Posted on 11/05/2007 9:30:30 PM PST by BurbankKarl
Gov. Arnold Schwarzenegger on Monday ordered all state departments to draft plans for deep spending cuts after receiving word that California's budget is plunging deeply into the red -- largely because of the troubled housing market.
State officials have warned the governor that the likely deficit for next year has jumped from a few billion dollars to as much as $10 billion, threatening to wipe out the progress Schwarzenegger has claimed in getting the state's accounts in order.
In response, Schwarzenegger's finance department has ordered agency directors to pull together plans to cut budgets by 10% for the state spending blueprint the governor will unveil in January, according to administration officials who spoke on condition of anonymity. That would mean substantial cuts in all state programs, including education, transportation and healthcare, the officials said.
The news is a major setback for the governor's other policy initiatives. His proposals -- to pass legislation this year that would bring healthcare to all Californians and address the state's water problems -- were already faltering in the Legislature. News of a massive looming deficit will make the proposals, both of which would require billions of dollars of new spending, politically less palatable to lawmakers.
The state's mounting financial problems will also make California less palatable to Wall Street, which could downgrade the state's credit rating.
Economists say the state's declining fortunes are due in large part to the shakeout in the housing market and a volatile revenue system overly reliant on income taxes. As state officials discovered last time the economy went into decline, any downward shift leaves California's general fund reeling.
(Excerpt) Read more at latimes.com ...
The state’s mounting financial problems will also make California less palatable to Wall Street, which could downgrade the state’s credit rating.
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Ouch!
Sure glad they reined in spending (and borrowing) since the recall. (/sarc)
Well, they did warn it would fall like a house of cards...
I think we should double down on stem cell research...that will save us.
not to mention..
Economists say the state’s declining fortunes are due in large part to the shakeout in the housing market and a volatile revenue system overly reliant on income taxes. As state officials discovered last time the economy went into decline, any downward shift leaves California’s general fund reeling.
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Drunk’d-up sailors couldn’t have done a better job of sending this ship off into the weeds by spending like drunken sailors the last few years.
we may never know what could have been had a few leaders been more interested in the state’s future than whose pockets they could line and whose votes they could buy.
Typical budget game. Get all the departments to put together a plan on how they would cut by 10%.
Of course, they will pick the most sympathetic programs that will cause the most public outcry. Then, the proposed reductions will be leaked to the media, violins will play, unions will squeal, welfare queens will march in the street, and Arnie will announce that the only solution is to raise taxes (citing fires and floods and earthquakes).
Voila! Tax Increase! ...or possibly another debt “restructure” (i.e. more borrowing)
Cut their salaries and bennies by 10%
house of cards...
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Is that an oblique reference to the massive expansions of tribal gambling recently approved and that we are about to witness,, all in the hopes it would bail the state out? Kaaa- CHING!!!;-)
Oh that’s right, you gave 10 billion for stem cell research the day you got into office.
It's ok we're all rich like you.
Mr. Maria Kennedy
Ahhhhhh.......Yup!
That’s the program
Alex, I will take “what happens when you budget on future proposed tax revenues” for $800, please.
CUT CUT CUT!!!
... maybe they can rerun the Leno show where GUbby announced he was running,, seeing as how the Writers Guild is on strike.. it would be only fair to remind folks how this madness developed and got us to where we are today.
This might be a good time to review just exactly how much illegal aliens are costing the state.
Schwarzenegger was asked about former Govs. Ronald Reagan and Pete Wilson raising taxes “when it came down to the crunch” to balance their budgets. Wouldn’t he do the same?What followed wasn’t as much political spinning as outright truth-twisting:
“If we have an emergency and something unexpected happens, absolutely, I will raise the taxes. But I am not faced with those kind of emergencies at this point because, as you know, Pete Wilson, who was a great governor … had a terrible time in the beginning.“I mean, here this poor guy went in there with great enthusiasm trying to fix the state, and here the $14-billion debt — right? — that he inherited. And all of a sudden he’s hit with riots, with fires, with floods, with mudslides, with earthquakes, with one disaster after the other.
“So this is why he had to raise the taxes because here all of a sudden the bridges and freeways were collapsing, buildings were collapsing. So he had to come up quickly with the money to make up for those kind of damages.
“So, otherwise, he would have never raised the taxes.”
The other whispering going on is how much CalPers and other public pension plans are invested in the mortgage securitization bonds and other soon-to-be junk bonds.
Tom McClintock was right!
Well, we had those fires...and the drought. More than enough justification to raise taxes.
They sure know how to make those go *poof*
This sounds familiar - - isn’t this where phantom government “jobs” get traded around the bureaucracy so the books can be cooked to make it look like there have been “savings”? There was a thread about this scheme a few years back.
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