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California Budget Deal Closes $26 Billion Gap

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posted on Jul, 21 2009 @ 12:43 AM
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By STU WOO and RYAN KNUTSON
SACRAMENTO, Calif. -- Gov. Arnold Schwarzenegger and California legislative leaders Monday said they reached a compromise to close the state's $26 billion budget shortfall.

Under the plan, state lawmakers would cut $15 billion in spending. The rest of the gap would be filled by taking funds from local governments and through one-time fixes and accounting maneuvers. The deal must still be approved by rank-and-file legislators, who are expected to vote on it Thursday.

"We have accomplished a lot in this budget," Mr. Schwarzenegger told reporters after lawmakers struck the deal Monday evening. "We dealt with the entire $26 billion deficit," he said.

The nation's most populous state faces a $26 billion gap in a $92 billion general-fund budget through June 2010. Mr. Schwarzenegger and legislators have been wrestling over the budget for weeks, forcing the state's chief accountant to issue IOUs to many creditors, including some welfare recipients.

As of Friday, the state had issued 153,711 IOUs, worth a total of $682 million. The office of Controller John Chiang said it would need to evaluate the budget proposal before determining when it could stop issuing the warrants.

Economists said the spending cuts will bruise a California economy already slammed by rising unemployment and foreclosure rates. "It will certainly offset a fraction of the federal-stimulus effect this fall," said Roger Noll, a professor emeritus of economics at Stanford University. "That will mean the depth and duration of the recession [in California] will both be bigger than otherwise would've been the case," he said.

The leaders of the Democratic-controlled state legislature said that of the $15 billion in cuts, $9 billion would come from education, $1.3 billion from state-worker furloughs and $1.2 billion from the prison system.

"For Democrats, I have to tell you that many of cuts we had to make, at another time, we would've thought unthinkable," said Assembly Speaker Karen Bass.

Ms. Bass also said that local governments "will have to share the pain." The state will take away $4.3 billion from local governments by borrowing from them or redirecting funds that had been earmarked for them.

Groups targeted by the cuts said the spending reductions would batter already-devastated essential services. "It's not a viable situation. As far as we're concerned, we do not have a functioning state government," said Sheila Jordan, superintendent of Alameda County schools, one of the state's largest at about 225,000 students, which has already seen sharp cuts.

"Class sizes go up, programs are being shut down, there are not enough supplies. Wherever you look, whatever we're doing, we're cutting back enormously," Ms. Jordan said.

Local governments, already reeling from their own budget crises, could stand to lose billions in the deal. "That would just be catastrophic," said Don Knabe, chairman of the Los Angeles County Board of Supervisors.

Los Angeles County's roughly $350 million "rainy day" fund stands to be decimated by the state budget cuts because it will be needed to replace the cuts being made to state health and human services programs, Mr. Knabe said. He said Los Angeles County has enough money to last it through October, and by then it plans to implement deep cuts to county programs.

Even if approved, the budget deal won't end California's financial problems. The state remains awash in home foreclosures and an unemployment rate of 11.6%—one of the highest in the nation.

Some positive signs are emerging, such as a resurgence in housing sales in most of the state's markets. But most analysts predict California's recovery will be slow, and that state coffers will remain under pressure because they are highly dependent on personal income taxes, which are now down.

online.wsj.com...



So these boneheads finally finished the budget. We'll see if this really makes any differance in our state. I just hope with all these cuts that my mom does not lose her school job.




posted on Jul, 21 2009 @ 01:26 AM
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So - let me work this out, its $700 billion into the pockets of the bankers and their pals - and not a dollar to help out an entire state of police, school teachers, firefighters, road workers etc etc - nice going Obamanation.



posted on Jul, 21 2009 @ 02:12 AM
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What a F'ING joke! Wow this really pisses me off. This entire budget fiasco was done behind closed doors and without any transparency i.e. involvement of the people of CA.

They are cutting 6 billion from K-14 including community colleges but only half of that for major institutions? LMAO! Oh I wonder why!


