Thread: Could California budget gap get wider?

Could California budget gap get wider?

Gov. Arnold Schwarzenegger and state legislators are searching – so far, in vain – for a solution to the whopping budget deficit that can pass political muster inside and outside the Capitol.

Lurking in the shadows, however, is fear that California's troubled economy could become even worse than current forecasts indicate and thus add billions more dollars to the budget gap.

The sharp spike in unemployment to 6.8 percent reported last week, coupled with dark numbers on other economic indicators, intensifies that fear. But leading economists disagree on whether California is seeing a bottom to its economic woes, whose proximate cause is the residential real estate collapse, or the worst is yet to come.

UCLA's Anderson Forecast last week adopted a cautiously optimistic tone, with leading economist Jerry Nickelsburg concluding that, as the Anderson summary put it, "California's service sectors, the state's traditional economic engines of growth, are still sidestepping the turbulence in the financial, construction and real estate sectors, keeping California's employment growth positive."

Nickelsburg also noted that exports and agriculture, which recently had been somewhat stagnant, "are now providing enough additional positive data to also offset the sharp declines in home construction and real estate." But Anderson also "predicts a very weak economy throughout 2008."

UCLA's macro view is similar to that of Schwarzenegger's latest budget. But Nickelsburg's colleagues at UC Santa Barbara's Economic Forecast Project have a more sour take. Project director William Watkins and his staff unveiled a new forecast in Sacramento on Tuesday that sees California's recession lasting well into 2009, at least.

"Overall, California's economy looks pretty weak," the UC Santa Barbara survey declares. "Much of the state is losing jobs. The real estate market is in meltdown. Retail sales are collapsing. Tourism has been surprisingly weak. The public sector will decline. The state has no budget, and policy makers have no idea how to create one. We see little reason to be optimistic about California's economy."

Watkins noted that the state is seeing "almost zero" job growth even though the pool of job-seekers has expanded sharply, in part, he believes, because stressed-out families seek more income to offset rising housing, fuel and food costs.

The housing meltdown is having both direct negative impacts – fewer construction jobs, declining purchases of building materials, furniture, and so on – and indirect ones. Even Californians whose incomes have remained steady must face rising prices and, if they're homeowners, are seeing personal wealth in the form of home equity decline, so are cutting consumer purchases.

The economic malaise affects income, sales and property taxes – the latter because of construction slowdowns and declines in taxable values due to market declines – and thus exacerbates the budget deficit.

Roughly speaking, the state has a "structural deficit" – a semipermanent imbalance between income and outgo – of around $8 billion a year. The economic downturn has doubled it. The official estimate is that the 2008-09 fiscal year budget has a $15.2 billion gap to be closed. But if the economy continues to slide, it will grow larger.

So far, Democrats have proposed unspecified new taxes in varying amounts ranging up to $11.5 billion, which Republicans flatly reject. Schwarzenegger proposes to borrow against the state lottery to cover about a third of the deficit and cut spending, tap special funds and use accounting gimmicks to cover the remainder without broad new taxes.

Whether middle ground can be found is still very problematic, and the possibility that it could get worse compounds the uncertainty.

http://www.sacbee.com/111/story/1037445.html

At the current rate of 1,600 new residents per day, yes the gap could and will get wider and wider until the madness ceases and immigration controls are instituted.

"Overall, California's economy looks pretty weak," the UC Santa Barbara survey declares. "Much of the state is losing jobs. The real estate market is in meltdown. Retail sales are collapsing. Tourism has been surprisingly weak. The public sector will decline. The state has no budget, and policy makers have no idea how to create one. We see little reason to be optimistic about California's economy."

They haven't for decades. LOL I see little to no reason to be optimistic about California at all. WHY WOULD I WANT TO VISIT CALIFORNIA with MS-13 gangs running wild, illegal aliens garbage filling the streets, Mayors in the two largest cities unwilling to safe guard their citizens. I wouldn't take a vacation in California unless I was coming to pick up a 10 million dollar check. I'd hire a private jet fly in, go to a limo, pick up the check, get back in the limo, and fly back out. ( I'd charge the trip with proof of the check coming.) All the while holding my nose.

It's funny about 14 years ago I joined a photography workshop for 10 ten days in Wyoming through the Audubon Society. As I was flying back into L.A. I felt then like I was flying back into a garbage can. That was 14 years ago. You can imagine how bad it is now.

Moving to Other Topics

Originally Posted by Buzzm1

"Overall, California's economy looks pretty weak,"

Yep, weak just like our political leaders.

Gov. Arnold Schwarzenegger and state legislators are searching – so far, in vain – for a solution to the whopping budget deficit that can pass political muster inside and outside the Capitol.

They haven't been searching very hard because everyone knows what the answer is but them apparently.

It's the illegals stupid!

Roughly speaking, the state has a "structural deficit" – a semipermanent imbalance between income and outgo – of around $8 billion a year.

That's what happens when you have illegal aliens taking more than they are putting in to the economy DUH!

Education is California's single largest public expenditure and commands 42% of that state’s $150 BILLION budget. The State of California's Legislative Analyst's Office reports that of the state's 6.4 million K through 12 public school students, one out of four is not fluent in English. Of that number, 85% are Spanish speaking (illegal immigrants). Additionally, one out of nine of these (illegal immigrant) students require special education programs.

These children of Spanish speaking foreign (illegal) immigrants increase California's K-12 enrollment by 21.3%, nearly 1.4 million (illegal immigrant) students. At $11,584 each, which is the state’s 2007-2008 budgeted allocation per student, the cost of educating these (illegal alien) students is $15.8 BILLION. Add in the $1.3 BILLION for special programs to accommodate non-English speaking (illegal alien) students, and the cost increases to $17.1 BILLION. The state's current budget deficit is projected to be $16 BILLION.

http://www.capsweb.org/content.php?id=301&menu_id=8

Incarceration of illegal immigrants, in California State Prisons, costs 1.4 Billion dollars a year.

A bill was submitted, in the California Legislature, to have 17,000 incarcerated illegal immigrants deported to reduce overcrowding (as ordered by a judge), and reduce costs, but the bill was killed in committee, by, you guessed it, the Hispanic Caucus.

It's us against them.

Stand up Americans.

I lived in South America for two years many years ago, and I imagine that LA has become like the other large cities created by the failed, gold-driven Spanish Empire - filled with the few very rich who live as far as possible from the majority poor, and pay as few taxes to maintain their own societies as possiible. I have read that the heavily polluted air in most South American cities is in itself considered a health hazard to their residents by the World Health Organization. Latin Americans: often wonderful people forever tragically crippled by their "legacy" of corrupt governments! This does not mean that we are required to "import" this condition, or that doing so will in any way alleviate conditions for the poor, who comprise the vast majority of people in Latin America. Reform needs to come to the financially corrupt governments of these countries themselves!