(California) State Cash Supply Is Dwindling (OUT OF CASH IN SIX MONTHS)

LA Times ^ | Dec. 5, 2003 | Evan Halper

[FairOpinion]

Over the next few months, lawmakers must act quickly to find ways to keep from running out of cash in June — when the state must repay $14 billion in short-term loans taken out to keep the state solvent last summer. Without a large bond, such as the $15-billion long-term borrowing proposed by Gov. Arnold Schwarzenegger, the state won't have money to make those payments.

Many budget experts in Sacramento and elsewhere agree that trying to pay back the loans due in June without a large, long-term bond is close to impossible at this point. The state simply wouldn't have enough cash on hand, even if it enacted massive cuts in programs and services.

One option would be for lawmakers and Schwarzenegger to agree on raising taxes. But that is unlikely because the governor has said repeatedly that he would not support a tax increase.

[FairOpinion]

It is very clear that the Dems are trying to push Arnold into raising taxes, because without the bond, there is no other way of raising that much cash in a short time to sink any Republican chances for 2004 in CA.

And the Republicans in the CA legislature seem to be playing into the Dems hands -- the CA State Senate rejected Arnold's spending cap UNANIMOUSLY! I think that's a disgrace.

http://www.freerepublic.com/focus/f-news/1035023/posts

[cyborg]

I see taxes in CA's future.

[FairOpinion]

"I see taxes in CA's future."

==

In that case the Republican can write off CA practically forever, and you may have to kiss the economic recovery goodbye. CA is the WORLD's 5th largest economy. A tax increase will push it back into a recession and maybe the US and the world with it.

The Dems finally found their weapons, and seems like the Republicans in the Legislature are willingly digging their own grave, by giving the Dems the resounding victory of defeating Arnold's measure UNANIMOUSLY.

[At _War_With_Liberals]

"One option would be for lawmakers and Schwarzenegger to agree on raising taxes. "

Headline is typical liberal propaganda about having no money, people suffering, etc.

I am at the point where I can read only the headlines in the LAT and NYT, and then accurately predict 90% of the content and context of it.

Yet another editorial posing as news. Is every major paper in the USA biased?

[Lancey Howard]

It is very clear that the Dems are trying to push Arnold into raising taxes

Well, the Democrats are in for quite a surprise if that is their strategy, because Arnold will NOT raise taxes. He gave his word he would not raise taxes and Arnold is a stand-up guy and a man of his word.

Arnold would have to be a lying, lowlife scumbag to turn around and raise taxes after promising he wouldn't, and he absolutely WILL NOT raise taxes, not in a million years. Everybody can relax.

[FairOpinion]

Can the creditors foreclose on CA, when the short term debt becomes due in June and CA can't pay it?

[evilsmoker]

Hate to burst your bubble but...

“The Republicans have a choice,” Schwarzenegger said on the Sacramento talk radio show. “It is the fiscal recovery bond or raising taxes. That is a choice that is up to them, because I am only going to make cuts to a certain point.” -- Sacramento Bee 11-21-03

[Lancey Howard]

Can the creditors foreclose on CA, when the short term debt becomes due in June and CA can't pay it?

That would be interesting to see, but I bet Dubya would ride to the rescue at the last minute with a plan to bankroll California in return for California allowing its state government to be placed under the control of an oversight board. This would be similar to the federal bailout of New York by President Ford, and similar to the bailout of Philadelphia during Rendell's term as Mayor.

[Jimbaugh]

15% across the board cut to every department. That is my bet.

[SteveH]

“The Republicans have a choice,” Schwarzenegger said on the Sacramento talk radio show. “It is the fiscal recovery bond or raising taxes. That is a choice that is up to them, because I am only going to make cuts to a certain point.” -- Sacramento Bee 11-21-03

Uh-oh, paging Fair Opinion to ping the flying monkeys on this one... ;-)

[cyborg]

You know it will. Isn't that every politicians answer? That's what Bloomberg did with NYC.

[SteveH]

“The Republicans have a choice,” Schwarzenegger said on the Sacramento talk radio show. “It is the fiscal recovery bond or raising taxes. That is a choice that is up to them, because I am only going to make cuts to a certain point.” -- Sacramento Bee 11-21-03

http://www.freerepublic.com/focus/f-news/1026526/posts

[Sabertooth]

You're both just evil, making people confront Arnold's words like that.

