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post #1 of 21 (permalink) Old 05-20-2009, 02:30 PM Thread Starter
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It is going to be a great summer in California...

http://www.cbsnews.com/stories/2009/...n5027149.shtml

California Budget Reform Fails … Again
Gov. Schwarzenegger's Promises To End "Crazy Deficit Spending" Proving Difficult To Fulfill

Is California Too Big To Fail?


(CBS/AP) Gov. Arnold Schwarzenegger wanted to permanently fix California's "broken budget system." But three times now he has tried and failed to smooth out the state's roller coaster revenues.

Voters on Tuesday resoundingly rejected his latest effort, a package of budget-balancing measures that he promised would provide a short-term patch for the current financial crisis and prevent further catastrophe in the future.

Instead, he now faces a $21.3 billion budget deficit and a budget system that has not changed a bit since he took office nearly six years ago.

"I think he's discovered that this job is a lot harder than he anticipated in a state of economic downturn," Treasurer Bill Lockyer said Tuesday of the governor who came into office in 2003 promising to "end the crazy deficit spending."

The Republican governor faces another tough round of budget negotiations after months spent haggling with lawmakers to close the state's first budget shortfall, which was initially $42 billion through June 2010.

Schwarzenegger will be forced to spend much of his final year-and-a-half in office struggling with the same financial woes that led to the recall of his predecessor instead of enacting the sweeping policy changes he once envisioned.

"The biggest loser would be Arnold," said Dave McCuan, a political science professor at Sonoma State University. "It's time to start looking for a cabinet post in the Obama administration or an ambassadorship someplace warm."

Lockyer said Schwarzenegger and lawmakers will have to reach a new budget agreement quickly, with tax revenue coming in far below projections. Unless a compromise is struck by the end of June, the state could have trouble paying its bills by the end of July.

Political observers say Schwarzenegger and lawmakers will have little choice but to go after even politically sacred programs such as schools. An unusually high two-thirds vote threshold in the Legislature for passing budgets and partisan polarization could combine for a painful summer.

"The choices facing the governor and Legislature are daunting," said Jack Pitney, a political science professor at Claremont McKenna College in Southern California. "Democrats have taken heat for accepting spending cuts. Certain Republicans have taken heat for accepting tax increases, and the heat's only going to get more intense this summer."

Many Californians have been hearing about the state's budget problems but have yet to feel the severity of the crisis. That will soon change, Pitney said.

"For a lot of people, the budget's been an abstraction. But with the next round, there will probably be serious consequences, particularly in the schools," Pitney said.

For a lot of people, the budget's been an abstraction. But with the next round, there will probably be serious consequences, particularly in the schools.

Last week, the governor said he will consider shortening the school year by seven days, laying off up to 5,000 state employees and taking money from local governments, which likely would translate into cuts to police and firefighting services.

Tens of thousands of teachers also face the prospect of layoffs.

"It has serious consequences for things that people probably don't think about, which is construction projects for example on infrastructure, roads," Julie Sunderland, a supporter of the budget proposition, told CBS News.

"This is a crisis that supersedes all partisan lines, supersedes all public interest lines, frankly. It is so big," Sunderland added.

But Schwarzenegger's warning did not sway voters, many of whom said they did not trust that the ballot propositions would do much to solve California's budget trouble.

"This is a signal by the voters that they are tired of the same old thing, meaning the indecisive decision-making in Sacramento," Willie Pelote, an activist against the proposition, told CBS News.

The majority of registered voters didn't bother to vote at all. Partial results from nearly 70 percent of precincts reporting late Tuesday showed only 19 percent of voters had cast a ballot, according to the secretary of state's office.

Chris Almanza, 55, of Sacramento was among those who chose not to vote, in part because she was angry and frustrated at state lawmakers.

"I'm not going to vote because I don't think it's going to matter," Almanza said.

The governor had particularly championed Proposition 1A, which would have created a stronger rainy day fund for troubled times and capped state spending, while extending a series of tax increases lawmakers approved in February. Those taxes would have brought in about $16 billion to state coffers in future years.

Proposition 1A also was crucial to solving many of the budget problems Schwarzenegger has had to confront in office and help him carve out a legacy for himself.

He reiterated Tuesday that he wanted to be remembered as a fighter for budget reform and said he wouldn't be dissuaded by the overwhelming repudiation from voters.

"I have been working to accomplish this kind of reform since I was elected in 2003 and I will keep working toward it because we cannot allow this harmful and out-of-control budget process to continue," Schwarzenegger said in a concession statement late Tuesday.

The governor planned to return Wednesday from Washington, D.C., where he spent Election Day, to start discussing the grim options with legislative leaders.
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post #2 of 21 (permalink) Old 05-20-2009, 02:33 PM Thread Starter
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http://www.cbsnews.com/stories/2009/...n5026792.shtml

California Gov. Arnold Schwarzenegger is looking for some big-time help from the federal government to save his state. (AP)

(CBS) California, the state that gave us wheatgrass, the microprocessor and the summer of love, is about to provide us with yet another first: a bailout of a failing state government.

