SACRAMENTO – State Controller John Chiang today released his monthly report detailing California’s cash balance, receipts and disbursements in May and through the first 11 months of the fiscal year. In May, revenue was $827 million below the latest projections found in the Governor’s May Budget Revision.
"Without immediate solutions from the Governor and Legislature, we are less than 50 days away from a meltdown of State government. This presents a terrible threat to California’s economy and to the State’s delivery of basic public services,” said Chiang. “A truly balanced budget is the only responsible way out of the worst cash crisis since the Great depression.”
Personal income taxes were $475 million below (-23.0%) estimates in the May Revision. Corporate taxes were down $84.4 million (-25.8%), and sales taxes fell by $109 million (-3.3%).
The Controller has met with Governor Schwarzenegger and Legislators in the past week to brief them on the State’s immediate cash problem. He also sent a letter to State leaders this morning with new cash projections – updated to reflect May actuals and final May Revision numbers from the Department of Finance – that continue to show the State exhausting all available cash by late July. The State is now projected to run $2.78 billion into the red on July 31.
The State started the fiscal year with a $1.45 billion cash deficit, which grew to $19.8 billion on May 31, 2009. ...
Any bets on how soon the feds will bail out "too big to fail" California, using our (non-California) tax dollars? After all, we can't allow California's bloated government and all those well-paid unionized state employees to ... gasp! ... sacrifice a penny while the rest of us cut back, now can we?
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and all those well-paid unionized state employees to ... gasp! ... sacrifice a penny while the rest of us cut back, now can we?
Excuse me? The last time I checked, CA state workers were taking two furlough days a month, and they may be taking more. How many furlough days are you taking?
And well paid? Not for CA we're not. I started at the state 4 years ago making exactly $12.50 an hour. Do you not know how much it costs to live in CA? We're already taxed to death, home prices, even though falling, are still higher than anywhere else in the nation except perhaps New York and Hawaii.
Anonymous,
I have numerous friends in California, so I am well aware of the high cost of living in your beautiful state.
California is the most heavily taxed state in the nation (New York is a close second), yet the state is on the verge of insolvency. So where is all that money going? The government is spending it on countless government programs, and their employees and pensions. (See this post from Mish on California pensions). So while you may not be a highly paid state employee, evidently many public employees in your state are. Simply put, if the state is spending beyond its means (and it is), then this cannot continue. That means cutting programs, jobs, and benefits, or raising taxes even more. Or some combination of these. Or forcing non-Californians to pay for your bloated state government's excesses via a federal bailout.
According to the Bureau of Labor Statistics (see here), as of May 2009 California has the second highest broad unemployment (U-6) rate, at 15.6% (Michigan has the highest, at 17.2%). So there are a lot of Californians making real sacrifices -- they are out of work, or want a full time job but can't get one. By the way, if you think two unpaid furlough days a month is a sacrifice now, when the state is still paying its workers, just what do you think will happen when it can't?
If the federal government forces non-Californians to bail out the California government, not only will the rest of the country have to subsidize California's bloated government, but your state will in all likelihood not make the needed cuts to bring state government spending in line with economic reality.
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