California Governor Jerry Brown Proposes Spending Cuts

WhoWee

California Governor Jerry Brown, faced with a $25 billion deficit has proposed over $12.5 billion in cuts, nearly across the board.
http://www.examiner.com/us-headlines...workers-budget

It looks like state pensions will be spared.
http://www.sfgate.com/cgi-bin/articl...BAOF1H6VJ1.DTL

skippy1729

Where is he going to get the other $12.5 B. They are headed for the cliff and I can't imagine who wants their bonds. Maybe the State pension funds would like to buy them?

Skippy

Pengwuino

And thus, it is all a moot point.

WhoWee

http://www.mydesert.com/article/2011...cuts-tax-hikes

"Having the Legislature call a special election in June to give voters an opportunity to continue the current increases in the income, sales and vehicle taxes for another five years.

The taxes are set to expire this year. If approved by voters, the taxes and proposed funding shifts would generate $12 billion in revenue.

Brown said his spending plan for the fiscal year that begins July 1 is intended to end the state's continual deficits and balance the budget for the next several years without borrowing money to do so.

“It's better to take our medicine now and get the state on a balanced footing,” the newly elected Democratic governor said in releasing his plan."

Pengwuino

And it won't pass. It never passes. This state, for supposedly being so educated, is full of morons.

WhoWee

I have no sympathy for CA. Then I see ideas like this being kicked around.
http://www.economicpolicyjournal.com...o-bailout.html

"Will the Fed Print Money to Bailout California?
Speculation is brewing that this just might be the direction the Federal Reserve may be headed in for various cities and states. It's clear that many state and local governments are in major financial trouble."

mugaliens

Goodness, I really hope the fed doesn't stoop to bailing out a wayward state. Such would be the epitome of insanity.

Vanadium 50

A federal bailout of California would have to be done on incredibly punishing terms. Otherwise every state would spend as much as they wanted, tax as little as they wanted, and would let their neighbors (through the feds) pay for it. It would also be an enormous transfer of wealth from red states to the bluest of blue states - and from the poor to the wealthy. (California has the 9th highest median household income)

However it was done, it would have to be so bad that the other 49 states would be scared off. However painful living within their means would be, this would have to be worse. How bad? I suspect you would find people looking at Reconstruction as the closest historical parallel.

CAC1001

Can the state go through bankruptcy in the way a corporation can (like Chapter 11), where it continues operating, but just must go through specific changes to come out leaner?

CAC1001

One of the main culprits is the public-sector unions: http://www.city-journal.org/2010/20_...ia-unions.html

Vanadium 50

It's never happened. Which laws apply is not a simple thing, though.

NobodySpecial

Isn't that just the same as transferring taxation to the federal government instead of state taxes?

WhoWee

An argument centered around unfundated mandates (Medicaid) by the states might gain traction?

nismaratwork

That's one of the most plausible and frightening things I've heard in a very very long time.

Vanadium 50

What's plausible? That California will default? Or that the reaction by the rest of the country will be as I described?

nismaratwork

The latter.

WhoWee

I haven't had a chance to wade through all of this yet - just thought I'd share.

http://www.ebudget.ca.gov/StateAgenc...epartment.html