California May Be Broke by June, State Controller Connell Says

Los Angeles Times ^ | January 23, 2002

[John Jorsett]

Finance: The controller fears there will be no money to pay bills and foresees a need to borrow up to $8 billion next fiscal year. A Davis aide scoffs at warning.

SACRAMENTO -- SACRAMENTO -- Controller Kathleen Connell, who must track California's cash flow, warned Tuesday that the state will end the fiscal year with virtually no money to pay its bills, and may have to borrow as much as $8 billion next year.

[Euro-American Scum]

Controller Kathleen Connell, who must track California's cash flow, warned Tuesday that the state will end the fiscal year with virtually no money to pay its bills.

And all this because of Enron. Imagine that.

[Robert357]

I am going to start sound like a broken record, but this was all predictable and could have been managed.

Wall Street doesn't play by the same rules that California politicians play by.

A Past Article on Moody's Rating of California Debt Obligations

I would like to quote from the previous Moody's report:

However, we expect any budgetary reductions of this magnitude will lead to protracted legislative debate, potentially extending into next summer. And differing opinions as to the timing and strength of the economic recovery may further complicate legislative efforts to resolve this imbalance, as will the upcoming elections in 2002. If the deficit for the upcoming year reaches $8 billion as both the Administration and the LAO estimate, the state may be hard pressed to eliminate this gap solely through expenditure reductions.

Watching the Politicians and Wall Street this year should be great sport. Wall Street has already told Sacramento that they will need to raise taxes. The Democrats in Sacramento do not want to do that in an election year. Wall Street has said, time for tough love! It will be fun to watch the showdown between Wall Street and the Democrats during an election season!

[Robert357]

Sorry, I forgot to add that the most important paragraph in the full LA Times article (you do need to click on the article) was the last paragraph....

Rating agencies downgraded California's credit rating during the energy crisis last year. State officials will meet with executives of rating agencies this week in an effort to assuage concerns about the state's credit-worthiness.

So what are the "state officials" going to say that will make the credit rating agencies feel the state is "credit-worthy?"

Will the rating agencies, based on new information from State Officials, feel compelled to revise the California Credit rating next week (downward)? From a liability to investor lawsuit standpoint, if the rating agencies hear anything really bad, they will need report those facts to the investment community and provide a warning to potential bond holders.

I have been on trips to investment rating firms as a public official and can say that, one needs to be extraordinaryily careful and thoughtful in what one says. Next week should be very, very interesting. These kinds of stories will lead to direct rating agency questions. I hope the Dem's have their stories straight for the rating agencies.

[Bullish]

Gee, and Davis' campaign commercials make him out to be the best governor the world has ever seen.

In reality, Davis is either fiscally stupid or utterly corrupt. I suspect it's a lot of both.

[doctor noe]

but right now California needs his financial acumen. And I really like how he said "I will not raise your taxes" and is endorsed by the Howard Jarvis Taxpayers Association.

You're exactly right! This budget debacle is only going to get worse after around May 1, when the state starts to get a good idea about tax receipts. Receipts are going to be lower than they expect and that's when the blood is going to start to flow.

Unfortunately, for GOP Assembly candidates running against Dem incumbents, this will make for excellent political fodder but the vast majority of these incumbents are in safe districts. The GOP will be extremely lucky to knock off one or maybe 2 incumbents. At least the Dems won't be successful in achieving a super-majority status. In other words, I think most Dems are going to be willing to take political risks i.e. raising taxes. At the very least, they will allow others to do their dirty work such as the initiative to raise the sales tax by 1%.

Realistically, the only chance the GOP has to make a difference in state gov't is the governor's office. Unfortunately, DICK will be the absolute worst standard-bearer for fiscal matters. Simon is our only hope but he really has an uphill climb against DICK.

[jpl]

Reapeat after me: "illegal immigrants put more into the system than they take out, illegal immigrants put more into the system than they take out..."

[Gophack]

Realistically, the only chance the GOP has to make a difference in state gov't is the governor's office. Unfortunately, DICK will be the absolute worst standard-bearer for fiscal matters. Simon is our only hope but he really has an uphill climb against DICK.

You are right. We won't get the majority anytime soon with this Democrat reapportionment, but if we nominate a conservative for Governor, we can motivate our people to go to the polls in November. The REAL problem with liberal Dick Riordan is that if he wins the primary in addition to him losing to Davis, he'll alienate our conservative base and we would be jeopardizing several assembly contests. In an average to good year, we'll have 30 assembly seats. If Simon wins, I can see 32. If Riordan wins, we'll be LUCKY to have 28.