A measly F'ING 1.3 billion for state workers!!!!!!!!!!!!! ARE THEY F'ING RETARDS! That group should have had THE MOST DAMN CUTS OUT OF ANYONE. Overpaid state workers is the entire problem with the California budget. What a complete and utter farce! Californians should be pissed at this so called budget proposal. They should cut higher education way before they cut K-14 but either way the cuts should be even across the board. College is a privilege and should be treated as such.



posted on Jul, 21 2009 @ 02:26 AM
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Well, considering that the latest projections I saw predicted an over $50 Billion deficit for next fiscal year in California, I think it's safe to say California is screwed. The next round of cuts might be better served right along the juggular vein of the state. Just put them out of their misery once and for all.



posted on Jul, 21 2009 @ 04:01 AM
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Arnold is stick to his guns. No more taxes, that will just accelerate the exodus of people leaving the state and exacerbate the problem next year. Good for him. He is doing the best he can given the situation. Painful cuts next year.



posted on Jul, 21 2009 @ 04:04 AM
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Originally posted by Zosynspiracy
What a F'ING joke! Wow this really pisses me off. This entire budget fiasco was done behind closed doors and without any transparency i.e. involvement of the people of CA.

They are cutting 6 billion from K-14 including community colleges but only half of that for major institutions? LMAO! Oh I wonder why!


A measly F'ING 1.3 billion for state workers!!!!!!!!!!!!! ARE THEY F'ING RETARDS! That group should have had THE MOST DAMN CUTS OUT OF ANYONE. Overpaid state workers is the entire problem with the California budget. What a complete and utter farce! Californians should be pissed at this so called budget proposal. They should cut higher education way before they cut K-14 but either way the cuts should be even across the board. College is a privilege and should be treated as such.


Not to totally defend state workers but not all of them get paid a lot of money. Did you know that due to salary cuts and furlough days state workers have lost 20% of their pay. For the higher ups that might not mean much but I have two family members that work for the state and they did not make much to begin with and now are really hurting. With this news they may just lose their job all together.



posted on Jul, 21 2009 @ 05:08 AM
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"The rest of the gap would be filled by taking funds from local governments and through one-time fixes and accounting maneuvers."
------------------------------------------------------------------------------


why am I reading this to mean......."We're cooking the books!!!"""

when you can't come to a balance, do the next best thing....forget how to add!!!



posted on Jul, 21 2009 @ 05:42 AM
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This is only the start as the democrats continue to run businesses out of the state.

Next will be a new group of environmental laws that will run even more good paying jobs out of the state taking the workers and the taxes they paid with them.
arc.asm.ca.gov...
www.reuters.com...
www.huffingtonpost.com...
www.huffingtonpost.com...
www.faqs.org...

Add that to other stupid laws in Calif.
www.chron.com...
chuckdevorearticles.blogspot.com...
www.sfgate.com.../chronicle/archive/2004/02/24/BUGUN56L9L1.DTL&type=business

As soon as i no longer have to take care of my ailing father I am selling out and moving to back to Nevada or Texas.

[edit on 21-7-2009 by ANNED]



posted on Jul, 21 2009 @ 05:42 AM
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Originally posted by dawnstar
"The rest of the gap would be filled by taking funds from local governments and through one-time fixes and accounting maneuvers."
------------------------------------------------------------------------------


why am I reading this to mean......."We're cooking the books!!!"""

when you can't come to a balance, do the next best thing....forget how to add!!!





You bet. They only fixed half the problem. i predit next year they will have the same problem only 10 billion dollars more. They avoided making most of the neccessary cuts needed to sustain themselves. If the economy does not rebound they are in big trouble.



posted on Jul, 21 2009 @ 12:20 PM
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Originally posted by ANNED
This is only the start as the democrats continue to run businesses out of the state.

Next will be a new group of environmental laws that will run even more good paying jobs out of the state taking the workers and the taxes they paid with them.
arc.asm.ca.gov...
www.reuters.com...
www.huffingtonpost.com...
www.huffingtonpost.com...
www.faqs.org...

Add that to other stupid laws in Calif.
www.chron.com...
chuckdevorearticles.blogspot.com...
www.sfgate.com.../chronicle/archive/2004/02/24/BUGUN56L9L1.DTL&type=business

As soon as i no longer have to take care of my ailing father I am selling out and moving to back to Nevada or Texas.

[edit on 21-7-2009 by ANNED]


Star for you, very good links, and the current budget only holds
IF and it is a BIG one, if the situation doesn't get worse.

So basically they bought themselves some time, but not 12 months worth.

Some have predicted as little as 90 days, and with lots of ppl losing
their jobs or getting paid less, they will spend less.

It all feeds back into what is called a degenerative feedback loop.

Cut in average income equals cut in spending, then a cut in tax revenues,
and then back to more cuts and so on.

