It just keeps getting worse in Cali

Instead of a $21 billion deficit, we are now looking at $24 billion. Ughhhhhh. Not many good choices at this point and it is guaranteed to get ugly. Here's a snippet from SFgate.com of what's being cut:

On Tuesday, the governor's finance officials released the following details on how the governor would cut $5.5 billion through June 2010:

-- $750 million from the University of California and California State University systems, bringing the total reduction over two fiscal years to nearly $2 billion.

-- $10.3 million - Eliminate all state general fund spending for UC Hastings College of Law.

-- $173 million - Eliminate new Cal Grants.

-- $70 million - Eliminate general fund support for state parks, potentially closing 80 percent of them.

-- $247.8 million - Eliminate the Healthy Families program, which provides health care to nearly 1 million poor children.

-- $1.3 billion - Eliminate the CalWorks program, which primarily helps unemployed single mothers find jobs.

The fact that we are now eliminating programs that help unemployed single mothers find jobs is like revoking the reduced bus fares for war widows (Simpsons reference).

Cutting two billion from the University system and eliminating Cal Grants is mortgaging the future of our state. Similar to when companies slash R&D spending- it might temporarily help the bottom line, but it is a disaster in the long run.

Governor Arnold rode in to office saying how we could roll back the vehicle tax and happy days would be here again. Hasn't quite worked out so well. But it is fun to look back at his campaign commercials:

Special Election...Yawn

Here in California, we are having a special election today, but in reality it is not all that special. Governor Arnold's diminishing clout has become more apparent every day and it will be emphasized in the next 24 hours. The man who came rolling in to office promising reform and to blow up the boxes of government....well, that guy must have snuck away in the last 6 years.

It looks like all of the propositions except for 1F, will go down to defeat tomorrow. Politicians are whining that failure to pass the measures will leave us with a $21 billion budget gap. That's a complete cop-out. Our elected officials are elected to handle these exact sorts of things. We've gotten in to a vicious cycle in California- we can never pass a decent budget, out come a bunch of propositions, most don't pass, the props that do pass hamstring the budget even more, repeat.

California going over the cliff

The California budget is just an utter mess at this point- a deficit of $21 billion. If all of the measures pass next week in the special election, then we'll be down to a mere $15 billion.

The Governor is completely helpless at this point. The energy and enthusiasm that he brought in to office have been slowly fading away. He's basically evolved in to Gray Davis with better pectoral muscles.

One of the biggest obstacles to fixing the deficit is that California requires a 2/3 vote of the Legislature in order to pass a budget. That means that the minority party can hold the process hostage. Furthermore, because of how incumbents have protected themselves in the redistricting process, we have almost no competitive seats in California. Therefore, the Republicans have reached a point where they are much more worried about the primary than they are about a general election. Republican candidates are terrified about voting for a budget that has any hint of a tax increase because it leaves them vulnerable to a primary challenge.

Until we fix the 2/3 rule, we are going to have budget disasters on a yearly basis in California.

It could be worse for California....

We could be AIG- they lost more than $61 Billion in the 4th quarter alone. If you manage to lose $61 really large in 3 months, don't you maybe think about just calling it a day?

Here are some interesting ways of getting a grasp on what a monumentally big number that is.

Could California go bankrupt?

It is hard to imagine that a state with the tremendous amount of resources that California has could possibly go bankrupt. However, even with the budget plan finally passing, we are in a precarious position. If the economy worsens and revenues decline further, what will the state do?

When Orange County declared bankruptcy in the mid-90s (and I was always leery about allowing a guy who was really in to jade jewelry for himself control all of the county money), it was truly startling. Now imagine if the state of California were forced in to a similar situation.

Could it happen?

The California budget mess

If we don't get a deal soon, Arnold is threatening to fire 20,000 state workers.

From the Chronicle:

The state's leaders also are considering setting a limit on state spending that would be calculated in part by using the state's revenue figures from the prior 10 years, according to sources who were briefed by Democratic budget staffers.

Additional revenue collected beyond that limit would go to a rainy-day fund.

I love the talk of the rainy day fund- seems to me like we are in a freaking monsoon already.