What in the heck is going on in California?!!! These idiots continue to believe they can run a welfare state and prosper. They utterly refuse to cut government (read union) jobs, social programs, or raise taxes. Something have to give.
Schwarzenegger Seeks Obama’s Help for Deficit Relief (Update4)
December 24, 2009, 02:28 PM EST
(Adds White House comment in fourth paragraph.)
By Michael B. Marois and William Selway
Dec. 24 (Bloomberg) -- California Governor Arnold Schwarzenegger, anticipating a $21 billion state budget deficit, plans to ask President Barack Obama to ease mandates and minimums on social programs to save as much as $8 billion.
The Republican governor plans to seek the relief, according to a California official who asked not to be identified because details haven’t been resolved. Instead of seeking one-time stimulus money or a bailout, the most-populous U.S. state wants the federal government to reduce mandates and waive rules stipulating expenditures on programs such as indigent health care, the official said.
California is among states most affected by the economic recession. It has the lowest credit rating and recorded the nation’s second-highest rate of home foreclosures, trailing only Nevada. Unemployment peaked at 12.5 percent in October amid the loss of 687,700 jobs from the year before, when the jobless figure was 8 percent. Wealth declined as the stock market lost 40 percent of its value in 2008.
“I’ve seen the reports that Governor Schwarzenegger was specifically looking for aid and it’s something that obviously folks at the White House are taking a look at,” White House spokesman Bill Burton said. He commented to reporters on Air Force One today as the president and his family flew to Hawaii for Christmas vacation.
‘No Easy Solutions’
“The problem is that there are no easy solutions left,” said Jean Ross, executive director of the California Budget Project, a Sacramento-based research group concentrating on issues facing the poor. “Where do you go to cut that doesn’t permanently compromise the level of public services that this state needs to remain economically competitive and to have some semblances of a safety net left for vulnerable populations.”
Schwarzenegger and lawmakers worked to close a record $60 billion gap from February through July with $32 billion in spending cuts, $12.5 billion of temporary tax increases, $8 billion of federal stimulus money and more than $6 billion of other one-time fixes.
California’s deficits show how local governments are being forced to chose between raising taxes or cutting more funding for schools, health care and other programs, even as the economy is emerging from the recession that began in December 2007. The nascent recovery has yet to produce any job gains, a drag on states that rely on income and retail sales taxes.
National Picture
Nationally, 35 states and Puerto Rico expect to have $56 billion less next year than they will need to pay for all of their programs, according to the National Conference of State Legislatures. In Nevada, Arizona and New Jersey, the difference amounts to more than one-quarter of their budgets, the conference said. Funds from the $787 billion federal stimulus bill passed in February run out at the end of next year.
Schwarzenegger, 62, will detail his request for help when he delivers his annual State of the State address on Jan. 6 and unveils his budget on Jan. 8, his last chance to reshape California’s fiscal policies before he leaves office in January 2011 after seven years.
The arsenal of one-time accounting maneuvers he and lawmakers have previously used to temporarily paper over parts of the gap -- such as accelerating income-tax collections -- has been mostly depleted, making efforts to erase the latest $21 billion deficit more difficult.
Struggling to Cut
The state also has struggled to implement cost-cutting measures that were part of the $85 billion spending plan approved in July. Courts blocked part of the budget that cut funding for home care for the disabled and another part that borrowed $800 million from an account that sets aside money for local transportation agencies.
An accounting error means the state has to spend almost $1 billion more on schools than budgeted. Officials also underestimated the cost of health care for the poor by $900 million, and lawmakers failed to pass legislation to realize $1 billion less in anticipated prison spending.
Combined, the state faces a $6.3 billion gap in the current year and another $14.4 billion in the next.
“We’ve already gone after the low-hanging fruit and the medium-hanging fruit and the higher-hanging fruit, so it’s going to get tougher and tougher now to balance the budget,” Schwarzenegger told reporters in November.
