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
Showing posts with label budget. Show all posts
Showing posts with label budget. Show all posts
Monday, January 11, 2010
Sunday, December 20, 2009
California Crisis Deepens... Part 4
OK! So I first thought there would only be 3 parts to this series. However, things keep getting worse on a daily basis. Who knows? There might even be a Part 5 and 6! Let's see how things develop.
In any case, California's deterioration continues. According to a very recent article in the L.A. Times, Bill Watkins, who heads the Center for Economic Research and Forecasting at Califonia Lutheran University, released a recent report. He urges that the State begin emergency discussions with both the Obama administration and the Federal Reserve in the increasingly likely event of a state default. Had he read "Marko's Take" he would have realized that these discussions are already taking place!
Watkins believes that the odds now FAVOR a default. California Treasurer Bill Lockyear sharply took exception with Mr. Watkins' assessment, accusing him of "irresponsible fear-mongering". It makes one wonder whether Mr. Lockyear has spoken to Governor Schwarzenegger who has been saying the same thing!
The crux of the problem is centered in the budget. Republicans are adamant in their refusal to increase taxes, while Democrats are equally determined in THEIR refusal of further budget cuts.
The only reason that California is NOT in default is that some banks still honor the IOUs already issued on 4 separate occasions. If they should refuse to honor those IOUs AND the Obama Administration refuses to provide emergency bailout funds, then the State will have no choice.
As I've mentioned previously in the "California Crisis Deepens" series, the State is SO important, not only to the United States, but the world. I believe the Obama admistration will have NO choice but to provide emergency bailout funds. Therefore, I disagree with Mr. Watkins' conclusions entirely.
California has come up with a rather interesting partial solution to the budget stalemate which will appear on the 2010 ballot: the legalization of growing marijuana! In so doing, the pot industry, the largest agricultural sector in the Golden State, will be subject to taxation at a variety of levels and should be able to raise revenues substantially. Recent polls show this initiative is very likely to pass.
I hope the new initiative has left this troubling piece on a "high" note!
So, why don't you give me your "Take" in the comments section below?
Marko's Take
In any case, California's deterioration continues. According to a very recent article in the L.A. Times, Bill Watkins, who heads the Center for Economic Research and Forecasting at Califonia Lutheran University, released a recent report. He urges that the State begin emergency discussions with both the Obama administration and the Federal Reserve in the increasingly likely event of a state default. Had he read "Marko's Take" he would have realized that these discussions are already taking place!
Watkins believes that the odds now FAVOR a default. California Treasurer Bill Lockyear sharply took exception with Mr. Watkins' assessment, accusing him of "irresponsible fear-mongering". It makes one wonder whether Mr. Lockyear has spoken to Governor Schwarzenegger who has been saying the same thing!
The crux of the problem is centered in the budget. Republicans are adamant in their refusal to increase taxes, while Democrats are equally determined in THEIR refusal of further budget cuts.
The only reason that California is NOT in default is that some banks still honor the IOUs already issued on 4 separate occasions. If they should refuse to honor those IOUs AND the Obama Administration refuses to provide emergency bailout funds, then the State will have no choice.
As I've mentioned previously in the "California Crisis Deepens" series, the State is SO important, not only to the United States, but the world. I believe the Obama admistration will have NO choice but to provide emergency bailout funds. Therefore, I disagree with Mr. Watkins' conclusions entirely.
California has come up with a rather interesting partial solution to the budget stalemate which will appear on the 2010 ballot: the legalization of growing marijuana! In so doing, the pot industry, the largest agricultural sector in the Golden State, will be subject to taxation at a variety of levels and should be able to raise revenues substantially. Recent polls show this initiative is very likely to pass.
I hope the new initiative has left this troubling piece on a "high" note!
So, why don't you give me your "Take" in the comments section below?
Marko's Take
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