Thread: California will run out of money in February

California will run out of money in February

By Guy Adams in Los Angeles
Wednesday, 24 December 2008

The State of California will run out of money within two months, forcing Governor Arnold Schwarzenegger to start settling bills and paying employees by issuing "IOU" notes, his chief financial officer has revealed.

John Chiang, the state controller, admitted on Monday that a spiralling budget crisis, which has left California spending billions of dollars more each month than it can raise in taxes, will see his coffers run dry some time in mid-February.

At present, Mr Schwarzenegger's administration is spending $11bn a year more than its total income. The figure is now rising exponentially and has been forecast to hit $42bn (£29bn) by 2010.

Unless taxes can be raised, or spending reined in, millions of public-sector employees and private contractors face having their salaries paid in "registered warrants," a piece of paper which the Governor will promise to exchange for cash as soon as he is able.

The effective bankruptcy of an entire state is unprecedented in American history, even during the Great Depression. Yet despite California's standing as one of the most prosperous regions of the wealthiest nation on earth, its Governor seems powerless to stave off disaster.

So-called "direct democracy," through which small interest groups can enact laws by making them the subject of an electoral "proposition" or ballot measure that attracts more than 50 per cent of the vote, has severely limited his ability to manage finances.

Property taxes, the mainstay of any state's income, have been frozen for many homeowners since a proposition was passed in the late 1970s. A separate measure, introduced in the 1980s, means that income taxes cannot be raised without the agreement of two-thirds of the state's lawmakers.

Meanwhile, a raft of other ballot measures control spending, meaning that only 25 per cent of California's spending is considered "discretionary". The rest has been "earmarked" for a particular cause or project.

The result has been political gridlock, with the minority of Republicans at the state assembly in Sacramento able to block tax rises, while the majority of Democrats refuse to countenance any cuts in spending.

Mr Schwarzenegger, who declared a "fiscal emergency" earlier this month, has pledged to hold round-the-clock negotiations to find a deal between Democrats and Republicans in his legislature in time for Christmas.

However, public-sector unions yesterday pledged to block his plan to force state employees to have two extra days off a month, saving $1.5bn a year.

http://www.independent.co.uk/news/world ... 10078.html

Perhaps they wouldn't be in this situation in California if it weren't a sanctuary state. Anyone have the figure for cost of illegals in California? I understand that as Mexicans move in, citizens are leaving the state, probably tired of footing the bills.

California needs to deport all the illegal aliens who have been mooching off the state for years. No more freebies. NO BAILOUTS.

Whenever I contact the governator's office the aid who answers the phone always denies the negative fiscal impact illegal's have on our state. I just don't know what else to do. I've sent letters and called to no avail and it's sooooo frustrating! Everyone else around me who lives here is in denial too!!!

Property taxes, the mainstay of any state's income, have been frozen for many homeowners since a proposition was passed in the late 1970s.

This is not true, property taxes can go up 1% a year, plus cities and counties can add to the property tax rate via ballot measures. In my city the property tax rate is 1.3%, with 1% going to the state and the other 0.3% going to the city and county. In other cities the rate is 1.5% or higher. Also our sales tax is 8%, other cities are higher. Then we have a high income tax.

As others have mentioned the problem is all the freeloader illegals who use at least $15,000 a year each in services but pay almost no taxes.

Originally Posted by alexcastro

Whenever I contact the governator's office the aid who answers the phone always denies the negative fiscal impact illegal's have on our state. I just don't know what else to do. I've sent letters and called to no avail and it's sooooo frustrating! Everyone else around me who lives here is in denial too!!!

Do like me, reduce your tax liability as much as possible to help bankrupt the state even faster, it is the only thing that might penetrate their thick skulls.

The unions have taken over the state government. Arnold tried to do something about the budget process early in his administration but the unions spent $150 million to defeat the propositions he put on the ballot. Since then Arnold has done almost nothing about this problem. The result is the state is insolvent, it is not bankrupt. It has plenty of assets and can cut spending or raise taxes etc. to fix the problem. States can not really go bankrupt.

Originally Posted by Justthatguy

The result is the state is insolvent, it is not bankrupt. It has plenty of assets and can cut spending or raise taxes etc. to fix the problem.

The problem is raising taxes does not work, the higher taxes go the more people figure out ways to get around them or move out of the state, so tax increases do not bring in more revenues. Increasing income or cutting spending is the only way to balance our budget.

That is why I left California.....

Justthatguy said:

The unions have taken over the state government. Arnold tried to do something about the budget process early in his administration but the unions spent $150 million to defeat the propositions he put on the ballot. Since then Arnold has done almost nothing about this problem.

Very true. And from what I've heard the state actually brought in more revenue last year! What do we have to show for it? Have any Californians noticed? No! The unions are running the show and benefits for illegals are bleeding us dry. Little true representation for the average middle American citizen in this state (unless you work for a union or the government).