Thread: California Becomes Fiscal Basket Case

California Becomes Fiscal Basket Case

Tuesday, October 6, 2009 7:52 PM

By: John Rossomando

Although California once conjured up visions of a warm paradise with limitless possibilities, it now fosters images of widespread fiscal disaster and economic dead ends.

That tarnishing of the Golden State's image could have been avoided if officials had eschewed out-of-control spending and high taxation, observers say.

From its 12 percent unemployment rate ? the highest in 70 years ? and housing collapse to the terrible fiscal condition of its state government, the state stands as a symbol of what not to do, says Grover Norquist, president of Americans for Tax Reform.

Decades of fiscal mismanagement are forcing the state to slash programs to balance its budget. Indeed, the government found itself so deeply in debt at the beginning of the summer that it began issuing IOU's to state workers instead of wages.

It had to cut its Healthy Families program, which provides healthcare to low-income children, despite increasing demands for services.

The state’s education system ranks 47th out of the 50 states, and its bonds are junk.

Under the budget deal Gov. Arnold Schwartzenegger and the Democratic-controlled Legislature cut this summer to close California’s $26.3 billion budget deficit, billions were slashed from the education budget, and 60,000 state employees were slated to be sacked.

Some teachers even resorted to a hunger strike in response.

All of this has dealt a huge blow to Schwartzenegger’s popularity.

Crisis Could Have Been Averted,

“Sadly, this story could have had a happy ending,â€

[quote]These new people coming into the state tend to be low-income and not paying a lot of tax increases.â€