STATE OF CALIFORNIA RAPIDLY HEADED OVER FINANCIAL CLIFF
By Daniel at 22 June, 2009, 6:26 pm
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The State of California passed a ridiculous mess in February called a “budget” but it depended on a series of major tax hikes like increasing the sales tax to nearly 10%, doubling vehicle registration fees, and all sorts of other outrageous measures. The response, of course, was for people to buy far less in the way of major taxable purchases, particularly cars, and so the State’s sales tax revenues have plunged nearly 34% since that “budget” was enacted.
Since it was passed mid-term (rather than on July 1st) it was a budget for around 17 months rather than the normal 12 months. It was also full of all kinds of other holes, accounting jiggers, and nonsensical projections that made no sense. It also depending on the State passing a series of incredibly stupid ballot measures, all of which were rejected by the unanimously voters in May.
Now, the State appears to be at least $24 to $30 billion in the red. Its lenders have cut it off. Its bond ratings are being downgraded even further and California is already the lowest rated State in the country on creditworthiness. Not even payday lenders will lend to it and it looks like the State won’t be able to float its annual “Revenue Anticipation Bonds.”
Over 25% of the State’s budget goes to services for illegal aliens and there is so much waste and fraud in the State’s spending - which has doubled over the past 10 years - that cutting spending is extremely easy. However, this is exactly what the State refuses to do as it heads straight over the cliff.
A.P
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