their evidence:
Higher taxes seem to have cleared up the state’s budget deficits.
But as Steven Greenhut notes, all that's really happened is a
temporary elimination of the deficit on paper. That can quickly
change and the state is still living off of borrowed money.
the goings-on in Stockton, a hard-pressed Gold-Rush-era industrial
city of 300,000 that sits in the agriculturally rich San Joaquin
Valley. But bond-holders, taxpayers, and government officials
throughout the country will be listening to U.S. Bankruptcy Judge
Christopher Klein’s expected ruling on Monday as he decides whether
the city may remain in bankruptcy. As Steven Greenhut explains, if
Klein sides with the city, then municipalities will face a
disturbingly low bar for pursuing bankruptcy. They will be
emboldened to choose Stockton’s course—i.e., using bankruptcy as a
strategic policy tool to offload debts without having to confront
the main reasons that they went bankrupt in the first place, such
as lush pensions for public employees.
