Tuesday, November 24, 2009

California Default Watch Initiated

I've been quiet about California just because there hasn't been anything to add. The State went into a terminal dive last summer as covered by the Daily California Watch Series.

Now even the longtime insiders are seeing all other possibilities foreclosed:
Dan Walters in the Fresno Bee:
If some of the bleaker economic forecasts kicking around are accurate and/or the state doesn't act quickly to close the gap, Taylor's $20.7 billion problem could easily balloon to $25 billion or more. Even more ominously, as temporary tax increases expire and deferred spending promises come due, the state faces annual deficits in the $20 billion range for many years to come, Taylor says.
The battle lines are already forming on whether to deal with the crisis with more spending cuts, more new taxes and/or more gimmicks.
They've scraped the bottom of the gimmick barrel, voters are livid and new taxes are functionally off the table. This will be one of the bloodiest skirmishes the Capitol has ever seen — with the only option being that the most populous state in the nation default on its debts.

And Federal receivership won't fly either. The terms will prove intractable and the other States will howl.
And vat does our Leader, da Governator haf to say?:
As pieces of the July state budget solution begin to unravel, the Republican governor said judges – especially on the federal level – are preventing California from solving its problems.

He complained in particular about judicial actions that have struck down some state worker furloughs, required reductions in the prison population, imposed restrictions on water delivery in the Sacramento-San Joaquin Delta and this week blocked cuts to in-home care services.

"They are going absolutely crazy," Schwarzenegger said of judges. "So we have to have a very serious conversation with the federal government, because they have to let us run the state." [from Fresno Bee last month.]

Want an example of "out of control" judges? This also from the Fresno Bee:
Tuesday, Oct. 20, 2009 - 2:43 pm
The California Redevelopment Association filed suit in Sacramento Superior Court today to block the state Finance Department from carrying out a $2.05 billion shift of tax increment funds from local redevelopment agencies over a two-year period.

California's adopted budget for 2009-10 seeks 1.7 billion in funds from the state's redevelopment agencies to help finance schools and calls for shifting another $350 million in the next fiscal year. The suit challenges the constitutionality of the budget language and cites state plans to use the money for non-redevelopment purposes.

The association prevailed in an earlier lawsuit challenging 2008-2009 budget language that would have shifted $350 million in tax increment funds to the state.

Yeah, stealing and getting caught is the judge's fault.


Mr. Outspoken said...

First the Governor needs to attend Casey Serin's boot camp on Lender Ignore Mode.

Second Massive Focused Action!

Property Flopper said...

There is no single solution to this, it's going to take both increased taxes and massive spending cuts to right the ship.

Prop 13 needs to go - at the very least, corporate owned property needs to be excempted.

The prison union needs to be broken, that situation has gotten way out of control.

It's going to get bloody and it's going to take major, very unpopular, steps.

sm_landlord said...

The LATimes has written several pieces about possible fixes including a constitutional convention.

But I guess we'll have to wait for the next budget bomb to drop before serious discussion begins again. As usual, nothing but whining coming from Sacto.

Son of Brock Landers said...

@PF the unions are only giving in when the money is all gone. just ask all of the progressive and enlightened profs in the UC center who don't want to see their students face 30% tuition hikes.

Lost Cause said...

Will the default be announced on Jay Leno?

sm_landlord said...

@Lost Cause;

The devolution will not be televised.

Rob Dawg said...

"The devolution will not be televised."

...but it will be blogged.

Property Flopper said...

Son of BL -
Trust me, I know that one all too well. Until June of this year, I was doing consulting for the UC system. I was working at UCOP (office of the Pres) and I listened to the career beaurocrats whining about all the work they had to do and how difficult it was... the sense of entitlement there was sickening.

The central office had 1300 employees... Not teachers or anything to do with students - just office workers and more vice president level execs than you could ever justify.

Question for the day: If the UC system is so hard up for funds, why is the Pres of the U getting over $800k per year? The Pres of the US only gets $400k.

Which of the two has the harder job?

TJandTheBear said...

Plundering California

H Simpson said...

Anyone figuring who owns the soon to be worthless paper other than the unions?

Might be good to know who will be prime for shorting once the crap hits the fan?

Please don't say AIG. I cannot afford them to lose anymore money .

Funny Circus Bears said...

My BIL was recently laid off from a division of the Dept. of Corrections. He is 50 yo and has 28 years or so of seniority. He was given 30 days in which to find another division to take him on or face actual termination.

No, please, stop crying.

After 20 plus years of grazing with like minded mongs, how long, measured in nanoseconds, do you think it took him to find a work shy, teat sucking division-head buddy to latch on to? Thankfully, zero time was lost in his pursuit of efficiently reading newspapers, surfing the internet for morlock porn, and aggressively avoiding work of any kind.

They openly laugh.

Lost Cause said...

Don't all of these public servants get retirement from CalPers or other funds? I mean, that is a huge and usually profitable fund -- it is not coming out of the taxpayer's pocket. And now they pay into it now.

What is all of this incessant whining about public retirement? At least somebody is getting retirement.

It is just another money grab by fat cat republicans. They already have destroyed huge chunks of capital called the private retirement system, and now they want the public system destroyed.

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