The governor has said he won’t increase taxes again to close the gap. That means more cuts, complicated by mandated expenditures for programs such as Medicaid health-care for low- income residents. With reductions already made to programs for the poor, additional trims jeopardize those federal funds.
Biggest Issuer
“In terms of programmatic reductions, we have to keep an eye on the fact that in some areas -- be it education or health and human services -- if you run afoul of federal maintenance of efforts requirements, you risk the loss of federal dollars,” said Schwarzenegger’s budget spokesman, H.D. Palmer. “As tough as 2009, these factors are going to make 2010 even more challenging.”
The state was the biggest bond issuer this year, selling $36 billion of debt. It may come to market with at least $5 billion more of public-works obligations in the fiscal year that begins July 1, state Treasurer Bill Lockyer said.
Moody’s Rating
California’s general-obligation debt rating from Moody’s Investors Service is Baa1, the company’s eighth-highest investment grade, and A from Standard & Poor’s, the sixth- highest. By comparison, Greece, the poorest member of the 16- nation euro region, is rated two steps higher at A2 by Moody’s and two lower at BBB+ by S&P.
“California, which is more than three times bigger than Greece, is running out of money,” T.J. Marta, chief market strategist at Marta On The Markets LLC, a financial-research firm in Scotch Plains, New Jersey, told Bloomberg Radio today.
A Standard & Poor’s/Investortools index of California state and local debt has returned 13.1 percent this year through Dec. 23, about 1.5 percentage points less than the national average.
Investors have demanded higher interest rates from California, compared with other borrowers. The state’s 10-year bonds yielded 4.6 percent by the end of last week, 1.51 percentage points more than top-rated municipal borrowers, according to Bloomberg indexes. Three months ago, that difference was as little as 1.06 percentage points. Greek 10- year bonds yield 5.72 percent, Ireland’s 4.78 percent and Spain’s 3.93 percent.
In California, “it’s never a quick budget, it’s always prolonged and when it’s prolonged the headlines get worse and spreads widen,” said Peter Hayes, who oversees $115 billion in municipal bonds for New York-based BlackRock Inc., the world’s largest asset manager.
Opposition to Cuts
Democrats, who control both chambers of the Legislature, are expected to oppose wholesale cuts to health and welfare programs. Such resistance, along with Republican opposition to tax increases, will be exacerbated as election-year politics heightens the partisan divide. Half of the state’s 120 Assembly and Senate seats go before voters in November.
Budgets and tax increases in California must be approved by a two-thirds majority, and Democrats are two votes short in the Senate and six in the Assembly.
“When you are looking at a deficit in the size we have, everything needs to be on the table,” Assembly Speaker-Elect John Perez, a Democrat from Los Angeles, told reporters on Dec. 11. “The reality is that the likelihood of passing taxes in this environment is slim, but everything has to be on the table. We have to come up with a resolution to this budget crisis that asks everyone to sacrifice, not just the people that are in the greatest need.”
--With assistance from Justin Carrigan in London and Roger Runningen in Washington. Editors: Michael Weiss, William Glasgall, Brigitte Greenberg.
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might as well do it while the printing press is warmed up. All the sovereign debts doing on in Europe and the socialized states in the US should be pretty clear indicator that it doesnt work
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06 IS350 Crystal White/Black + Sport + Mark Levinson
wow, really sad article. what's more pathetic is how the feds are likely to bail out the states, putting the ENTIRE economy and country at even greater risk.
why don't we just write a bill to give everyone a million dollars, a new lexus, a fancy home, all you can eat meal coupons to any restaurant, and a free vacation anywhere once a year? yeah, that oughta do it.
I believe he will be asking for even more money now that a court has ruled that the extended furloughs of state workers was beyond the Governator's authority
Of course the lawsuit was filed by unions including SEIU
Quote:
"In these tough economic times, there's no reason why state workers should be shielded from the same economic reality that the rest of the state faces," [said Schwarzenegger spokesman Aaron McLear].
