Saturday, October 4, 2008

Californian challenge

Not surprised, Arnold had "hinted" it when he tried to cut state employee wages to the federal minimum. People there remain oblivious of the need to honker down, buckle up, and start saving instead of consuming needless things.

LOS ANGELES — With the credit crisis cutting off access to short-term financing, California officials said the state may be forced to ask the United States government to lend it $7 billion, warning that the state could run out of money in a few weeks without it.

Asked what would happen if the markets or the government did not come through, Mr. Schwarzenegger replied, “This is no such thing in my vocabulary as ‘what if not.’ We will."

Another columnist provided a main street perspective of the Californian situation (via an alternative media outlet).

California going broke - California is broke, but most Californians don’t know it. College students know it because their tuitions have gone up. Teachers received layoff notices in May, but many of those notices were rescinded when teachers agreed to benefit cuts to save fellow teachers jobs.

However, the majority of Californians are clueless that their state is broke.

Reality arrived recently for everyone who owns an operable car or pickup. The governor’s finance director just tripled registration fees for every registered vehicle in this state. If you paid $150 to register your car last year, the next notice will be for $450. This was no arbitrary decision, but a statutory trigger in a law passed during the last, Republican administration that says basically when the state cannot pay its bills, license fees triple.

California is looking at a budget deficit of somewhere between $35 billion and $38 billion, roughly one third of its annual budget. Anyway it’s sliced, the fifth or sixth largest economy in the world, depending on who is doing the boasting, is broke.

What does that mean? For many state administrators, it means no paycheck until a budget is approved. For many union state workers, it means minimum wage paychecks until the budget is passed.

For University of California Cooperative Extension farm advisors and specialists, it likely means you are out of a job or you may be working out of your pickup or a rented trailer in a county equipment yard.

Layoff notices are about to go out to 400 California Highway Patrolmen.

A new era is beginning in county and city governments because their pipeline of state money is dry. It is called outsourcing. This is not simply contracting with someone to clean buildings or service city cars. It means city and county-owned facilities like convention centers and exhibit halls will be run by contractors and not employees paid by tax dollars. Cities cannot afford to operate their own properties and are turning them over to outsiders in hopes of cutting expenses and hopefully generate revenue to meet budget shortfalls.

California is facing a fiscal crisis only a very few really understand. Can California be broke?

Oh yes it can and because of it there is an even chance the governor of one of the largest economies in the world is facing recall. Gray Davis is no corrupt, local politician. He a savvy, cat-like politician who seems to land on his feet more times than a cat thrown out a first floor window. He is the governor of the largest state in the nation and he may be kicked out of office mid-term. It is not all because of the current budget deficit. The energy crisis of two years ago still has people seething.

Recall proponents already have enough signatures (about 900,000) to recall Gov. Gray Davis. They want many more signatures to guarantee that the recall goes on to the ballot.

The recall seems more certain than the prospect of getting a state budget any time soon. Hang on because you are about to see a state government for more than 32 million citizens go broke. Recalling the governor will not put $35 billion in the bank. It will only add to the financial chaos that seems to have no easy solutions.


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