We mentioned yesterday how California Governor Arnold Schwarzenegger had declared a brand new budget emergency in California, where a $19.1 billion shortfall will force state employees to take time off, with the possibility that the state may bring back last summer IOUs to pay its debts.
The LA Times has a good writeup on the situation. Perhaps the worst part is not even the fiscal part, but the fact that the political system seems even more broken than it was last year. Nobody seems to think that they’re anywhere close to finding $19.1 billion worth of cuts, and Democrats are threatening to make the state go budget-less (how? We’re not sure, exactly) until Schwarzenegger leaves office in 2011.
Investors in Cali debt may take note:
“Every passing day of political paralysis leads us closer to a completely avoidable fiscal meltdown,” state Controller John Chiang, a Democrat, warned officials in a written statement this week.
The state’s $19.1-billion shortfall remains despite a temporary increase in taxes last year and lawmakers’ slashing of billions from school budgets. Tuition at public universities has skyrocketed, and healthcare and other services for the poor have been scaled back.
Meanwhile, the two sides’ proposals for saving the state are almost a parody: The Governor wants to cut welfare. Democrats want to raise taxes on oil companies.
Hopefully for the state, voters will pass that pro-pot initiative this November. The state could use it.
Don’t miss: Why California is the next Greece >