Would the unions feel better if they were laid off just like the other millions of people in this country instead of having mandatory furloughs?
This union crp is getting out of hand: UAW workers get preferential treatment in GM's bankruptcy, they want to be exempt from the tax on Cadillac healthcare plans, expect not to take a pay cut or be fired while the rest of the country is in the dumps, etc., etc.
even after huge cuts, cali is $20B in the red. Yet union jobs arent getting the needed cuts that are crippling the state with ridiculous expenses. Wonder what these unions think if the state declares bankruptcy and their asses are out of a job. Was it all worth it? Bankruptcy is inevitable, just like how the unions ruined the American automotive industry.
Public Employee Unions Are Sinking California
Months after closing its last budget gap, the Golden State is $20 billion in the red.
By STEVEN GREENHUT
An old friend of mine has a saying, "Even the worm learns." Prod one several hundred times, he says, and it will learn to avoid the prodder. As California enters its annual budget drama, I can't help but wonder if the wisdom of the elected politicians here in the state capital equals that of the earthworm.
The state is in a precarious position, with a 12.3% unemployment rate (more than two points higher than the national average) and a budget $20 billion in the red (only months after the last budget fix closed a large deficit). Productive Californians are leaving for states with less-punishing regulatory and tax regimes. Yet so far there isn't a broad consensus to do much about those who have prodded the state into its current position: public employee unions that drive costs up and fight to block spending cuts.
Earlier this month, Gov. Arnold Schwarzenegger proposed a budget that calls for a $6.9 billion handout from Washington (unlikely to be forthcoming) and vows to protect current education funding, 40% of the state's budget. He does want to eliminate the Calworks welfare-to-work program and enact a 5% pay cut for state employees. These are reasonable ideas, but also politically unlikely.
As the Sacramento Bee's veteran columnist Dan Walters recently put it, the governor's budget is "disconnected from economic and political reality." Mr. Walters suspects what will happen next: "Most likely, [the governor] and lawmakers will, to use his own phrase, 'kick the can down the road' with some more accounting tricks and other gimmicks, and dump the mess on whoever is ill-fated to become governor a year hence."
Mr. Walters' Jan. 10 column was fittingly titled, "Schwarzenegger Reverts to Fantasy with Budget Proposal." Shortly before releasing his budget, the governor and Democratic state Senate President Pro Tem Darrell Steinberg held a self-congratulatory news conference. Mr. Steinberg used the spotlight to bemoan what he deemed to be unfair attacks on California. Mr. Schwarzenegger told a hokey story about his pet pig and pony working together to break into the dog's food. It was an example, he said, of how "last year, we here in this room did some great things working together."
Meanwhile, activists are fast at work. For example, the Bay Area Council, a moderate business organization, is pushing for a constitutional convention to reshape California's textbook-sized constitution. The council's aim is to ditch a constitutional provision that requires a two-thirds vote in the legislature to pass budgets. Other reforms being proposed include a plan to institute a part-time legislature and another plan to require legislators to pass drug tests. None of these ideas will ratchet down state spending.
To do that California needs to take on its public employee unions.
Approximately 85% of the state's 235,000 employees (not including higher education employees) are unionized. As the governor noted during his $83 billion budget roll-out, over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period. A Schwarzenegger adviser wrote in the San Jose Mercury News in the past few days that, "This year alone, $3 billion was diverted to pension costs from other programs." There are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year, according to the California Foundation for Fiscal Responsibility.
Many of these retirees are former police officers, firefighters, and prison guards who can retire at age 50 with a pension that equals 90% of their final year's pay. The pensions for these (and all other retirees) increase each year with inflation and are guaranteed by taxpayers forever—regardless of what happens in the economy or whether the state's pensions funds have been fully funded (which they haven't been).
A 2008 state commission pegged California's unfunded pension liability at $63.5 billion, which will be amortized over several decades. That liability, released before the precipitous drop in stock-market and real-estate values, certainly will soar.
