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Arnold: state deficit balloons to $26.3 billion
July 1st, 2009, 1:36 pm · 39 Comments · posted by BRIAN JOSEPH, Sacramento Correspondent
Gov. Arnold Schwarzenegger had some bad news and harsh words for the State Legislature this morning after lawmakers blew past the June 30 deadline for fixing California’s budget deficit.
The bad news: thanks to the Legislature’s inability to capture some education cuts by yesterday, the end of the 2008-09 fiscal year, the deficit has been raised by $2 billion. The state now faces a $26.3 billion deficit with State Controller John Chiang poised to begin issuing IOUs tomorrow.
Schwarzenegger squarely blamed this “sad story” on the Legislature, saying lawmakers refused to act quickly and then pandered to special interests when they did.
“The Legislature’s failure to act … sent a message to California voters and to the taxpayers that ‘We want you to make the sacrifices, but we in Sacramento don’t want to make any sacrifices whatsoever,’ ” the governor said.
Schwarzenegger’s response to the deepening fiscal crisis was three fold:
(1) He announced that beginning this month state workers will be forced to take an additional day off without pay, bringing their furlough days to three per month. For the past few months, state workers had been allowed to take their furlough days on a self-directed basis, meaning not all state workers were taking the same days off. Schwarzenegger scrapped that plan today and re-instituted furlough Fridays when state employees will all take off work on the same day, resulting in state government virutally shutting down. Furlough Fridays will begin next week on July 10, and after that occur on the first three Fridays of each month, through July 2010.
(2) Schwarzenegger declared a fiscal emergency under Proposition 58, which gives the Legislature 45 days to pass and send a bill to the governor to address the state’s fiscal woes.
(3) The governor declared he would not sign any legislation un-related to the budget (unless it was an absolute emergency) until after the deficit is fixed.
Meanwhile, State Senators are meeting in private to discuss what to do next while the Assembly is voting on the Democrats’ majority-vote budget plan, which the governor has repeatedly vowed to veto (and has already vetoed pieces of).
Check back with ocregister.com later for the full story.
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DENA BUNIS, Washington bureau chief, 202-628-6381 or dbunis@ocregister.com
BRIAN JOSEPH, Sacramento correspondent, 916-449-6046 or bjoseph@ocregister.com
JENNIFER MUIR, County government reporter, 714-796-7813 or jmuir@ocregister.com
JOEL WALSH, Washington bureau intern, 202-628-6381 or jwalsh@ocregister.com
MARTIN WISCKOL, Politics reporter, 714-285-2867 or mwisckol@ocregister.com twitter.com/MartinWisckol
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Democrats are bought and paid for by the unions. That’s the problem.
Its TIME for the people of this ONCE great state demand that these lawmakers stop screwing around with our livelyhood. Many families have suffered job losses, foreclosures and reduction in pay. Honestly we as a state we must stop balancing the budget on the back of the state workers and agencies but cut the array of freebies to everyone who steps foot here. The government support families here in this state are going to be living better than the working class; thank a Democrat!
the governor and CA legsilators are still refused to acknowledge that there a pink elephant in the room and keep feeding it. I wont feel sorry for them one bit. Keep on cutting on all benefits to legal citizens and keep on servicing to all illigals (without any question asked). Wonder when the Governor and legislators of CA will see the big pictures. CA is one of the richest states and we are in deep trouble because of ……
The democrats have to protect their core programs. Thats about 70% of state spending.
The Democrats must protect the citizens of California. That is 100% of their fiduciary duty to their constituents.
Thats a dream…
That is their job. If they can’t do it, they need not be re-elected.
Too bad the state can’t declare bankruptcy. Instead, we’ll just die a slow death. The unions don’t give a damn about our financial health so long as their programs are funded. Unfortunately, this attitude won’t help solve the problem but I’m also cheesed at Arnold because he should have stepped up to the plate like he’s currently doing years ago when he signed the previous budgets.
This is NOT Arnold’s fault. These lawmakers have absolutley no backbone when it comes to rejecting the demands of the lobbyists. These special interst groups have once again brought this powerhouse of a state to it’s collective knees! Outlaw all special interst groups NOW.
Each of us is our own special interest group.
They have a backbone. Problem is they are bought and paid for and they have no choice but to do what they are told. They could care less what the voters demand or what is best for the state. They are elected to protect unions and that is it.
COMPLETE LOSERS…ALL OF THEM!!!!!
Better hope that big ugly San Andres Fault stays calm….
can you imagine a large earthquake, and the problems that would throw this state into?
The Republicans in Sacramento are cowards, and so are their supporters… I have yet to hear anything from a Republican that would show how exactly the budget would be passed on cuts alone. All they say is “no taxes” but offer no alternatives, because they know how heartless it would make them seem. So rather than go on record, they dig their heels. ALL HAIL THE COURAGE OF THE GOP IN SACRAMENTO!!!
