Monday, January 18, 2010

Not Good, California

California At The Brink Of Financial Disaster – by Michael C. Genest, California Director of Finance

http://aiki14.com/files/2010/01/Financial_Disaster-Presentation-w.pdf

Here is a breakdown of California’s finances. We took in $86.3 billion in Taxes but owed $14.8 from past borrowing. So we will bank $71.5 billion.

But we are set to spend $111.1 billion this year. That leaves a shortfall of $41.6 billion. That is 58% more than we expect to net in FY2010!


So who gets hit if California runs out of money – er can’t borrow anymore money?

No Tax Refunds! That’s right, first on the list for those who lose are those who PAY THEIR TAXES! Can you say TAXPAYER REVOLT?? Remember Grey Davis… Watch Massachusetts tomorrow…

Next up, Vendors will not get paid.

Social Services, Healthy Families, Development Services and College Students (Cal Grants)


What about Infrastructure?
$22.5 billion in construction, schools, transportation projects and water projects would be left unfunded. Didn’t we just go through this last year?



Where Do They Propose Closing the Deficit?

Cut $8.5 billion in Education spending – about half of all spending cuts proposed
Raise Taxes $17.4 billion (including raising the Sales Tax by 1.5%)
Borrow $5 billion from the Lottery
Cut the Tax Credit for having Dependents by $1.4 billion



So where does this all get us?
Best case estimates put future deficits at the following levels –

FY 2011 - $11.7 billion deficit
FY2012 - $9.9 billion deficit
FY2013 - $13.4 billion deficit

Phew. I’m glad they solved that problem…



Is it just me, or is California going about this the wrong way?

California is proposing putting the majority of the pain on families with young kids and young kids and school-age kids who receive public support.

I did not see a line item that noted how much Retired Employee Benefits would be cut or how many redundant public employees would be fired or how the current salaries for public employees would be brought back in line with economic reality.

At some point, the country will pick to favor our future over our past and throw these idiots in government into the unemployment lines with the 17.3% of Americans currently showing up on the U-6.

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