Preliminary returns on Tuesday night show that voters soundly rejected ballot measures calling for higher taxes, meaning that the not-so-Golden State's politicians are likely to take hat in hand and head to Washington begging for a bailout.

Republican Gov. Arnold Schwarzenegger floated that idea months ago, as did Assembly Speaker Karen Bass, a Democrat. Schwarzenegger's visit to the White House on Tuesday surely didn't harm its prospects.

California does have enough cash to survive through June 30, but the state controller estimated in March that another $10.6 billion would be necessary to last the summer.

A more recent report from the state's non-partisan Legislative Analyst's Office offers a higher estimate of what would be needed if the ballot measures failed. It says: "Failure of measures in the May 19 special election would increase the state's cash flow pressures substantially - potentially increasing the short-term borrowing requirement to well over $20 billion. California is likely to have difficulty borrowing anywhere close to the needed amounts from the short-term bond markets based on the state government's own credit."

Ouch. To sum up: Legislators can't easily raise taxes (because of a requirement for a two-thirds supermajority). The Democratic majority is unwilling to go along with serious budget cuts. That leaves capital markets.

But who wants to lend to a debtor with such a bleak future? In February, Standard & Poor's awarded California the dubious honor of having the worst credit rating of any state.

Schwarzenegger has proposed attempting to raise $6 billion by handing lenders what are known as revenue anticipation warrants - the rough equivalent of a subprime loan - but that means the state will pay Wall Street dearly in the form of additional fees and interest. Besides, $6 billion is hardly enough to cover the state's looming budget deficit.

Which is why left-coast politicos are hoping their right-coast counterparts will prove to be an easier mark. Last week, Treasurer Bill Lockyer asked U.S. Treasury Secretary Timothy Geithner for a bailout through the TARP program, which was created to help ailing banks. "I am writing today to ask that you authorize extending TARP assistance to the State of California and other financially strapped states and local governments which face a severe cash flow crunch in the near term due to eroding tax revenues resulting from the current economic downturn," Lockyer wrote in his letter.

Other options include federal guarantees for loans that California takes out - the equivalent of having a co-signer - or a commitment from the U.S. Treasury to buy those loans. A third choice would be funneling stimulus funds to the state faster than scheduled.

An article in Tuesday's Bond Buyer newspaper reported, citing congressional sources, that the U.S. Treasury and Federal Reserve are considering loan guarantees and "other assistance" to state governments. A House of Representatives committee is holding a hearing Thursday on a bill to provide federal guarantees; House Speaker Nancy Pelosi, a San Francisco Democrat, is in a position to make that happen.

Now, it's true that California's fiscal woes are serious, but they're the result of politicians' poor decisions over many years. No matter how it's concealed, a bailout could jeopardize the nation's AAA credit rating - and invite 49 other governors to queue up outside the Treasury building. (The incentive is perverse: The worse shape your state is in, the more cash you get from the Feds.)

Between the 2004 and 2008 fiscal years, total state spending increased by around 44 percent, far outstripping tax revenues. Debt has tripled in six years. All this is true even though Californians enjoy one of the heaviest income tax burdens in the nation.

There was "a pronounced run-up in spending in the four years preceding the recession," says Jason Clemens, director of research at the free-market Pacific Research Institute in San Francisco. "Secondly, the base from which the state is trying to draw revenue is shrinking. People are voting with their feet. Businesses are leaving the state, as are citizens."

Not helping is that neither Schwarzenegger nor Democrats in the legislature are willing to confront public employee unions, including teacher's unions that enjoy the highest pay anywhere in the country. The Obama administration's insistence on putting demands of the Service Employees International Union, which opposed California wage cuts for home health care workers, is no better.

"Political leaders have said we can have high tax rates, we can have fairly high government spending, and we can have a robust economy," Clemens says. "The economics behind that are just faulty."

So might be the assumption that Washington, D.C. will write a blank check, and that any bailouts will limited to California. One estimate says 47 states are suffering declining revenues, meaning just about everyone's a candidate for a federal handout.

It will be interesting to watch Senate Majority Leader Harry Reid, a Nevada Democrat, explain to his conservative constituents why Sin City taxpayers need to bail out San Franciscans. It will be even more interesting to watch what the Golden State does if the Feds say no.
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post #3 of 21 (permalink) Old 05-20-2009, 02:35 PM
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fuck california

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post #4 of 21 (permalink) Old 05-20-2009, 02:40 PM
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Komrade Obama could use this as an opportunity to nationalize Kalifornia.
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post #5 of 21 (permalink) Old 05-20-2009, 02:48 PM
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Just add it to the tab we can never fucking pay off...... maybe China would take California in exchange for the debt we owe them.
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post #6 of 21 (permalink) Old 05-20-2009, 03:03 PM
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Just add it to the tab we can never fucking pay off...... maybe China would take California in exchange for the debt we owe them.
If only.....
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post #7 of 21 (permalink) Old 05-20-2009, 03:17 PM
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If they cut giving free EVERYTHING to illegals, it'd probably save the state.