One idea gaining traction is to create a two-tier pension system to offer lesser benefits to new employees. That's a good start, but it would still leave tens of thousands of state employees in line to receive lucrative benefits that the state must find future revenues to pay for. Another is to enact paycheck protections that require union officials to get permission from their members before spending union dues on politics (something that would undercut union power).
My hope is that these and other reforms find support in unlikely places. Former Assembly Speaker Willie Brown, a well-known liberal voice, recently wrote this in the San Francisco Chronicle: "The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life. But we politicians—pushed by our friends in labor—gradually expanded pay and benefits . . . while keeping the job protections and layering on incredibly generous retirement packages. . . . [A]t some point, someone is going to have to get honest about the fact."
State Treasurer Bill Lockyer, another prominent liberal Democrat, told a legislative hearing in October that public employee pensions would "bankrupt" the state. And the chief actuary for the California Public Employees Retirement System has called the current pension situation "unsustainable."
As the state careens toward insolvency, these remarks are the first sign that some people are learning the lesson of the earthworm.
Mr. Greenhut is director of the Pacific Research Institute's journalism center and author of the new book "Plunder! How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation" (The Forum Press).
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06 IS350 Crystal White/Black + Sport + Mark Levinson
This will start a nuclear war in Cali with the unions.
Quote:
The Solution
The Citizen Power Campaign has filed an initiative for the November 2010 ballot to restore political power back to California’s Citizens by making it illegal to use taxpayer money, deducted the paychecks of public employees, for politics.
The official initiative title, as provided by the Attorney General, is "Makes Illegal the Use of Public Employee Wage Deductions for Political Activities." Read the summary here (scroll down to 1403) and full text here.
The Citizen Power Initiative is modeled on a law enacted in Idaho which prohibits the government from automatically collecting union dues if any portion of those dues are used for political purposes. Idaho's public employee unions challenged the law, and in February 2009 the U.S. Supreme Court upheld the statute in the Ysura decision.
When this initiative passes:
* Public Employee Unions will not be allowed to use any portion of workers’ paychecks (funds that are collected by the government) for political activities. This would remove hundreds of millions of dollars from the corrupt Political Machine that dominates California politics and level the playing field for all groups and citizens.
* Public employees would regain the right to make their own decisions about their political donations, not have the Union Bosses play politics for them.
* Public Employee Unions and their politician cronies will have to ASK for voluntary political contributions just like everyone else!
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06 IS350 Crystal White/Black + Sport + Mark Levinson
Most performance mods need a watch and timed course to demonstrate actual improvement. Few deliver the advertised claims. Many are actually worse than stock. The best performance mods are made to the driver.
Emotional arguments - They're not just for chicks anymore.
here comes another potential bomb to Calis economy. Obama Administration's Secretary of the Interior is intervening into a state issue where water will be cut off from many southern California farms to protect the Delta Smelt, some fish that has a declining population. So they are "testing out" if the declining population has to do with water thats getting diverted out, so they withhold the water to Southern Cali.
Without this water $20B worth of food could be destroyed. This would dramatically upset the food balance and supply in the US as California produces a huge amount of food for the country. These eco terrorists make me sick, and the govt that sides with them.
This is one of the reasons why I beleive there is a high chance of a food crisis and rocketing prices in 2010. Especially in produce, much of which comes from California. And we might have to import from China because of it
Obama to California “Water, Its Not a Right its a Privilege”
by John Loudon
On the list of insane public policy moves we have come to expect from the current administration, Cap and Tax, Obamacare and Union Card Check, a fourth has garnered relatively little attention, although the implications for all Americans may be among the most far-reaching. The recurring theme is centralized control. This is a completely boneheaded public policy move. Putting millions of peoples food, 1000s of jobs, billions of dollars at stake to protect a stupid fish.
On Monday, the Metropolitan Water District of Southern California will host a rare Congressional “Field Hearing“. A Congressional delegation will venture out of the beltway and actually devote time to a problem in our country. Better yet, they will be listening to real citizens. Sort of.