Simon does have an uphill battle simply because of name ID. I thought he did fairly well in the debate, but he needs to be a little more comfortable and less rigid. It was an inspiration that he came out strongly for his beliefs -- it shows that he means what he says and says what he means. THAT, my friend, will go far.

[ken21]

gov grey entered office with a surplus.

[Angelique]

Sounds like Connell broke rank or is Davis gearing up to raise taxes? Was he lying when he said CA had a balanced budget? I smell a RAT a Davisdemrat.

[John Jorsett]

Davis and Connell have a prickly relationship, and she sticks a knife in him from time to time. Which isn't to say that that's what she's doing here. Her office has a duty to apprise the state of its fiscal condition. The Davis budget is smoke and mirrors. It defers the state's contribution to the public employee retirement fund, borrows from various places with the promise to repay over decades, and on and on. Even with all of the chicanery, the only way he got it to balance was by an optimistic forecast for future tax revenues that no one else in state government is buying into. By the time it becomes obvious that there's going to be a shortfall, he hopes to be safely reelected.

[Grampa Dave]

This is not news for those of us who follow this.

Davis and his mirror image, enviral anti business governors in Oregon and Washington have driven these 3 states to bankruptcy in the past few years.

These enviral hand puppets hate capitalism, farming, ranching, logging and any industry that provides a product that we need in real life! Their anti business rhetoric and behavior drives business from their states. When a business leaves, tax inflow from these businesses disappears.

One of the reasons why we didn't go total blackout last year, was the massive failures of businesses in California last year or massive down sizing of businesses. If your business closes or cuts production 50% or more, a lot less electricity is used! No one wants to address this factor.

The lack of blackouts due to business failures and downsizing has a two edged sword. If these businesses are not contributing money into the state funds, then there is less money to spend. Also, tax paying employees, often go on the government dole when their company goes out of business, leaves the state or downsizes them. Instead of sending tax $'s to Sacramento, they take tax $'s to exist.

The left wing maggots in charge of the perverted legislature did not decrease their spending for their perverted voting cults. The cults which are dependent on our tax $'s for their survival.

So like the power crisis where we did not produce enough electricity to meet demand until massive business failures. The tax $'s flowing into Sacramento have dropped like lead dodos while spending on the perverted dark sides has increased. So in typical left wing fashion, the maggots in the legislature and Davis have spent more that was coming in. Now we are reaching the bottom line of a busted state like Oregon and Washington will be.

Wall Street people and the Bond people are not demonicRat cult members. They look at Davis and his maggots in the legislature as tax and spend demonicRats who are anti business. The bond ratings have dropped and will drop more!

Of course Davis wh$res who control the LA Slimes and the SF Gayrhonicle will continue to lie about how great Davis is. They know that 90% of Davis's voters can't even spell B-O-N-D-S, let understand why the ratings will crash and few if any buyers will appear.

[Grampa Dave]

As I posted above, the enviral governors of Oregon and Washington have ruined the economies of their states like their enviral rat/buddy Davis.

Go to this link for more on the Oregon situation, (Oregon's enviral governor who hates capitalism seeking higher taxes to pay for Oregon's new third world economy!)

[Angelique]

Thanks for the info on the Connell/Davis relationship. I still can't get over the fact that he once our Controller. Since I will be returning to CA, I would like to know, is there any hope for Simon at all?

[John Jorsett]

I don't know how much business failures contributed to the lack of blackouts last Summer, but I think that the price rises had a lot to do with it. Davis initially kept consumer prices capped and people went merrily along using power as they always had. When he finally gave in to the inevitable and let prices go up, consumers suddenly slammed on the brakes on usage. I think that, more than anything, pulled the fat out of the fire.

I wonder if Davis is ever going to be successful in getting back all that state money that he blew on power purchases. If he is, I hope the bills land on the public just before the elections, just as a reminder of how incompetent Davis is.

[Ernest_at_the_Beach]

Simon does have an uphill battle simply because of name ID. I thought he did fairly well in the debate, but he needs to be a little more comfortable and less rigid. It was an inspiration that he came out strongly for his beliefs -- it shows that he means what he says and says what he means. THAT, my friend, will go far.

I like what Simon believes, even if he is not a TV star!

Too many here even think that your TV appearance is what you will get in performance!