A Very Brief History of California State Budget Crises

Yes, folks, crises is not an error. It is the plural of crisis. Just since 1992 there have been 3. In 1992 the state funds ran so low that the state employees were issued warrants instead of paychecks. Banks honored the warrants and redeemed them later with a 5% premium. It took 2 months for the legislature to pass a budget.

In 2002, thanks to California's kinda sorta deregulation of the electricity market, there was another crisis. The legislature assumed the competition that(snicker snicker ha ha)deregulation brought would hold prices down until 2 weeks after Heck froze over. So they put a cap on how much electric companies could charge consumers. Yes, the politicos in Sacramento put a limit (AKA regulation) on how much electricity providers could charge their customers. They never thought that inflation would nudge prices up, that developing countries (India, China for example) would not want more oil for their expanding energy needs or anything else would drive prices for electricity production up. In other words, the legislature did not do much thinking at all when they set up this "deregulated" electricity market. When real life kicked in, California's electric suppliers were forced (by legislative fiat of course!!) to pay more for electricity then they were allowed to charge consumers. This brought on rolling brownouts and the recall of Governor Gray Davis.

Now, Arnold Schwarzenegger is Governor and dealing with the same problem. The state of California spends more money than it takes in. If California was a nation onto itself separate from the USA, it would be somewhere between the 5th and 10 largest economy worldwide based on gross domestic product. How does a state with a gross domestic product larger than lots of nations end up with such a deficit that a budget emergency needs to be declared and the state stops paying its bills ??!!! Truth is much,much stranger than fiction.

The First Lady is Smoking Hot!!!!

I saw a picture of President & First Lady Obama walking down Pennsylvania Ave on January 20. The Prez had his overcoat buttoned up, probably due to the ambient air temperature of 20 something fahrenheit. The First Lady had her coat open. Unless she had thermal underwear on, I don't know how she could not feel the chill in the air. Perhaps it has something to do with the fact that she was born and raised in Chicago, the windy city on the shore of Lake Michigan. President Obama was raised in much balmier climates( Hawaii, Indonesia & Kansas) so it would be natural for him to button up his overcoat. Oh well, just more proof that opposites attract! Maybe Barack's balmy nature and Michelle's Chicago heartiness will make for a winning team in the White House. Let's hope so.

Armageddon California Style!

Here's the latest news from the California State Budget Crisis:

John Chiang, Controller for the State of California, announced on Friday, January 17, 2009 suspension of some State debt payments effective Feb. 1, 2009. $3.7 billion will be suspended (AKA not paid) unless the governor and legislature can work together and put together a working budget in 2 weeks. At a news conference in his office Friday, Chiang said "It pains me to pull this trigger. But it is an action that is critically necessary."

The suspended payments include $2 billion in tax refunds, $13 million in student grants and $300 million for elderly, blind and disabled Californians. The tax refunds are actually excess collection of income tax payments to the state from the taxpayers wallets in the first place. This has got to hurt the taxpayers unless they are masochistic, suicidal or both. The $300 million for the blind and disabled may be a place to start trimming the budget. Here is a quote from www.news10.net, the website for News 10 KXTV in Los Angeles:

Also affected are an estimated 1.3 million blind and disabled Californians, like Kathy Hall, who's friend Lillian Duran explained the impact it could have. "She will not be able to pay her house payment, her VISA payment, her rent."

Only in California can the blind and disabled afford house payments and rent, not to mention a visa card. I don't mind a whole lot assistance for someone to pay either a house payment or rent but not both. I also find the visa a little too much. Maybe that statement needs some clarification.

While we're on the subject of clarification, let's review the budget crisis over the last 12 months. Governor Schwarzenegger declared a fiscal emergency for the state of California under the rules of proposition 58, which he sponsored and the voters ratified in 2004. Proposition 58 requires action by the legislature to correct the anticipated monetary shortfalls. 1 year later, they are still trying to resolve the shortfall. Most emergencies and crises have such urgency that 12 months with no resolution is unthinkable.

More on this later.