At issue is what residents are calling a government-made drought in the Central and San Joaquin Valleys of California. Legal and environmental regulations in the Endangered Species Act has resulted in the diversion of 200 billion gallons of water from the agricultural heartland of California into the Ocean. According to California farmer Rose Corona,
Quote:
“Potentially over $20 billion of California’s $43 billion of agricultural revenue could be decimated in America’s greatest breadbasket as farmers lose their farms and residents are forced to import food from China. While the solutions are not simple, local government officials are not even able to attempt them.”
Two thirds of California’s water is in Northern California, but two thirds of the people live in Southern California. Over the last generation, a series of aquaducts and canals was built to divert some of the plentiful water in the North so that instead of raising the sea level (as Al Gore warns us is imminent) the fresh water will irrigate incredibly productive land. The five counties effected provide tens of thousands of jobs and a stunning $20 billion of food output.
So why would politicians in California, a state that is already bankrupt, do anything other that mount a united battle to find a solution? That is hard to say. Instead there are deep and often ugly divisions and battle lines such as radical environmentalist on one side and farmers and migrant workers on the other.
Officials are perplexed to find an explanation for the declining population of the delta smelt, a small bait fish. It is also true that the salmon industry is concerned. So it is understandable that regulators would force action. What is not understandable is why the game of man vs beast is tilted at every turn toward the beast.
Consider that the judicial solution holds that if the fish population is declining, we will leave more water in the river and see if that works. No one knows if it will. Maybe there is a chemical or biological explanation, but we will take a chance because the lives of fish are at stake.
So when a compromise solution is proposed, called the “Two Gates” project, that would restore water and possibly protect fish, the Obama administration’s Interior Secretary, Ken Salzar put the brakes on it. So we will experiment to put fish over people, but we will not experiment to put people over fish. How is that Hope and Change working for you?
As for the rest of us, the implications are huge, not just for our food bills, but for establishing the precedent of allowing the Federal government this level of control over water. When government takes your water, they take the value of your land nay, they steal the value of your land.
Missouri lost this battle over the last several years and unlike California, we have to drive hundreds of miles to find anything that looks like a desert. Nevertheless, the Government used the same Act to withhold water from the State after which the river is named, favoring the pallid sturgeon over farmers. Get the pattern?
Now consider for a moment that we are not just talking about California farmers, nor just our food supply, we are talking about who controls the food supply.
This area of California is some of the most productive in the Country producing nearly half of America’s produce including 55% or our asparagus, 90% of our strawberries and 100% of our olives. When the 35,000 unemployed residents of the region look for help at the food pantries they drive past idle asparagus fields to get their canned asparagus from China. So we depend on Islamists for oil and now China not just for cash but for food!
So residents of California, and really the rest of us, have no other hope than Congressional action. They need Congress to immediately pass Congressman Devin Nunes‘ Bill, the aptly named “Turn the Pumps on Act“. Amazingly, the legislation to help California out of this crisis is bottled up in Committee by a Californian–Nancy Pelosi. Nunes is asking his colleagues to sign the discharge petition. Is your Congressman on the list?
Although Rose Corona and others are pleased with the leadership of Congressmen Nunes and McClintock who have pursued the “Field Hearing” that will take place Monday, they remain angry about several points including:
Quote:
* Why the hearing is located in Los Angeles, over 200 miles from the effected area?
* Why Democrats get five witnesses and Republicans only one?
* Why was the “Two Gates” solution postponed indefinitely under the radar last week by the Obama administration?
* Whether California’s Congressional Democrats are willing to move the majority Party in Congress to act?
