Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.
The latest figures show that California is facing resurgent fiscal strains. Since February, Schwarzenegger and lawmakers have cut $32 billion from spending, raised taxes by $12.5 billion and covered $6 billion more with accounting gimmicks and borrowing. Even with those actions, state budget officials predict an additional $38 billion in deficits in the next three fiscal years combined, including $7.4 billion in the year starting July 1.
The budget news comes as Californai prepares to sell as much as $15 billion of bonds in the next nine months to refinance debt and fund public-works projects, and as a surge in fixed-rate municipal issuance sent benchmark rates up by the most in almost four months.
California, already the largest borrower in the municipal market, may offer $4 billion of debt during the week of Oct. 26 to refinance the bonds used by Schwarzenegger to cover previous budget deficits. The budget enacted in July would allow the sale of as much as $11 billion more of general obligation bonds through the June 30 end of the fiscal year if financial markets allow, state Treasurer Bill Lockyer said. The exact sale amount hasn’t been decided.
Additional bond sales by California would follow an offering of $4.1 billion of general obligation bonds this week.
California has been among the hardest hit by the recession, had already issued $22 billion of debt since March, including $8.8 billion of notes that provided the state with an advance on taxes collected next year.
California is the classic example of liberalism at work. Look at Hollywood, the crime and drug problem, and now their economy. Welcome To Reality!
The state of California is in crisis and time has almost run out. Arnold Schwarzenegger, the Governor, has spent this week haggling with state legislators to agree cuts to basic services in one of the world’s largest economies.
The state’s top finance officials warned that unless an emergency austerity plan is agreed by Monday — and there is little chance that it will be — they will not be able to borrow the billions of dollars needed to keep the current government functioning. If California was a company, it would have gone bust months ago.
The breadth and depth of Mr Schwarzenegger’s cuts are unprecedented and no one in the state, not even its dozens of billionaires, will be unaffected. His more radical proposals include wiping billions of dollars from the education budget, with the school year shortened and larger classes.
Hundreds, possibly thousands, of police and firemen will be laid off, and state employees who keep their jobs face pay cuts of at least 10 per cent.
Parks will close, shutting access to thousands of square miles of beaches, redwood forest and other attractions that draw 80 million visitors a year. Thousands of prisoners will be released early and the notorious St Quentin penitentiary will be among state buildings put up for sale.
All financial aid for university students, affecting 200,000 people from low-income families, will end.
Local governments will no longer have to provide absentee ballots in elections, nor run programs to help infants exposed to drugs. Even stray animals will no longer be kept alive for the statutory three days.
Mr Schwarzenegger, whose popularity has plunged to levels that George W. Bush would recognize, told lawmakers in Sacramento, the state capital: “California’s day of reckoning is here. Our wallet is empty. Our bank is closed. Our credit is dried up.”
For the self-styled Governator and former Hollywood action hero used to getting his way, the issue has become humiliating. His proposals last month to raise taxes and boost borrowing to help to cover the deficit were rejected. Now he has embarked on a “day of reckoning” strategy, asking voters to recognize that Californians must “live within our means”.
The crisis represents a dramatic fall not only for Mr Schwarzenegger but for America’s Golden State. It faces a $24 billion (£14 billion) deficit in the fiscal year starting on July 1 — nearly $700 per head of population.
Were it an independent country, California would be among the ten biggest economies in the world, but its finances have been crippled by the recession. Unemployment already stands at 11 per cent, the fifth-highest in the nation, and another 63,700 jobs were lost last month. Now it will almost certainly need federal guarantees from Washington to borrow money from the financial markets.
Shocked welfare organizations are scrambling to protest at the savagery of the social cuts. Jean Ross, the executive director of the California Budget Project, a public policy research group, wrote in the San Diego Tribune: “These proposals target children and the young, California’s very future.”
Indeed, they would send a state that prides itself on its youthful image, its innovations, its tradition of reaching the future first, reeling backward in time into what one advocate called “an era of Dickens”.The Governor says that he “sees the faces behind those dollars” but he and other Republicans in the legislature will not raise taxes again after agreeing to $12.8 billion in sales, personal income and vehicle tax rises earlier this year.
Last year overall personal income declined for the first time since 1938. The land of Hollywood’s dream factory has turned into a fiscal nightmare.
California is the salad bowl in which the world serves up its more exotic lifestyle experiments. Mix sunshine with self-indulgence and dress it with surf-wear and you get a glimpse of how we might live in the future – if we could only afford the plastic surgery.
Unfortunately, it appears that even Californians can no longer afford the lifestyle of the Valley Girl.
The Golden State is almost bust, but its inhabitants, even if they believe it, do not want to know and they certainly do not want to pay for it. The state has been running huge budget deficits for years; the till in Sacramento, the state capital, is now empty and the last-ditch attempt by Governor Schwarzenegger to balance the books with a series of tax increases and budgetary shuffles was roundly rejected by voters in referendums a week ago.
With a $21 billion deficit and the lowest credit rating of any State, the choices are few and grim. California cannot hope to borrow such large sums, except at extortionate rates, which leaves the option of massive cuts in public spending.
California could run out of cash in a few months. Mr. Schwarzenegger has already warned that 5,000 state employees face being fired. The State education budget is in line for a $5 billion cut, alongside the end of funding for parks and the closure of at least one State agency.
Meanwhile, there is talk of a trip to Washington to seek financial assistance. One idea is a federal guarantee of short-dated bonds issued by Calfornia, but that solution would be resolutely opposed in Congress by States resentful of West Coast profligacy. One of Obama’s early constitutional headaches may be getting the financial bailout of California approved by Congress.
Inevitably, the Golden State’s excesses will have to be curtailed. What will jealous legislators from other States demand in return for more cash for the beach bums? The fight will be ugly and California may find that it is not only its extravagant lifestyle that is in the straitjacket, but its political freedom as well.
Schwarzenegger to cut 5,000 state jobs, deport illegals from prisons
Just to drive the point home, the day after state voters rejected Schwarzenegger’s spending ballot measures, the California Citizens Compensation Commission voted to slash pay for the governor, legislators and statewide officeholders by 18 percent.
The California taxpayer revolt evidenced in the rejection of the five budget resolutions by margins approaching two-thirds of the voters was consistent with the spirit of the April 15 tea parties held around the nation, in which average Americans protested the Obama administration’s trillion dollar deficit spending and the move to increase federal and state taxes to finance the deficits.
WND reported that an estimated 1 million Americans participated in some 1,000 tea party protests held in all 50 states.
The shortfall follows a February fix in which California legislatures closed a $42 billion California budget deficit by a series of step cuts and new taxes.
This time, Schwarzenegger may be forced to fire 5,000 of the state’s 235,000 workers and engage in a series of additional cuts that involve slashing education by $5 billion, selling key state properties such as the Los Angeles Coliseum and borrowing $2 billion from local governments, according to the Los Angeles Times.
The newspaper also reported that a worst-case scenario could call for the release from state prisons of up to 19,000 illegals who would face deportation, plus the transfer of up to 23,000 state prisoners to county jails.
“The problem faced by states such as California is that the economic recession has lowered anticipated tax revenues at a time when a strategy of raising state taxes to increase state revenue is almost certain to be self-defeating, further depress economic growth rather than simply increasing state revenue,” Corsi wrote.
Anticipating the bad news, Schwarzenegger traveled to Washington where he requested an Obama administration bailout in the form of a government guarantee on $6 billion in proposed California loans.
“If the Obama administration concedes to blue state political pressure to bail out California, the request is certain to be followed by virtually every other state,” Corsi noted. “Meanwhile, all signs point to the recession deepening in California.”
To read the rest of this story go to http://www.wnd.com/index.php?fa=PAGE.view&pageId=99122
This is a great post from Alan Caruba at http://factsnotfantasy.blogspot.com
What legislators at the federal and state level don’t seem to understand is a fundamental law of thermodynamics. You cannot get more mileage out of a gallon of gasoline than it possesses. Every form of energy, oil, coal, natural gas, has a specific amount of energy it can produce when used.
When you add moonshine like ethanol to a gallon of gasoline, you actually reduce the amount of mileage you get for your dollar.
Meanwhile, the producers of the ethanol are lining their pockets with federal subsidies. Without the subsidies—taxpayer dollars—they would not be able to make a profit and since the ethanol fantasy has managed to drive up the cost of corn—normally a food product—some ethanol producers have already gone out of business because they couldn’t afford it!
California, home to more truly bad ideas about the environment than any other State, has enacted a “California Car Standard” to cut tailpipe emissions of “greenhouse gases.”
There is NO global warming and carbon dioxide has NO impact on the Earth’s climate except to show up in slightly higher amounts hundreds of years after a warming cycle has occurred. What Governor Schwarzenegger hasn’t figured out is that the Earth is well into a cooling cycle since 1998.
In California, all vehicles, cars and trucks, sold in the State will have to average 34.5 miles per gallon by 2015. Recent new standards for trucks, most of which would have to be retrofitted, means that fewer and fewer goods will be delivered in and to California because the cost of retrofitting is so high most truckers and fleet owners will simply decide to avoid doing business there.
Meanwhile, with the U.S. government imposing more and more emission demands on the auto manufacturers, they will ultimately have to start making cars out of paper mache in order to lighten the vehicle enough to achieve utterly meaingless mileage standards.
On top of that, the U.S. government is requiring automakers to make cars that very few people can afford or even want. Pretty soon we’ll have a new auto company, Obama Motors!
Isn’t it communism when the central government gets to decide what must be manufactured?
The effect of putting carbon dioxide emission limits in place on American cars ignores the fact that CO2 is being produced daily in China, India, Russia, Europe, and everywhere else in the world. Let’s not forget, too, that every human being on Earth emits about two pounds of the stuff every day.
The California standard has the effect of banning, not just SUVs, but midsize cars like the Honda Accord and the Toyota Camry. Just how dumb is this?
It is interesting to note that Ford Motor Company has refused to line up for a government bailout. Back in the 1930s when the FDR administration passed a law requiring manufacturers to collude to set higher prices, Henry Ford refused to participate. He believed that competition was the best economic policy. People actually went to jail back then for selling a product or service for less than the price set.
Your President, elected by just barely 6% over the Republican candidate and accompanied by a huge Democrat majority in Congress, is pushing this nation into a deeper recession which in time, if nothing is done to reverse the process, will develop into a full blown depression.
You might want to keep this in mind in 2010 when it comes time to vote for members of Congress. Americans put the Republicans in control in 1994 and we can do it again. At this point, I would vote for a chimpanzee if it was a Republican!
The next politician who, like Al Gore, tells you that the Earth is facing a global warming calamity because of greenhouse gas emissions, should be voted out of office and into the nearest soup kitchen line.