More California Budget Antics

July 9, 2009

It goes on for the Golden State in the Red. From the Christian Science Monitor:

While the political theater in Sacramento is intensifying — wheelchair-bound protesters rallying against cuts to social programs were arrested Tuesday and a top lawmaker has boycotted budget meetings — analysts say that legislators are probably weeks away from coming to any agreement on how to close this state’s budget shortfall.

At the center of this drama is Gov. Arnold Schwarzenegger, who is staking his political legacy on demanding a balanced budget that comes with fiscal reforms and without tax hikes.

“This is the year that we finally have to put our fiscal house in order,” Governor Schwarzenegger said Wednesday at a press conference to pitch his proposal for cuts to the state’s social welfare programs.

While Schwarzenegger says he wants to get rid of “waste, fraud, and abuse” in the state’s welfare-to-work program — which he says could save the state $753 million this fiscal year and $1.5 billion annually — Democrats say he’s mainly trying to force through reforms that he’s been trying to make for years because the end of his term is in sight.

California’s new warrants (IOUs), currently being traded on craigslist and eBay, may drop sharply in value come tomorrow:

Some banks have said they will stop recognizing the IOUs come Friday. What’s more, Fitch Ratings cut this state’s bond rating just two clicks above junk status.

More Tax Foundation research and commentary on California here.

(Hat tip to Kail for the “Golden State in the Red” descriptor)

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