Because the travel distance is such a strain on both the farmers and the concerned citizens in that area, Corona and other Pro-water coalition groups are calling on all Patriots and Tea Party Activists to come and show their support for a solution in two locations. A Town Hall meeting with Representatives Nunes, McClintock, McCarthy and Bishop (R-Utah) will be held on Monday:
8:30am-10:30am
Fresno City Council Chambers
2600 Fresno Street, 2nd floor
Fresno, CA 90012-2944
The Oversight Field Hearing will be held:
1:00pm
700 N. Alameda Street, Los Angeles, CA
If you will be anywhere in Southern California on Monday, please make one of the meetings. If you cannot, please be sure your Congressman is on the discharge petition. The administration that wants to control your health care, your energy and your bank, now wants to control your water.
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06 IS350 Crystal White/Black + Sport + Mark Levinson
Believe it or not, this has been an on-going issue in California since I first set foot there in 1980. The EPA and the smelt have been creating drought in Northern California for years.
Sadly, many people do not realize our most critical resource is not oil, but water. Look at it this way - you can go up to 5 minutes without oxygen, 3 days without water, and 30 days without food and expect to survive. Oxygen is a byproduct of plant respiration. Plants need water to survive. Plants support all food production (meat depends on a stable supply of vegetation to feed the animals). So, when you get right down to it, nothing is more critical to sustaining life than fresh water.
Most performance mods need a watch and timed course to demonstrate actual improvement. Few deliver the advertised claims. Many are actually worse than stock. The best performance mods are made to the driver.
Emotional arguments - They're not just for chicks anymore.
We could build desalination plants which would reduce our dependence on the Colorado River and the Sierra Mountains for water but there are so many environmental regulations in California that prevent it from happening.
I know these desalination plants are expensive but once the regulations are loosened up I'm sure the cost would come down. Plus, with these plants we won't have to rely on a finite resource, so in the long run it may be cheaper for the state to build a lot of them to supply drinking water and water for industry (farming and manufacturing).
We could build desalination plants which would reduce our dependence on the Colorado River and the Sierra Mountains for water but there are so many environmental regulations in California that prevent it from happening.
I know these desalination plants are expensive but once the regulations are loosened up I'm sure the cost would come down. Plus, with these plants we won't have to rely on a finite resource, so in the long run it may be cheaper for the state to build a lot of them to supply drinking water and water for industry (farming and manufacturing).
Especially since the desalination process has incredibly increased efficiency in the last years.
The smelt will die eventually - but I think it's time for SoCal to STOP LEECHING OFF NORCAL and find your own damn water - time to throw up a few new desalination plants ala the Middle East. As for the smelt, hatch them in a protected part of the Delta and the American River, or have someone on an ATV carry them to safer waters during spawning season.
Secondly, it's time to root the "democrats" out of office. People at the state level like Karen Bass, Loni Hancock, and at the federal level like Nancy Pelosi have to go. The state can also trim some fat like CARB and dozens of other unneeded bureaucracies. Willie Brown hit the nail on the head - if you work for the government, don't expect to make 6 figures.
So now Cali's Senate approved a single payer healthcare, how in gods name is this state suppose to pay for it? Costs are going to overrun like always. They should be cutting spending not maintaining and increasing it: http://www.breitbart.com/article.php...show_article=1
Quote:
Calif. Senate approves single-payer health care
Jan 28 04:20 PM US/Eastern
By DON THOMPSON
Associated Press Writer
SACRAMENTO, Calif. (AP) - The California Senate approved creating a government-run health care system for the nation's most populous state on Thursday, ignoring a veto threat from Gov. Arnold Schwarzenegger.
Supporters said it is time for state legislatures to take up the debate as the Obama Administration's national health care proposal falters in Congress.
"If it's not to be done at the national level, let us take the lead," said state Sen. Christine Kehoe, D-San Diego.
The move in California comes after Massachusetts voters changed the calculus in Congress by electing a Republican to the Senate who opposes the pending plan.
Democrats are the majority in both houses of the California Legislature. The 40-member state Senate passed the single-payer plan on a 22-14 vote, sending it to the Assembly. One Democrat voted against the measure.