It is also referred to as a deflationary spiral.

Defaltionary Spiral forecast by World Bank

Well....isn't that a coincidence...LOL

With the true U6 numbers being around 21% we just need a 4% nudge
down to hit some of the depression level unemployment numbers.

Like the shysters play the numbers game with the derivatives and
bailouts, they play numbers games with the unemployment figures.

We got cities with a new game plan of bulldozing large sections of
houses to save money on services.

Dozens of cities to bulldoze houses to survive ?!?!?

LOL

Sounds like Agenda 21 is RIGHT on time !

Agenda 21 redux

Get your vaseline now cause they got some sexing coming your way.

Good Luck to you all !

[edit on 21-7-2009 by Ex_MislTech]



posted on Jul, 21 2009 @ 12:26 PM
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reply to post by Kingfanpaul
 


I realize that and your family members might be the good productive state workers. But the prison guard union is one of the biggest, most powerful unions in the state. They do make very good money and have some of the best pensions and retirements. Also when I say state workers there are lots that do nothing and make 6 figures.



posted on Jul, 21 2009 @ 12:46 PM
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Originally posted by Zosynspiracy
reply to post by Kingfanpaul
 


I realize that and your family members might be the good productive state workers. But the prison guard union is one of the biggest, most powerful unions in the state. They do make very good money and have some of the best pensions and retirements. Also when I say state workers there are lots that do nothing and make 6 figures.

Well lucky for California most of those guards are about to lose their jobs
as they have also announced they plan to release most of the
non-violent offenders and close some of the prisons.

They are also going to change sentencing where time will be replaced
by larger fines, and larger probation fees, etc etc.

Basically it is all about the money.

So you will be out on the street, but you will be paying for your freedom.

If you get a paycheck they will have automatic garnishment setup too.

Sounds like California is getting ready to have one hell of a party.

Glad I do not live there anymore.



posted on Jul, 21 2009 @ 01:47 PM
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The only thing I saw reading this article is that the California legislature is going to sweep everything under the carpet and call the house clean. This isn't even a stopgap measure. Its kicking the can down the road all the while accumulating more debt through interest. "Accounting Maneuvers" hahahahahah! That's real funny, why dont you just tell the people of California that you're cooking the books outright!

Buch of idiots!

[edit on 21-7-2009 by projectvxn]



posted on Jul, 21 2009 @ 01:51 PM
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Originally posted by dawnstar
"The rest of the gap would be filled by taking funds from local governments and through one-time fixes and accounting maneuvers."
------------------------------------------------------------------------------


why am I reading this to mean......."We're cooking the books!!!"""

when you can't come to a balance, do the next best thing....forget how to add!!!




That's what I read as well. Of course, the probably just a trick out of the Fed's books. I really liked that though. 'Accounting Maneuvers..'



posted on Jul, 21 2009 @ 01:56 PM
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The California Budget fiasco has a few choice words for Arnold and company.


I'll Be Back


next year, and the year after, and so on.

I bet you next year, California will see some innovative new terms used to tax the people of California without calling it a tax.



posted on Jul, 28 2009 @ 03:52 PM
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Originally posted by Spartak_FL
Arnold is stick to his guns. No more taxes, that will just accelerate the exodus of people leaving the state and exacerbate the problem next year. Good for him. He is doing the best he can given the situation. Painful cuts next year.


ohh Arny stuck to his guns and didnt raise taxes.. OF COURSE NOT - PEOPLE WHO PAY TAXES VOTE < Get it ?

SO LETS JUST SCREW OVER THE DISABLED AND ELDERLY

I think you can measure a Country by how they treat their disabled and elderly folks, and I think we are heading back to the dark ages here.

Read the entire article here : news.yahoo.com...

"the vetoes include $80 million from child welfare programs; $61 million in county funding to administer Medi-Cal, California's version of Medicaid; $52 million from AIDS prevention and treatment; $50 million to Healthy Families, the low-cost health insurance program for poor children; and $6.2 million more from state parks."
continued.. "In earlier rounds of cuts, California reduced Medi-Cal reimbursement rates for health care providers and eliminated optional benefits such as dental and eye care for adult recipients.


The additional cuts Schwarzenegger made Tuesday also include $37.5 million from the In-Home Supportive Services program, $50 million from the Early Start program for developmentally disabled children, and more than $6 million in cuts from programs for the aging."



Who will be these peoples voice? What are these people supposed to do? Does anyone even care?



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