California's Crisis Deepens... Part 6

California's fiscal situation contiues to get more bleak.  The budget is projected to have a deficit of $20 billion, despite a total of $60 billion in program cuts, tax hikes and Federal bailout funds enacted last year!

Lawmakers are stuck in a stalemate:   Republicans, such as Governor Arnold Schwarzenegger read Bush 1's lips: NO NEW TAXES!   Democrats are being equally obstinate by refusing to sign any spending cuts.  This suggests that the budget will once again be forced to extend its legal due date and IOUs will need to be issued AGAIN!

Democrats control the Legislature and are dismissive of the proposed budget.  In additon, they view the proposal as nothing more than a re-tread of last year's budget, which was rejected.

Democrats do applaud the $6.9 billion owed to the State as a result of various mandates.

The Governor has been particularly sharp in his criticism of Democrats, declaring in his usually upbeat State-of-the-State address,  that the Federal Government is partly to blame.  He also appeared on NBCs "Meet The Press"  and said that the Democratic legislature was also at fault.

Schwarzenegger particularly irritated Democrats by taking umbrage with the possible Federal medical overhaul known as "Obamacare", which would pile billions in spending onto the state.  Yet the Governor pushed his own version of healthcare reform only 3 years ago!

Schwarzenegger DOES have some valid points.  The Federal Government has failed to protect the state's borders, which cost California nearly $1 billion.

If the $6.9 billion does not materialize,  The Governor will aim to eliminate the State's welfare program called CalWorks.  He will also terminate the healthy families healthcare program for poor kids.  He'd also remove the program called In-House-Services, which provides care for the elderly and disabled.  Furthermore, the plan would include an additional 5% reduction in wages on top of the 10% cut enacted already! 

California's budget negotiations will prove quite messy.  But the election of 2010 will undoubtedly shake things up and hopefully end the stalemate.

Thanks for reading!  Tomorrow, we re-visit Gold.

Marko's Take