Tuesday, May 19, 2009

California Hits a Brick Wall

Ballot measures headed for defeat in early returns
By Mike Zapler
Mercury News Sacramento Bureau
Posted: 05/19/2009 08:41:38 PM PDT
Updated: 05/19/2009 10:28:49 PM PDT
SACRAMENTO — The resounding rejection Tuesday of five ballot measures meant to shore up the state’s shaky finances leaves California facing another monumental budget problem — and could hasten the arrival of a financial reckoning, with severe cuts to public schools, health and social services and public safety.
In early returns, five of the six propositions on the special election ballot were trailing badly. In a telling sign of the electorate’s mood, the only measure that appeared headed for passage, Proposition 1F, would bar pay raises for elected officials whenever the state is running a deficit. Its effect on the state’s bottom line would be tiny, but the outcome reflected voters’ anger at Sacramento’s seemingly endless dysfunction when it comes to the state budget.
The likely failure of the key budget propositions means that an already staggering $15 billion shortfall projected through the middle of next year swelled immediately to more than $21 billion. That’s about a quarter of the entire general fund.
“We’ve just driven off the budget cliff, ‘Thelma and Louise’ style,” said Steven Maviglio, a Democratic strategist and former top legislative aide who advised the campaign backing the ballot measures.
Pressure to act
The sheer magnitude of the shortfall — on the heels of a package of cuts and tax increases that Gov. Arnold Schwarzenegger and legislators agreed to in February
to close a $40 billion shortfall — is expected to trigger more of the partisan sniping that has dominated state politics over the past year.
But with California facing the threat of insolvency this summer, lawmakers will be under immense pressure to act. And with any further tax increases having been all but ruled out, legislators will have little choice but to resort to massive borrowing and deep program cuts.

Exactly who was the genius who decided to hold this off year election during the very beginning of the summer vacation season?
The State of California and the voters there in are about to find out what a stupid idea Proposition 13 was and is. It allows a political minority the ability to hold the rest of the state hostage. Thus ideologues from the Republican Party are able to cram their no new taxes and small government agenda down the rest of California’s throat.
The double whammy of less revenue from taxes caused by the downturn and now the defeat of the propositions means that the day of reckoning is at hand in the Golden State. We might see the very first state ever to file for bankruptcy.
The finances of the state of California have been very bad ever since the days of Grey Davis. His attempt to begin bringing some sort of sanity to the ledgers of the Golden State got him ejected from office.
Governor Ah-Nuld quickly reversed the unpopular Davis revenue enhancements and then spent most of his terms coming up with smoke an mirror budgets that only postponed the final reckoning. When the real estate market dropped like a stone Ah-Nuld’s goose was cooked.
This is political cock-up is going to have wider consequences. California alone contributes 12% of the USA’s GDP. A further cratering of the economy of California, caused by the layoffs of thousands of state workers, could easily kill off all those green shoots that the Obama economic team keep talking about.
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