Important News - Dec. 16

• 1) California Taxes Fall Short of November Target by $439 Million

“California’s finances resumed a decline in November, adding to the state’s resurgent deficit as Governor Arnold Schwarzenegger readies a spending plan that will need to erase a $21 billion gap.

California, the most populous U.S. state and the largest municipal bond issuer, collected $439 million less revenue in November than what was estimated in July, Schwarzenegger’s Department of finance said yesterday in a report. The decline leaves revenue $1 billion behind projections halfway through the fiscal year.

Schwarzenegger is due to release his budget for the coming fiscal year in January. California Legislative Analyst Mac Taylor said in November the state will face a deficit of $14.4 billion beginning in July. That’s in addition to a $6.3 billion gap opening up in the current year as several projections within the budget falter or miss revenue projections. ”

• 2) Medicaid faces major cuts - Wisconsin may be forced to cut $1 billion from health care plans

“The state may be forced to cut more than $1 billion over the next 18 months from BadgerCare Plus and other health care programs for the disabled, elderly and low-income families.

The shortfall comes at a time when more people are turning to BadgerCare Plus because of the state’s battered economy. About 700,000 people were enrolled in BadgerCare Plus alone on Nov. 30, an increase of more than 70,000 since the start of the year. At the same time, state tax revenues have plummeted because of the economic downturn.”

• 3) CalPERS may boost long-term care premiums by 22%

“CalPERS said the rate hike is necessary because of heavy investment losses and the disproportionate number of people drawing benefits compared to those paying in.

“This is a painful decision for the board, particularly in light of the current economic challenges our members are facing,” Priya Mathur, chairwoman of the health committee, said in a news release Tuesday. “However, we have a fiduciary duty to ensure the long-term sustainability of this program.”"

• 4) Current account deficit widens in Q3 (To $108 billion)

“WASHINGTON (Reuters) - The current account deficit widened as expected in the third quarter to $108 billion, largely driven by a big trade shortfall, a Commerce Department report showed on Wednesday.

The deficit rose from a downwardly revised $98 billion in the second quarter and was in line with analysts’ forecasts for a third quarter shortfall of $108 billion.

The third-quarter deficit equaled 3 percent of gross domestic product, up from 2.8 percent in the April-June period, a Commerce Department official said.

The current account is the broadest measure of total U.S. trade with the rest of the world, covering goods, services and income transfers.”

• 5) Target-Date Retirement Funds Use Junk Bonds to Increase Returns

“Dec. 16 (Bloomberg) — John Hancock’s Lifecycle 2010 mutual fund is marketed as an investment that “becomes more conservative” for people approaching retirement age. Thirty- five percent of the fund’s debt holdings in September were junk bonds, according to Morningstar Inc.”

• 6) Marin pension system plays lead role in $15 million budget deficit

“Marin County’s public pension system is financially unsustainable without reform, officials say.

No message came across more forcefully than that during a budget restructuring workshop attended by county supervisors Tuesday at the Marin Center in San Rafael. With an audience of more than 30 county employees, supervisors received a refresher course on why the county is facing a deficit of $15 million in fiscal 2010-11 and a deficit of $46 million over the next five years.”

• 7) Poll Finds 2 Million Unemployed Lost Their Homes

“A New York Times/CBS News poll released Monday found that 26 percent of unemployed Americans surveyed have been threatened with evictions or foreclosure since losing their jobs and 13 percent have lost their homes for not paying their mortgage or rent.

Those who have been looking for a job for six months or more are even more likely to have been threatened with foreclosure, according to the survey conducted on December 5 through December 10.

With 15.4 million Americans currently unemployed, some 4 million would be at risk of losing their homes and 2 million would have lost them, if the survey’s findings proved to be true on a national level. Total foreclosures in 2009 are expected to exceed 3.5 million, according to RealtyTrac.

The poll found that 86 percent of those surveyed say the loss of their jobs plunged them into crisis. For 46 percent of the unemployed, that crisis was described as “major.” Among those out of work more than six months, 57 percent say their unemployment caused a major life crisis.”

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