At least the Democrats have a backbone to insist on raising taxes in addition to cuts to pass the budget. Name me one Republican who has done the same. The last one I remember was Pete Wilson, and he was as conservative as they come… but he no longer is representative of Republicans in Sacramento today. For that, we all will pay a heavy price…
A political strategy that
Ace, you must not read much or look too hard for opposing opinion.Piling an increasing tax burden on the citizenry already weakened by a devastated economy doesn’t constitute “backbone”…it constitutes weakness and stupidity.
The real point is that our ENTIRE LEGISLATURE has failed the people who elected them as representatives. Both parties have failed to confront the core issues that have thrust this state into our present dire position. When the warning signals and bells sounded hey kept spending and expanding programs and bureaucracy to appease special interests.
If a 2/3 vote wasn’t required to pass tax increases the Democratic majority would have taxed us further into oblivion by now. They simply refuse to conceed that we can’t afford all of the programs and benefits they’ve doled out over the past 8 years. Like a drug addict, they will not seek a cure until they’ve hit rock bottom…we’re almost there.
The state does not have a revenue problem. It has a spending problem. We are already the highest taxed state in the nation and just got a $16 billion tax increase a couple months ago, is that not enough? Raising taxes is not the answer. The overspending problem is the cause and correcting it is the only way to fix the state fiscal mess.
Go ahead & stop funding all the illegals and this is what you will get I kid you not. When people cant put food on their table legal or Illegal massive violence will ensue. I’m all for the cuts but they need to get the National guard ready when it goes through.
http://yfrog.com/03image5122257j
The Democrats and a few Republicans (RINOS) have sucked the lifeblood from the taxpayers for years. The unions, collectively, have spurred their memberships to vote for these people, in order to get “their fair share”. Every election time, we get pledges of “no new taxes”, yet every year when a new budget is passed we are gaffed again, often with increased or new taxes masquerading as “fees”. These people are worse than criminals; they take your money under the guise of legislation, without using a mask and a gun!
Wake up! Come election time, remember their actions, or rather, their inaction, and sweep these dolts out of office.
thank you, sir, may i have another?! anybody who accepts california’s iou’s in exchange for anything is a fool. the state will default massively very soon. the recycle value of the paper is the only underlying value for the paper ca is printing. i all but guarantee that anyone holding an iou gets a fractional repayment, or nothing at all. at this point, your heroin addicted relatives are better credit risks than this state.
How much would the deficit be if everyone paid the same property tax percentage based on current home values rather than having many people pay property tax based on home values 30 yrs ago? Isn’t this really an easy and just solution?
It is if pricing the elderly, disabled and the poor out of their homes is the sort of justice you seek.
Prop 13 protects you even if you bought your house yesterday. Without it they would just keeping raising your property tax at a higher rate every year. Someday you actually might be old and be on a fixed income. It might be nice to be able to stay in your house instead of being forced to sell to pay taxes.
When taxpayers gave AIG $180 billion dollars the numbers really started to become meaningless to joe six pack. A $trillion$ sounds like play money. So when they start throwing around 9 digit numbers I don’t think it really has any meaning to anyone anymore. Nobody blinks an eye. $26.3 billion? So what? Even if the deficit went to $500 billion you wouldn’t get any different reaction from the public that you get today. It’s all relative. People won’t react until the grocery store shelves are empty and the credit card won’t work anymore. Only then will you see concern.
Thats the sad part, they will continue to vote the same politicians into office.
Right on ocobserver. America has been anesthetized by politicians spewing large numbers. To put the deficit in perspective, here are a few things $24.5 billion can buy:
1. a new Ford Focus for 1.57 million people (before taxes)
2. sponsor 63.8 million children for 1 year through World Vision
3. purchase 8.7 billion gallons of 87 octane gasoline in CA
4. buy $400/month of groceries for 5.1 million families for 1 year
5. hire Tom Hanks to make 765 movies ($32 million per film)
Choices are tough. A dollar has no morals. People impute their morals on every dollar they spend. Is the California State Legislature making wise and prudent decisions?
Lets keep in in thousands
With $24,500,000,000
98,000 people buying $250,000 houses.
a once great state ruined by liberals’ welfare programs and unions’ greed. government should only govern, not provide for it’s citizens or employees.
The voters said that government had to be reduced. So the state employee work force has been cut by 5%. State employees have been given a 20% salary decrease (4.9% for each furlough day and an additionally 5% across the board). But in reducing gov’t., has the legislature reduced their staff by 5%? Has the legislature directed a 20% salary reduction for their staff? Has the Governor done the same? They definitely don’t need all that staff if they can’t run the state as they were elected to do.
Who’s driving this train?? It’s not the state employee, it’s Sacramento!
