Wednesday, December 23, 2009

Schwarzenegger Wants $8 Billion Bailout from Washington

The desperate demand for dollars expresses itself in many ways. Shane Goldmacher and Evan Halper report for LaTi:
Facing a budget deficit of more than $20 billion, Gov. Arnold Schwarzenegger is expected to call for deep reductions in already suffering local mass transit programs, renew his push to expand oil drilling off the Santa Barbara coast and appeal to Washington for billions of dollars in federal help, according to state officials and lobbyists familiar with the plan.

If Washington does not provide roughly $8 billion in new aid for the state, the governor threatens to severely cut back -- if not eliminate -- CalWORKS, the state's main welfare program; the In-Home Health Care Services program for the disabled and elderly poor, and two tax breaks for large corporations recently approved by the Legislature, the officials said.

Schwarzenegger also will propose extending a cut in the state payroll that is scheduled to expire this summer. That cut has translated into 200,000 state workers being furloughed three days a month, the equivalent of a 14% pay cut. Lawmakers would have the option of extending the furloughs, imposing layoffs or some combination of the two.

The governor is scheduled to unveil his plan publicly early next month...One new source of revenue in the budget: Schwarzenegger will revive a plan to allow offshore oil drilling from an existing platform off the Santa Barbara coast. The proposal was so controversial during last summer's budget debate that after the Assembly voted down the plan, members expunged the vote, erasing it from the public record.
California's budget deficit has grown so large -- roughly 20% of the general fund -- that some measure of cuts to social service programs may be inevitable regardless of how Washington responds.


  1. Those jokers--they'll sit in their own ashes before they will cut spending. A bailout before spending cuts? Only if you have enough electoral votes would you ever ask. Please.

  2. I used to live in California. I left at the end of 2007 when it was apparent what was going to go down there.

    I was involved in real estate at the time and was kind of taken aback when there just seemed like too many foreclosures for there not to affect the entire state. Neighborhoods were blighted with them and they were sitting on the market, in comparison to years previous when they would disappear quickly.

    Considering how crazy valuations were at the time, the total impact of the losses would be epic for any government collecting property tax. All that tax money, gone.

    These facts in addition to Peter Schiff's constant hyperbolic, bearish rants on CNBC, it seemed to make sense that the worse was yet to come for California. I'm happy I made the move.

    J Cortez

  3. Happy holidays from the federal government: