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California Discloses A $25.4 Billion Budget Hole, Asks If It Should Pass The "Huge Challenge" To "Future Californians"
The California Legislative Analyst's Office has just released the latest fiscal outlook. It's not pretty. The state discloses a $25.4 billion budget "problem" which consists of a $6 billion deficit for the remainder of 2010-2011, and a $19 billion budget deficit forecasted for 2011-2012, thanks to a $8 billion plunge in revenues for the general fund, as temporary tax increases adopted in 2009 expire. Furthermore, as the state admits: "One major reason to stop passing the state’s problems to future Californians is that the state’s long-term fiscal liabilities—for infrastructure, retirement, and budgetary borrowing—are already huge. The costs of paying down these liabilities already are reflected, to some extent, in the state’s recurring deficits, but these costs will only grow in the future. By deferring hard decisions on how to finance routine annual budgets of state programs to future years, the state risks increasing further the already immense fiscal challenges facing tomorrow’s Californians." Luckily this is all rhetorical, and Cali will just take the Bernanke pill, and kick the can down the road. And as state budgets ultimately have to balance, at least on paper, one wonders if Cravath's ploy with its pro bono Harrisburg gimmick is merely to get Sacramento on a silver platter when the Chapter 9s move to the Golden State. One can be certain that one won't be pro bono.
From the report, which in no way tries to hide the dire situation California finds itself in:
$25 Billion Budget Problem Needs to Be Addressed in Coming Months
Our forecast of California’s General Fund revenues and expenditures shows that the state must address a budget problem of $25.4 billion between now and the time the Legislature enacts a 2011?12 state budget plan. The budget problem consists of a $6 billion projected deficit for 2010?11 and a $19 billion gap between projected revenues and spending in 2011?12.
2010?11 Deficit. We assume that the state will be unable to secure around $3.5 billion of budgeted federal funding in 2010?11. This assumption is a major contributor to the $6 billion year-end deficit we project for 2010?11. We also project higher-than-budgeted costs in prisons and several other programs. In addition, our forecast assumes that passage of Proposition 22 will prevent the state from achieving about $800 million of budgeted solutions in 2010?11.
2011?12 Deficit. The temporary nature of most of the Legislature’s 2010 budget-balancing actions and the painfully slow economic recovery contribute to the $19 billion projected operating deficit in 2011?12. This gap is $2 billion less than we projected one year ago. Actions taken during the 2010?11 budget process to reduce Proposition 98 education spending are a major contributor to the decline.
Ongoing Annual Budget Problems of $20 Billion Persist
Similar to our forecast of one year ago, we project annual budget problems of about $20 billion each year through 2015?16. In 2012?13, when the state must repay its 2010 borrowing of local property tax revenues and the full effect of Propositions 22 and 26 hit the state’s bottom line, our forecast shows the operating deficit growing to $22.4 billion. Because our methodology generally assumes no cost-of-living adjustments, our projections probably understate the magnitude of the state’s fiscal problems during the forecast period.
Additional Savings From Proposition 98 Will Be Very Difficult
Our forecast indicates that General Fund revenues and transfers will decline by over $8 billion in 2011?12 due to the expiration of the temporary tax increases adopted in 2009. Because the Proposition 98 minimum school funding guarantee is affected by this drop, our budget forecast already reflects a $2 billion fall in the minimum guarantee between 2010?11 and 2011?12. This reduction would come at the same time that school districts exhaust the billions of dollars of one-time federal money they have received through the stimulus program and other legislation. For these reasons, it may be very difficult to achieve substantial additional budget reductions in Proposition 98 in 2011?12, compared to the levels already reflected in our forecast. In other words, if the Legislature funds schools at our projected minimum guarantee in 2011?12, it would mean billions of dollars in programmatic cuts to education but not contribute a single dollar to closing the $25 billion budget problem.
And the key question that California is asking itself, and which the Chairman should also be at least pondering. It is unfortunate that while the debate is at least open in California, Bernanke has decided on what the "right" course of action is:
Key Choice: Painful Decisions Now…or Pass Problems to Future Californians
Too often, discussions of California’s budget situation are framed in extreme terms: the state about to go “bankrupt,” debt-service payments hypothetically poised to default, the state government on the verge of collapse. None of these scenarios is remotely likely to occur. History tells us that the state can find ways to temporarily “patch over” its annual budget problems in ways that prove sufficiently palatable to policy makers of both major parties. Periodically, large influxes of capital gains allow for temporary relief, and this too aids in patching over the state’s now-recurrent budget challenges. The Legislature and the new Governor will be tempted in the next few years to continue patching over the budget problems with temporary fixes. Unless plans are put in place to begin tackling the ongoing budget problem, it will continue to be difficult for the state to address fundamental public sector goals—such as rebuilding aging infrastructure, addressing massive retirement liabilities, maintaining service levels of high-priority government programs, and improving the state’s tax system. Accordingly, the state faces a basic choice: begin to address today’s huge, frustrating budget problems now…or defer the state’s budgetary and policy problems to future Californians
The decision is pretty clear. Or maybe not: even California now believes it is better to bite the bullet now and take the medicine asap, no matter how painful the detox from cheap money will end up being:
Huge Longer-Term Fiscal Challenges Already Can Be Foreseen
One major reason to stop passing the state’s problems to future Californians is that the state’s long-term fiscal liabilities—for infrastructure, retirement, and budgetary borrowing—are already huge. The costs of paying down these liabilities already are reflected, to some extent, in the state’s recurring deficits, but these costs will only grow in the future. By deferring hard decisions on how to finance routine annual budgets of state programs to future years, the state risks increasing further the already immense fiscal challenges facing tomorrow’s Californians.
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Will a bailout need to go thru Congress or can it magically appear?
"
Will a bailout need to go thru Congress or can it magically appear?"
It'll have to go thru the new Rep House. Translated: fat chance.
The author(s) keep referring to a group called "future Californians" - will there actually be ANY such species? Will even the Mexicans be willing to go there any more?
Good thing that I live in Illinois - we don't have those sort of problems here!!!
The gap is worrisome, but not end times bad. CA closed a $24 billion shortfall in 2008, $60 billion in 2009, and $18 billion in 2010. Squeezing blood from a stone is old hat out here.
Bennie's printing press has nothing on Ahhnold's HP SpeedJet IOU printer.
If you closed the gap why is it still there, and bigger?
Please, Sir, stand directly in front of the magician.
And don't ask about pensions tied to the state constitution either!
...si, the great taxpayer derivative. Too bad it's not gonna work out. The State has given constitutional budget priority to everybody but white middle class male Anglo Saxons.
Wait'll the public workers find out they got ponzied too by the full faith and credit confidence game .
I assume you're being serious and want a serious reply... Budget shortfalls occur because of either increased spending or decreased tax revenues. In our case, tax revenues continue to decline due to ongoing unemployment and lower business revenue.
I sincerely doubt there will be any meaningful reform out here; likely more muni bonds and across-the-board 5% cuts/furloughs/early retirement/etc.
Better switch to something stronger, Xanax. CA has been using budgetary shenanigans and subterfuge for years to hide the real extent of the damage. You're out of your fucking mind if you think that a tweak here, a tuck there, and a little good old-fashioned economic growth will bring things back into balance. 3,000 Californians a week are leaving the state. I guarantee you that most of them are makers and not takers and have simply had it with a legislature that is stark, raving mad. I, for one, cannot WAIT until the 2x4 hits Californians in the face. It is the only way they will learn a lesson. As a native, I love the state, but only a keel-haul will fix it at this point. Bring it on.
California needs a state run bank like North Dakota. Only state left without a deficit.
A little off-topic, but still related. In the recent Florida gubernatiorial election, there was one candidate, Farid Khavawri, who wanted to charter the State Bank of Florida. He claimed that through the bank's profits, he would be able to eliminate the property tax and close the budget gap. I voted for him, sadly one out of only 5,000.
"Closed" ... Yeah, you keep on smoking that stuff the state that re-elected Governor Moonbeam but didn't, oddly enough, legalize. They must have been really stoned to get that vote backwards.
Meanwhile, let's keep giving free medical care, education, and other benefits to undocument residents, because these seem to be a real long-term investment in what seems to truly be the future of what used to be 13% of US GDP.
We are doomed!
Future Californians = citizens of Aztlan, a territory administered by China and loosely controlled by several drug cartels.
Not so fast. The new congress is not seated until January 2011. The wicked witch of the west will still be speaker of the poor house until then. As she hails from Kalifornia I can easily see this pushed.
Hopefully you are being facetious. Illinois is only behind California, New York and Michigan on clueless politicians and gaping black budget holes.
I'm pretty sure my fellow Illini was being quite facetious. In fact, our bond yields suggest we are ahead of the states you mentioned, not behind.
Wooooohoooooo....we're #1...we're #1...
I really hope we get acquired by Indiana soon (and then give Chicago to Wisconsin as a Christmas present).
you forgot dirty jerz
"future Californians" is code for Mexicans
Good to know they are being proactive about things. LOL.
Future Californians.... like Kurt Russell with an eye patch?
http://www.imdb.com/title/tt0116225/
Call him Snake.
..or Cptn Ron
http://www.youtube.com/watch?v=RREoBxOBHi4&feature=related
http://www.youtube.com/watch?v=2D2DOJIf6Zg&feature=related
"Home of voodoo, hoodoo, and all kinda wierd shit"
So appropriate.
California... the 'other' Ireland of the world.
I heard he was dead.
How about a special POMO just for California? No reason we can't POMO after hours and on weekends!
Would'nt that be a COMO. I think they have that problem in NY already. Unless you think it is a dead crooner.
I believe it's pronounced HOMO, and yes NY has that problem too. ;)
Yeah they imported them from San Francisco. bada bum!
Hush. Don't give them any ideas.
On second thought since the POMO crew reads ZH, expect to see Saturday, Sunday and Holiday POMO's to "prime the pump" when the next schedule is released.
Damn you PG, damn you to hell.
To the tune of "Sugartime":
POMO in the morning
POMO in the evening
POMO at suppertime
Be my little POMO
And love me all the time
Lindsey Williams might be right about $200/b oil, sigh...
CA is borrowing $40 million per day from US government to pay for unemployment benefits.
Uncle Sugar ain't gettin' nuthin' back but IOUs. Dat moneee looong gone ! Uncle need to get to the back of the payday line.
Cali's total debt outstanding is now roughly $77 Billion. The only way to resolve this is if the state implodes. Unions will not budge, and the State still requires a 2/3rds majority to raise taxes or fees.
http://californiawatch.org/watchblog/californias-debt-levels-soar-under-...
the State still requires a 2/3rds majority to raise taxes or fees.
Not anymore, didn't they git rid of that?
Yes, for next year. Now it's just a simple majority. Look for the deficit to explode, and then the debts to be defaulted on.
Actually, proposition that just passed allows majority to pass budget, not to raise taxes. Fees remain without adequate description. Makes balancing budget even more difficult, but still a step in right direction. Will force democratic legislature to make cuts in spending.
Wrong Eternal Student. Prop 25 made it so that the budget only requires a 50% majority, but tax increases still require a 2/3 supermajority.
http://articles.latimes.com/2010/nov/04/opinion/la-ed-props-20101104
True enough. I was thinking of the spending, not the taxing. And it's fees that are limited by prop 26, not taxes. As I said, look for the deficits to explode. There's wiggle room in that description. The key thing is that they got rid of the 2/3's requirement for the budget.
Prop 25 passed, but it doesn't lower the 2/3rds requirement.
http://www.voterguide.sos.ca.gov/propositions/25/
Just a majority for budget due to Prop 25 passing, even that will be tough going by some past votes. But Prop 26 passed which makes trying to disguise taxes as "fees" or "assessments" etc subject to 2/3 vote now.
Prop 23 also failed victim of a progressive disinformation campaign but upshot is it would have delayed AB32 (Cali's own Cap & Trade) an economy killer, 144 businesses have left this year anticipating it. That pace should quicken now.
Best bang for buck, enforce borders, stop sanctuary cities, start mandatory e-verify. Cali spends $21.8B a year on illegals
http://www.examiner.com/page-one-in-salt-lake-city/study-shows-illegal-immigrants-cost-u-s-113-billion-a-year-52-billion-to-educate-their-children
No. the super majority requirement to raise taxes is still in effect. What changed is the state legislature's ability to pass a budget...now it only requires a simple majority. California voters will pay for their stupidity.
"California voters will pay for their stupidity."
Indeed. We have spent the last 40 years paying for the stupidity of the majority:
http://www.investors.com/NewsAndAnalysis/PhotoPopup.aspx?id=552718
Calif situation is horrible, but SEIU, the largest public employee union in California did just cut pay by 5% and contributes more to pensions and has retirement age increasing. Not enough, but a start.
http://www.contracostatimes.com/ci_16565838?IADID=Search-www.contracosta...
You wouldn't know it though. My co-worker, just got a job with the county fire dept making about 2x what I make, to do work that is far less technical, and complex, and less productive do to union pace making. He will be SEIU.
The unions have already budged, several times. Eventually they will strike, not that it will do them much good.
Will a bailout need to go thru Congress or can it magically appear?
It would never survive a passage thru congress, therefore it won't even be attempted.
I suspect the Fed can do exactly as they please. Could start buying CA debt tomorrow. I wonder how much CA debt is actually owned by foreign sovereigns already?
Otherwise CA can write themselves a check by holding payments on bonds and issuing IOUs. That would hammer future bond offerings, but WTF it's down to funding each quarter as they arrive, forget about decades.
That's my thought, the Fed will be the one that bails out the states. If they are willing to toss 600 billion around what's what another 100 billion for the states? Passing in congress would be a disaster (even if it could be done which is doubtful), would lead to epic moral hazard.
California is too big to go down alone. If the federal government plays hard ball (which it might, but I wouldn't bet on it), then California will eventually default and that will send a panic through the muni bond market. It'll effect almost every state out there.
Wonder if Arnie/Moonbeam will have a hot-line to Zimbabwe Ben
"Ben I got a hot load of bad bonds I need to issue! Get to the choppa!"
Also who the hell are they kidding about future Californians? This bomb goes off this gen. Unless there is true wizardry there is no way to keep this pig flying another 20 years.
Yeah, that's my thought - there will just be some stealth QE-whatever priced-in for Cali, Ill-noise, and a whole host of state-PIIGS.
BTW, I found this quote hillariously ironic...
One major reason to stop passing the state’s problems to future Californians is that the state’s long-term fiscal liabilities—for infrastructure, retirement, and budgetary borrowing—are already huge.
... given that Cali just re-elected as Governor the guy principally responsible for setting the retirement, budgetary and borrowing time-bombs in place. Awesome. Sure, I doubt What's-Her-Name would have been any better, but seriously.
The House of Reps will not bailout CA...period. Don't forget the House is basically the purse strings of the country. I see a crisis in the next two years.
Executive order. Debt swaps with the Fed. IMF. Congress is as irrelevant as always.
National security will justify the executive order, of course. CA is the first line of defense against . . . well, whatever it was.
Intelligence
Don't forget the IRS's new Bankrupt America Bonds! Eventually, every state and local government will be in hock to the IRS. I'm guessing that's when Dodd's Sustainable Communities Act of 2009 will hit the floor, nationalizing every aspect of local government, including remaking local zoning laws into regional ones. They are also the driver for the next real estate market, as they will be the ones GRANTING mortgages to those in politically connected groups. Already cities are creating federally funded "Office of Sustainability," as well as "Office of Neighborhood Services" (not sure if this one has any grant money). So far, our city just has a low-paid director in the sustainability office, but the ONS is made-up of people from all departments, who share info in order to skirt the law (like the old trick of fire inspections when the police cannot obtain warrants).
They didn't have implied backing for Fanron either, and the Fed isn't allowed to by Fanron bonds. But somehow it is getting done anyway. A bailout, whether overt, or back door Bennie kind, makes sense to further consolidate power and destroy the remnants of the Republic.
They should have passed Prop 19, and used the newfound GDP to start plugging holes
Who junked the doobie? Stand be counted! No naked junking! Rebutt FFS.
I didn't junk him.....maybe some old temperance ladies got him. Those bitchez are everywhere.
I hate to say it, but California should've passed that bill to make MJ legal, and taxed. Some estimates put the revenue from it at $1B per year in income. Which is not a "token" amount.
I'm sure the bill will be looking better next year. Dont' bogart that bill, dudes.
Its like the pushback from vegas towards the riverboats... Tons of cash being made with things as is.
Would have cut the price in half once it flooded the other states ....
Volume would have filled the gap down in price?
The California MJ industry is united against prohibition, but they were not united on Prop 19. Many growers and dispensaries feared Big Tobacco would move in. Phillip Morris has already bought 400 acres of land in Northern CA, even though they have stated they are not interested in the MJ business (yeah, right). The folks who voted no (aside from the social conservatives and seniors) voted against corporatism, IMO. And yes, we're all hoping the ballot measure will look better next time around!
Agreed Aces & Eights. I like it much, much better without Monsanto and PM enwrapping their tentacles around it.
default bitchez.. Mr. Moonbeam would you please turn to Chapter 9
Yet they keep voting in Boxer and Pelosi. I'm surprised all of those super rich entertainment types who want everyone to go green and pay more taxes don't just hand over all of their property and cash to help out. I'm sure Sheryl Crow saves a mountain of cash by only using one square of toilet paper and wants everyone else to do the same. I wonder when they will come together and put out an album and a telethon in order to "save cali"
"We're The World (China For Cali)"
There comes a time when we hear a certain call
When the world must come together as one
There are states in debt
and it's time to lend
There greatest gift of all the credit
We can't go on pretending day by day
That someone, somewhere will soon make a change
We are all a part of Ben's great big family
And the truth, you know,
Debt is all we need
[Chorus:]
We are the world, we are in the crasy world of dollar denominated debt
We are the ones who make the credit today
So let's start borrowing
There's a choice we're making
We're in debt for the rest of our lives
it's true we'll make a better day
Just you and me
WRT Cali's current situation, Tool's Aenima comes to mind:
http://www.lyricsmania.com/aenima_lyrics_tool.html
Cuz I'm praying for rain
And I'm praying for tidal waves
I wanna see the ground give way.
I wanna watch it all go down.
Mom please flush it all away.
I wanna watch it go right in and down.
I wanna watch it go right in.
Watch you flush it all away.
Time to bring it down again.
Don't just call me pessimist.
Try and read between the lines.
I can't imagine why you wouldn't
Welcome any change, my friend
+1
I'm rooting for the cartels to take over and annex Cali to Northern Mexico. It certainly would take a load off the rest of us.
I think you'd miss the 7th largest economy in the world. Not to mention that California gets 75 cents for every tax dollar it sends to Feds, unlike most of middle America which gets $1.15 for every dollar sent. But, now that California is borrowing daily for unemployment that ratio has likely changed. Still, be careful what you wish for.
They should be free to leave. If they can do better on their own great, but then I think any state should be able to opt out.
That always surprised me. The 7th largest economy in the world. Great. But the state government is insolvent and can not posibly pay any of its bills. It reminds me of the Lending Tree commercial.
http://www.youtube.com/watch?v=hn5EP9StlVA
"I"m in debt up to my eyeballs"
Or the "We get 75 cents of every dollar we send Washington"
Sure, if you don't count the 20% of state bonds that are federally insured.
And since Kalifornia is a net cost to the other states, has to purchase most of its power from out of state and many of the socialist ideas infect the rest of the nation, I don't think we would miss you too much. Time to cut the cord and let you guys grow up.
More than likely, Cali annexes Mexico. And they like it. We already support the place with remittances.
Those cartel boys would have Cali profitable in no time digging smuggling tunnels to NY, bitches.
Pewblik Werx Bitchez!
send the bill to brown and boxer and all the koolaid drinkers that voted for them
CC to Nancy Pelosi, and Maxine Waters also!
This together with peak oil/water means that Socal has no future.
Northern California on the other hand could still be a nice place.
With the amount of business and people leaving the State this number will look like a dwarf in a few years. The only people dumb enough to stay here will be the 50+ year olds that have the rest of their life on the entitlement train. It will be the land of retired union workers and ex-government employees mixed in with illegals. The best thing California could do is give the State back to Mexico to try and stick save the rest of America from the same demise.
There is no bullet to take. YOU CANNOT BALANCE MONETARY ACCOUNTS when the central banks policy is A HYPERINFLATIONARY one.
Get it? Probably not. It means no matter what, going for 'balanced budgets' WON'T Work.
But then again, we aren't printing hyperinflation because of entitlements, or infrastructure. It's because of the monetary structure, and guess what BAILOUTS, and right wing giveaways for war and tax cuts in the MIDST of bogus wars.
Fight the Obama-Rand Paul Fascist drive. After all, the compromise between them is what their SAME master has been pushing for the whole time.
Obama and Rand Paul...2 fascist peas in a corporate pod grown in the Queen of England's soil.
I think ZH is spot on in Harrisburg bankruptcy pro-bono was to start the wave, and they'll cash in later.
So come on california, put the bazooka to your head, you'll be fine, says the idiot fascist. This is the part of the Nazi school, oops Austrian school, that makes no sense. JMK or Austrian just two different paths to the same FASCISM. Enjoy.
Content: 1 point (maybe 2)
Style: Zero points
Please stop ranting and be more coherent. Oh, and will you let me in your bunker when the apocalypse arrives in 2011?
Ranting? It's not ranting. People who want to 'balance budgets' in an environment where it is impossible, are idiots.
Let's use a metaphor. People wanting balanced budgets in 2010 and beyond are the equivalent of people on the titanic taking a bucket and bailing out water. That DOES NOT MEAN BAILOUTS. Let the banksters bleed out onto the streets from their bad debts. But actual spending, on life and the continuity of it, is important. They want us to replace what we need to spend with their bailouts. We don't need social security it will bankrupt us. But we can give that much money in bailouts or everything fails.
Austerity and budget cutting for the sake of numbers on an monetary account just ain't going to work. Specifically because of, but not limited to, benny and the inkjets.
Style is subjective, and who really cares about it? Is it important if the bomb has a picture of a half naked lady on it? Or is it the fact that it's a bomb exploding a bigger point?
Bunker? C'mon, a bunker won't protect crap. We either fix it together or die together. There is NO OTHER OPTION.
We don't have much time, it is fixable, but not much longer. After that good luck to us, and our new forever dark age. Totally needless.
Obama: Unlike Tea Party, I Want to Cut Entitlementshttp://www.larouchepac.com/node/16392
The Legacy Of Friedrich Von Hayek: Fascism Didn't Die With Hitlerhttp://www.larouchepac.com/node/16404
LaRouche: We Are on the Attack; Rand Paul Is the Targethttp://www.larouchepac.com/node/16400
Cat Food Commission Meeting Secretly to Implement Obama-Rand Paul Fascismhttp://www.larouchepac.com/node/16397
Rand Paul's Feudal Agendahttp://www.larouchepac.com/node/16388
Racist Rand Paul Adopts Obama's Moustachehttp://www.larouchepac.com/node/16387
Obama, the Post-Election Republican, Calls for "Difficult Sacrifices"http://www.larouchepac.com/node/16379
LaRouche: No Compromises With Rand Paul! Get Obama Out Now!
http://www.larouchepac.com/node/16378
Also some great insights into Obama Admin here, especially his Nero condition (i.e. mental)http://newsflavor.com/
Rand Paul - Only a patriot to the SUCKERS!!!
Can you explain further how Rand Paul is fascist? Do you have an alternative economic plan in mind besides ending the Fed and returning the country to sound money?
Yes our American Credit System. Ending the fed, yes. I've said many times ending the fed is something I totally agree with on Paul. But Paul uses that one trick pony to convince everyone that the rest of his ideas are on the same level. They aren't.
He's a one trick pony. The rest that's up his sleeve is just fascism.
the mustache obv. what a bunch of garbage
....and launches another missile...
Almost makes me happy that I live in NJ.
NJ is in bad shape too. As is NY, AZ, and IL, among others. People make fun of CA, but its just the tip of the iceberg.
there is no reason whatsoever to be happy about living in NJ. not if they had a $3T Au bullion surplus.
Who in their right mine would want to be Governor of this gigantic mess??
Jerry Brown has to have a few screws loose.
It seems that California has been kicking the proverbial can down the road for nearly two decades. Now they are in a dead end alley at the bottom of a steep hill.
.
This is all Waddell & Reed's fault.
Muni ETFs destroyed again today
EIM
BYM
VKI
NUV
Not a problem for newly elected Governor Moon Beam.. tax the bejeesus out of anyone who makes $100k or more. Problem solved ! Ask and ye shall recieve !
Californians voted Democratic in the election. No way could a person like NJ Governor Christie go in there and slash away at the waste. Not sure what more of a wake up call can be given to the people of California.
Prop 22 passed in California, prohibiting the taking or borrowing of funds from local governments and agencies. Last year the State took $5.5 billion from those sources -- this year they get nada.
Last year, some local agencies in CA had to issue bonds to raise money to give to the State. Forcing local governments and agencies to capitalize the States current operating deficit-- Obscene. And if it hadn't been outlawed they'd be doing it again.
Why aren't we paying more attention to the fact that California residents lose in the re-distribution of Federalism. No one here ever mentions that they send way more tax $ to DC than they get back.
For sure, they are poorly governed and bloated. For damn sure, they are subsidizing Mississippi and other poor, small states.
One of the reasons they are going broke is the endless Federal mandates for Entitlements paid at the State level.
This Federalist systems is beyond broken.
This is why sometimes reading ZH's comment section is worth the time.
You mentioned everything I was going to say, Prop 22, 23, 25, 26, AB32, illegal aliens entitlement spending equalling the entire yearly deficit, SEIU and Prison guard unions, Municipal bankruptcies in SoCal, Inland Empire, and Sac-Modesto corridor coming like a tidal wave, Gov Moonbeam, the entire state (pending the AG vote count) going to Dems.
California with a clear conscious and of sound mind freely elected to destroy their state.
THey MUST be held accountable.
If the Fed , US Treasury, US Legislative or US Supreme COurt interfere with the free will of the people, the Union of these United States must be dissolved.
I will not pay for the pension benefits of school teachers who make more in retirement than currently working teachers in my own state with our own teacher pension funding crisis.
Sorry, I have zero(-hedged) sympathy for the self-destruction of the Empire.
$25 billion is all of 2.5% of America's annual military expenditure (Pentagon, nukes, veterans benefits, the wars, homeland insecurity, everything.) A trillion dollars a year, pissed away on bull$%#, financed with money borrowed from the BRICs.
Sow the dragon's teeth, end up being owned by Dragon, Inc.
Hey they voted for Jerry Brown and did they turn any elected office out of office... NO... They kept everyone... EVERYONE!!
So, raise taxes until the problem is solved... If it takes a 100% tax rate so be it. Dumb shits...
Books
Governor Moonbeam is in command now. Look for a massive tax increase to "cover" it and snuff the last bit of life out of California business.
Maybe California can use the Barbara Boxer balanced budget method - just write a bad check. (For those with short memories, Boxer wrote more than 300 hot checks off the house's bank before it was dissolved.)
Apparently it takes a 2/3rds majority to raise taxes in Cali.. do the Dems have a 2/3rds majority in both state houses ? Anyone ?
CA voters passed prop 25 which guts the 2/3rd requirement. If you live in CA, bend over.
California voted for all their Bell, CA-type leaders.
They just voted for carbon taxes over jobs. Fine.
Just double Californian taxes now to pay for it all.
They can forget about coming to the Federal government for a bailout.
They can forget about making all the non-pixilated people in the country pay for their lunacy.
.
Couldn't the Federal Reserve buy Cali's debt and keep the ponzi rolling? Because I would think a Cali implosion would upset the applecart. What could stop the Federal Reserve from printing the dollars to buy the debt? They are an 'independent', private bank.
Better yet, the Fed could buy their debt and pay remit the interest payments back to the state like they do to the Treasury when they buy T-bills and bonds. That way, there would be no limit on the amount they borrow because it's free money!!!
If California is bankrupt, the responsible thing to do is for everyone to leave the state. There are 49 other states they can go to.
Vermont may be the best choice, for they don't have to balance their budget.
Don Levit
I'll just hang back and turn out the lights. I think I could balance the budget if it's just me and my family. I promise: I won't ask for any bailouts...or any federal money for that matter. Kay?
Half of this state is illegal immigrants or decendants thereof. A large percentage of these work cash jobs under the table.
Before they legalize anything that will demotivate even more productive people, they need to enforce E-verify and labor laws. And a friendly visit from the tax collector to the huge proliferation of "cash only' businesses might reveal some hidden revenue.
For 25 years Californians have been asked to vote for bond issues for more school funding. The appeal is the same every year. The idiot voters vote for these loans against the future. Now we have dumber students than ever, the fattest bureaucrats in the world, and unpayable debt obligations. The voters got what they voted for.
Too often, discussions of California’s budget situation are framed in extreme terms: the state about to go “bankrupt,” debt-service payments hypothetically poised to default, the state government on the verge of collapse. None of these scenarios is remotely likely to occur. History tells us that the state can find ways to temporarily “patch over” its annual budget problems in ways that prove sufficiently palatable to policy makers of both major parties.
Hey, as long as we make the "policy makers" happy, all is OK! Cali has a huge problem, and this is what they write about it?
Look at the solutions out of Bam's deficit reduction task force. Increase taxes on homeowners by phasing out the interest deduction and reduce SS bennies. Neither has a chance of being passed. What makes us think the populace is willing to accept any pain, especially after Wall Street got their freebies?
Default already, get it over with. sschu
EURO daily chart bearish warnings continue.
US Dollar daily chart bullish warnings continue.
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