We have been a welfare state for over 30 years. And it worked under several Governors. Pat Brown, Ronald Reagan, Pete Wilson, etc. It’s definitely time to clean up this mess, but it’s going to take the entire legislature, not just the Republicans, or just the Democrats. It’s time for the legislature to take a hard look at what it’s going to take to keep this state afloat. This used to be the greatest state in the nation. Now we rank at the bottom in education, we pay more for gas, utilities, taxes, and cost of living. California is no longer user friendly. And as a 56 years native, I feel that I can say that. I travel to places like Louisana, and they talk terrible the Ca. education system. When arer the CA citizens going to realize how bad we look to the rest of the country??
Come on Democrats … you can keep spending and spending … you can keep taxing (fees) and taxing (fess) … the “rich” working and taxpaying Californians. After all most Democratic constituents don’t work and they don’t pay taxes (most can not read or speak English) so keep spending and spending … taxing (fees) and taxing (fees) those “rich” Californians with DMV ‘fees’ – ’soda fees’ – ‘liquor fees’ - ‘cigarette fees’ – ‘excess property value fees’ - that a way to go Democrats!
No wonder businesses and taxpayers are fleeing the state to live elsewhere.
fees fees fees, big deal. The big ones are coming with the states environmental policies.. Now that will be fees.
Who’s going to buy a car with 8.75 sales tax and DMV taxes going up every year! If we don’t spend you don’t get revenue and we fall farther behind!
It is easy to balance the California budget. Any well-informed,
dedicated tax payer could do it in a single day. Our problem
is we have no such people up in Sacramento. There have not
been many responsible adults in Sacramento for a decade.
That might seem harsh, but pull up the Governor’s May Revise
and look a the table summarizing the last 10 years. For 10 years
we have hand “spending plans” that spent more than the state
took in. Not a single balanced budget in a decade. What makes
anybody think it will be possible for the same group to do anything
different this time?
The people in the Assembly, call them the “SpenDemiCans”, are
are not capable of reason, logic or restraint. The concept of
spending less on social programs or state worker pensions or
teacher perks is not part of their sphere of reality. You are more
likely to find a fish that can operate a spaceship than you are to
find a Democrat that wants to shrink government.
But this time around, government must shrink. Income tax was
down 39% in April and 34% for the first quarter. Overall
revenue is down somewhat more than 20%. Yeah, and taxes
were already raised SHARPLY earlier this year. You might
recall we had an election after the tax increase to increase taxes
even more. The election made it clear the public does not want
even more taxes. If the tax rate is raised, would the result be
more revenue? The state appears to be on the declining part
of the Laffer curve: raising rates will result in LESS revenue.
What about that old stand-by, borrowing? Not so likely this time
around. The state already has the lowest bond rating in the nation.
Banks are not so interested in lending the state money when there
is no plan (that is to say a real budget) to pay the money back.
Issuance of IOUs will drop the state’s credit rating down again,
into the Bs. This will force entities, like pension funds, that need
“investment grade” securities to sell off California bonds. This will
further depress the states credit rating to junk bond status.
Still the same people are in charge. Instead of working on this
_real_ problem for the past few months, the Assembly has spent
a great deal of effort deciding how many bullets can be sold per
month, and passing mandates for use of non-existent automotive
technology. No substantial work has been done on the budget
this calendar year.
At some point, and hopefully soon, the SpenDemiCans will have
to look at the fiscal black holes: prisons, illegal aliens, state worker
pensions, education spending. It will be hard for the Democrats
to cut the funding to their core fund raisers. Making hard choices
is part of being an adult: perhaps some of them will grow up.
There is a good chance things will not go so smoothly.
It is good for the nation as a whole to watch California go through
this exercise now. The unfunded entitlements at the Federal
level pose the same problems. The same imbecility exists in
Washington as in Sacramento. The major difference is DC can
print money while ignoring the problem.
Let’s raise the liquor and cigarette tax by 20%. Reduce our State employee headcount to 1999 levels instead of closing State offices 3 times a month. Also, reduce all State funded entitlement programes to 1999 levels. Yes we will put people out of work and we will have to pay more for some products and to wait longer for State services. That is the price we have to pay to balance our budget.
Another one that thinks more taxes are part of the fix. If thats the case, lets raise Ray’s state income tax by 20%.
When you raise taxes you actually cut gov’t income, thats not the answer. Ray, you need a drink!
c
This whole mess is unraveling very quickly and will not have a good ending. The democrats (and some republicans) in Sacramento are finally seeing what a disaster they have created. It is incomprehensible how these people think they can keep up the wreckless spending orgy after the bottom fell out of the California economy.
This state is on life support and nobody in Sacramento seems to care. These politicians only care about themselves and the special interests they represent. They could care less that this once great state is on its death bed. They are lucky we live in a civilized society and the citizens don’t take matters into their own hands.