Schwarzenegger promised to veto the proposal, as he has two similar plans that previously reached his desk. Spokeswoman Rachel Arrezola cited the state's massive budget cuts and looming $20 billion deficit in arguing the state cannot afford to shift to a single-payer health care system.
"Any elected official who thinks it's a good idea to strap the state with tens of billions of dollars from a government-run health care system is clearly not in touch with what voters need and deserve," Arrezola said.
The proposal by Sen. Mark Leno, D-San Francisco, authorizes $1 million to establish a commission that would decide how to pay for the system. The funding plan would ultimately have to be approved by voters.
Leno argued the state-run plan would replace the $200 billion Californians already pay for their health care while eliminating insurance companies' share. He previously said the system could use existing state and federal money and a payroll tax, coupled with increased efficiencies from a government-run system.
"We are spending $200 billion currently," Leno said. "It is the same $200 billion used in a more efficient, cost-effective fashion."
Republicans derided the timing of the vote, saying Democrats are ignoring the lesson in Massachusetts at their political peril.
"This plan is to the left and radical of what couldn't get out of Washington," said Sen. George Runner, R-Lancaster.
Senate President Pro Tem Darrell Steinberg said Republicans refused to support even a $14.7 billion health care reform bill that Schwarzenegger, a Republican, negotiated with Democratic leaders two years ago.
"Not a single Republican vote—so what are you for?" asked Steinberg, a Democrat from Sacramento who usually strikes a conciliatory bipartisan tone. "The demagoguery needs to be answered and addressed."
Schwarzenegger's proposal actually was undone by Democrat Don Perata, Steinberg's predecessor in the Senate, when he ordered a financial review that found the plan would be billions of dollars out of balance within a few years.
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06 IS350 Crystal White/Black + Sport + Mark Levinson
Man these elected officials are so stupid it isn't even funny! California is in debt by $20 billion dollars and now they want to take control of the state's health care? Wow, I really should think about moving out here!
were gonna be out of money by April 1st (ironic date) but lets pass state healthcare anyways. Well Schwarzenegger has threatened to veto the healthcare bill, hopefully he does for fiscal santity's sake http://www.mercurynews.com/ci_14249833?source=rss
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California controller: State will run out of cash before April
By Denis C. Theriault dtheriault@mercurynews.com
Posted: 01/22/2010 05:13:27 PM PST
Updated: 01/22/2010 09:12:00 PM PST
SACRAMENTO — State Controller John Chiang issued a stern warning Friday about California's cash reserves, telling legislative leaders and Gov. Arnold Schwarzenegger they must act on nearly $9 billion in budget cuts the governor is seeking by March — or the state will run out of cash to pay its bills.
Without making those cuts — which Chiang says will pump $1.3 billion into the state's checking account — California would be broke by April 1, no fooling.
The state wouldn't climb back to what's considered a safe level of cash on hand, $2.5 billion, until later that month, when tax revenues are expected to begin flowing into Sacramento.
"While our current cash condition is marginally better than it was one year ago," Chiang wrote to leaders, "it is still precarious."
Even with the budget cuts, the state's cash reserve would still be far below that cushion in March and April.
To that end, Chiang is calling for an additional $2 billion in cash-flow "solutions." Looking at previous cash crunches, that could mean some payments, like income tax refunds, would be delayed for a few weeks to keep the cushion intact.
"Call it overdraft insurance," said H.D. Palmer, spokesman for the state Finance Department. He stressed that officials are still huddling over specific solutions.
If the budget gridlock lingers all the way to July, then IOUs could come back into play. And because many budget cuts
require months of ramp-up to take effect, delaying action on a new budget could inflate the state's overall $19.9 billion deficit by $2 billion, Palmer warned.
"Inaction ignores the projected cash shortfall which we face in less than 70 days," Chiang wrote. "Only you can prevent history from repeating this year."
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06 IS350 Crystal White/Black + Sport + Mark Levinson
California comes back to the feeding trough
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