California nears financial "meltdown" as revenues tumble

SAN FRANCISCO (Reuters) - California's government risks a financial "meltdown" within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state's controller said on Wednesday.

Underscoring the severity of California's cash crisis, Controller John Chiang, who has previously warned the state's government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.

Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger's budget plan by $827 million, Chiang said.

He warned California's state government is speeding toward a financial disaster unless officials act urgently to balance its books.

"Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government," Chiang said in a statement.

Reuters

Im sorry guys I really see no way for this to not happen. In short of the Federal Government immediately helping out (which they arnt, they love banks more).

Get ready everyone, as I have said many times before this fall is going to be horrible.

GET READY

[edit on 6/11/2009 by Tentickles]

Im surprised no one is interested in this considering the social outcomes of if they do fail...

The Federal government needs to probe every level of California's state government for graft, embezzlement and corruption.

With all the money that state has, how do they keep going broke?

They need arrests and publicized perp walks on TV. Plus they need to deny medical and social services to illegals, period. Sorry, but they're broke, need to get real someday. Happy,happy fun time is over, now pay the bill.

Originally posted by CAPT PROTON
The Federal government needs to probe every level of California's state government for graft, embezzlement and corruption.

With all the money that state has, how do they keep going broke?

They need arrests and publicized perp walks on TV. Plus they need to deny medical and social services to illegals, period. Sorry, but they're broke, need to get real someday. Happy,happy fun time is over, now pay the bill.

You know that will never happen. With men like Bernanke and Tax Cheat Timmy running the accounting books and printing presses.

Three key elements are contributing to this disaster...

The first is the short sightedness of the writers of Prop. 13 in the late 70's. They put a clause in there requiring a 2/3 majority in the state legislature to raise taxes (I won't even get into the whole issue behind prop. 13 which was the freezing of property taxes at what they were in the late 70's or the subsequent subsidizing of municipalities by the state government to make up for the resulting revenue shortfalls)...

The second is the bullheadediness of the Democrats to resist cutting programs...

BUT that pales in comparison to the bullheadediness of the Republicans refusal to back any tax increases which are obviously needed since budget cuts alone simply won't do it.

The thing about the Republicans and this is true nationwide (and we have had to deal with it here in Va. as well) is that Grover Norquist's group has essentially blackmailed Republican legislators into signing a no tax increases pledge... if they refuse to his group works to unseat them... so they sign... then they hold it over their heads and threaten to work to unseat them if they back out of it.

Grover Norquist's group... Americans for Tax Reform has repeatedily stated that their goal is to encourage the running up of so much red ink that the state and federal governments will have no choice but to eliminate services whether the people want it or not.

I would not be surprised one iota if the next election cycle in California if both parties are roundly cleared out of office... which is what they deserve.