Posted on 12/22/2008 4:24:09 PM PST by SmithL
Controller John Chiang laid out a nightmare scenario today of the state's resorting to IOUs or costly and uncertain emergency loans if Gov. Arnold Schwarzenegger and legislators don't agree on steps to close the state budget deficit very quickly because the state will run out of cash in about two months.
"Specifically, my office will be forced to pursue the deferral of potentially billions of dollars in payments and/or the issuance of individual registered warrants, commonly referred to as IOUs,"
. . .
"Without action by the Legislature and the governor, we literally are weeks away from a meltdown of state government that threatens the delivery of critical public services our citizens deserve and expect," Chiang said.
(Excerpt) Read more at sacbee.com ...
“meltdown of state government that threatens the delivery of critical public services our citizens deserve and expect,”
Unfortunately, expectations outstrip both their ability or willingness to pay. Therefore, they certainly do not deserve them.
rwneill wrote on 12/22/2008 07:21:59 PM:
“States can not file bankruptcy.
True. And they can’t print money either.
That’s why, when a State becomes insolvent, the Courts would order that a Federal Receiver takeover administering the reorganization of that State by allowing the People of the State time to form a new, stable, solvent State government to govern the people of that State.
Federal troops could be involved, Federal money (the Feds CAN print money), whatever it takes to provide time for the reorganization.
This is the best plan for California under the current circumstances, IMHO.”
Big_Bruce95833 wrote on 12/22/2008 07:21:36 PM:
“The State of California Supreme Court had already
ruled back in the 90’s that State Government IOU’s
are Illegal !!”
“...Chiang said his office is also pursuing the issuance of “revenue-anticipation warrants,” a form of short-term borrowing that carries high interest and heavy fees because it’s believed that the state cannot issue “revenue anticipation notes” that would have to be repaid by June.
Treasurer Bill Lockyer has said he doubted whether lenders would respond to the revenue warrants, known as “RAWs,” but Chiang said his staff is pursuing that option to avoid the cash crunch expected in February.”
“Without action by the Legislature and the governor, we literally are weeks away from a meltdown of state government that threatens the delivery of critical public services our citizens deserve and expect,” Chiang said.
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Revenue Warrants sound mighty sinister to my unschooled ears. Will the State start seizing private assets willy-nilly?
Or will they finally have no choice but to start butchering their sacred cows?
LET THE BODIES HIT THE FLOOR!!
This state has spent and borrowed recklessly and have no intention to ever change their ways. It must be forced on them. A total timeout on everyone. Make everything stop. Schools, prisons, everything. Armageddon will make it all right. Just raising taxes will just pass the buck on to the next generation.
Screw california, they have the government they deserve. Ca. FReepers, time to leave my FRiends. Give it back to mexico.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
When the big O comes in the Fed will bail out Ca.
Bet on it.
It’s getting easier and easier to see why See BS went all out on the sewage treatment of Arnie on 60 Minutes. I saw part of it...about half, before my gagging caused Hubby to change the channel in a hurry. There is NO WAY that somebody with Arnie’s moonbat-like environmental vision is capable of dragging CA out of it’s financial difficulties. His arrogance is worthy of a ...of a Kennedy. No wonder he’s shamelessly sucking up to Obama.
Unless I'm betting Obama WILL bail out Arnie (I mean, Cauliforneeeea), it's no bet. However, there IS an off chance he'll dangle the possibility for a while, and then renege.
That's of very dubious constitutionality as well.
A state cannot be sued, except as it permits itself to be. When a state no longer has credit, what happens is it then only can pay for what is has money for.
What happens then is that reality is imposed on the state, and the state government officials have to come down from their LSD trip. Phrases like "legally mandated expenditures" no longer have meaning. The entity issuing the checks must suddenly decide who gets paid, and who does not, and bear personal responsibility for the decision.
Think about this: Ahnold wants to do to America what he's done to California.
That's of very dubious constitutionality as well.
I'd say that "dubious is a kind word.
Far off the wall dreaming is another way.
So. Has a state ever actually gone into receivership. The District of Columbia, during the latter phase of the reign of Barry and into the mayoralty of Tony Williams was under a Congressional-appointed Control Board but that’s a special case.
We are talking about liberals here. To them the Constitution is a mere piece of paper.
If you've got the power and the will, the skys the limit.
DC is a Constitutionally special case, in that the Constitution puts control of DC into the hands of Congress. Congress chose to allow locally-elected officials to run it, but that authority, coming from Congress, is subject to revocation at any time with Congress appointing any new government it chooses.
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