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post #8 of 21 (permalink) Old 05-20-2009, 03:21 PM
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The majority of registered voters didn't bother to vote at all. Partial results from nearly 70 percent of precincts reporting late Tuesday showed only 19 percent of voters had cast a ballot, according to the secretary of state's office.

Chris Almanza, 55, of Sacramento was among those who chose not to vote, in part because she was angry and frustrated at state lawmakers.

"I'm not going to vote because I don't think it's going to matter," Almanza said.



I think this is the biggest problem - apathy. Your state is going bankrupt - changes HAVE to be made and you don't even show up to vote.
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post #9 of 21 (permalink) Old 05-20-2009, 03:25 PM
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Just add it to the tab we can never fucking pay off...... maybe China would take California in exchange for the debt we owe them.
They would euthanize gays like it was lunch time...

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post #10 of 21 (permalink) Old 05-20-2009, 03:49 PM
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The majority of registered voters didn't bother to vote at all. Partial results from nearly 70 percent of precincts reporting late Tuesday showed only 19 percent of voters had cast a ballot, according to the secretary of state's office.

Chris Almanza, 55, of Sacramento was among those who chose not to vote, in part because she was angry and frustrated at state lawmakers.

"I'm not going to vote because I don't think it's going to matter," Almanza said.



I think this is the biggest problem - apathy. Your state is going bankrupt - changes HAVE to be made and you don't even show up to vote.

But that guy is exactly right. It isn't going to matter. California is just going to go to the Feds for a bailout. Taxpayers foot the bill whether they like it or not. The State government over their just doesn't give a fuck what the people say.
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post #11 of 21 (permalink) Old 05-20-2009, 04:54 PM
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Land should be cheap when that state folds up.

1/19/09, the last day of Free America.
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post #12 of 21 (permalink) Old 05-20-2009, 05:24 PM
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The people out here think it's funny that the only measure that passed was the one that disallows pay raises for politicians during deficit years LOL....... Arnold ran on a platform of cleaning up the budget, got gray davis sent away, and hasn't managed to do shit since.

The real problem is in the legislature, they cannot make a decision and are beholden to special interests. On their last budget cycle they went WAY past when the budget was due, infighting.

As an example of the fine quality of legislators that california produces I give you pelosi and boxer.
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post #13 of 21 (permalink) Old 05-20-2009, 05:24 PM
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The majority of registered voters didn't bother to vote at all. Partial results from nearly 70 percent of precincts reporting late Tuesday showed only 19 percent of voters had cast a ballot, according to the secretary of state's office.

Chris Almanza, 55, of Sacramento was among those who chose not to vote, in part because she was angry and frustrated at state lawmakers.

"I'm not going to vote because I don't think it's going to matter," Almanza said.



I think this is the biggest problem - apathy. Your state is going bankrupt - changes HAVE to be made and you don't even show up to vote.
Everyone was too stoned to vote. Honestly who gives a fuck about Kalifornia, I gave up on that state years ago. I had dreams of moving there at one time. Times have changed. Maybe if they gave that state an enema more importantly in Hollywood, it would be decent place to live.

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post #14 of 21 (permalink) Old 05-20-2009, 05:44 PM
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Land should be cheap when that state folds up.
I'm waiting to buy some ocean front property.

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post #15 of 21 (permalink) Old 05-20-2009, 07:39 PM
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I'm waiting to buy some ocean front property.
If they don't give it to the illegals first.
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post #16 of 21 (permalink) Old 05-20-2009, 07:48 PM
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If they cut giving free EVERYTHING to illegals, it'd probably save the state.
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post #17 of 21 (permalink) Old 05-21-2009, 01:05 AM
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I'm waiting to buy some ocean front property.
Shit... if PRK would just fall off the map like we all wish it would, i already HAVE oceanfront property!


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post #18 of 21 (permalink) Old 05-21-2009, 01:12 AM
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Everyone was too stoned to vote. Honestly who gives a fuck about Kalifornia, I gave up on that state years ago. I had dreams of moving there at one time. Times have changed. Maybe if they gave that state an enema more importantly in Hollywood, it would be decent place to live.

The ONLY reason I care is that federal money - yours and mine - will be used to bail them out. As Dennis Miller said - I don't mind helping the helpless, but I have a problem helping the clueless.
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post #19 of 21 (permalink) Old 05-21-2009, 01:17 AM
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But that guy is exactly right. It isn't going to matter. California is just going to go to the Feds for a bailout. Taxpayers foot the bill whether they like it or not. The State government over their just doesn't give a fuck what the people say.


By the voter turnout, it apprears that the people didn't even speak up. I'm sorry, but this falls squarly on the shoulders of the California citizens. I think this is the 4th time they've rejected a plan to bail themselves out.
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post #20 of 21 (permalink) Old 05-21-2009, 09:33 AM
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So let me get this straight. The citizens of California have voted NO several times to tax increases and now the Federal Government wants to step in and bail California out. Yall do realize what this means right. Not only will the people of California be paying more Federal Taxes for the bail out, but the citizens of the remaining 49 states are also going to have to pay more taxes for this bailout. So much for a Government For The People and BY The People huh.

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post #21 of 21 (permalink) Old 05-21-2009, 09:43 AM
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