[Prime Choice]

“The Republicans have a choice,” Schwarzenegger said on the Sacramento talk radio show. “It is the fiscal recovery bond or raising taxes. That is a choice that is up to them, because I am only going to make cuts to a certain point.” -- Sacramento Bee 11-21-03

So it's either raise taxes later or raise taxes now? Can't say either option is at all appealing.

How about cutting taxes, cutting spending by 20% across the board, and cutting off all aid to illegals unless the federal government means to pay 100% of the tab?

I should have run for governor...but even I know I'm un-electable. ; )

[SteveH]

Hey, I asked for flying MONKEYS, not a TIGER. Aaargghh ;-)

[FairOpinion]

"The state simply wouldn't have enough cash on hand, even if it enacted massive cuts in programs and services."

===

Which part of the above don't people understand?

Arnold is right. "The Republicans have a choice,” Schwarzenegger said on the Sacramento talk radio show. “It is the fiscal recovery bond or raising taxes."

The Republicans blew it.

[FairOpinion]

"I asked for flying MONKEYS"

[SteveH]

The Republicans blew it.

I have to imagine that there is a different explanation for the Republicans in the Senate voting against the bond. We just don't know the strategy yet.

Brulte supported Arnold's candidacy.

Republicans only voted against when it was clear it would fail.

So there's a strategy, I think, or at least a rationale...

[Sabertooth]

Which part of the above don't people understand?

Arnold is right. "The Republicans have a choice," Schwarzenegger said on the Sacramento talk radio show. "It is the fiscal recovery bond or raising taxes."

The part of the quote you omitted...

"The Republicans have a choice," Schwarzenegger said on the Sacramento talk radio show. "It is the fiscal recovery bond or raising taxes. That is a choice that is up to them, because I am only going to make cuts to a certain point." -- Sacramento Bee 11-21-03

That's why I didn't vote for this guy.

[evilsmoker]

It's War!!! Arnold says he's going after the Dems! I think he truly thought they'd work with him. They played hardball and he says he's ready to fight back. I hope that's the case.

[SteveH]

My flying monkeys picture is better than your flying monkeys picture.

;-)

[Iris7]

Utterly predictable. Schwarzenegger knew this would happen.

The Germans and Austrians went through all of this stuff before 1933 when Hitler was elected to head the government in a perfectly legal and honest election, if such a thing can be said of any election!! Scwartzenegger heard all about this sort of thing while still a child.

History repeats itself, first as tragedy and then as farce! Actually I never liked that saying!! Oversimplified as all heck.

Looking forward to Scwartzenneger's next move. A master at work. But of course I have been wrong before!

[Iris7]

"Yet another editorial posing as news. Is every major paper in the USA biased?"

Always have been. Nothing new. And always claiming piously to stick to the truth!

[marsh2]

I know when the State was considering land deals on Headwaters, it came up with a list of disposable State lands. Perhaps now is the time to divest itself of some property.

[SteveH]

I know when the State was considering land deals on Headwaters, it came up with a list of disposable State lands. Perhaps now is the time to divest itself of some property.

UN Plaza (San Francisco, California)

[The Vast Right Wing]

First, it is unclear that raising taxes would allow Ca. to raise 15 billion in six months. Short of confiscating wealth or raising property taxes, raising sales or income taxes in an attempt to get 15 billion in six months would cause a severe depression and actually lower revenue. Second, cutting spending by that amount will have a similar effect and is simply not possible. Arnold needs to make a decision, is he going to work with the legislature or go nuclear? I think the legislature has already made that decision. My solution if I were Arnold, a bond measure and spending cap referendum similar to Colorado's, a referendum to make the legislature a part time legislature similar to Texas'. I think both would win overwhelmingly. If Arnold backed them, he could get the relevant signitures in a few weeks I suspect. That would be great, he could campaign "The only way to stop the legislature from spending your money is to keep them out of sacramento, that is why I am supporting this referendum..."

[FairOpinion]

"First, it is unclear that raising taxes would allow Ca. to raise 15 billion in six months. Short of confiscating wealth or raising property taxes, raising sales or income taxes in an attempt to get 15 billion in six months would cause a severe depression and actually lower revenue.

Second, cutting spending by that amount will have a similar effect and is simply not possible."

===

You are absolutely right. Any sensible person can see that -- but it goes to show you, how few such people exist. Here I am counting them on one hand and have a couple of fingers left over.

Arnold is indeed going to take it to the people in November, which will remind people that the reason they are voting on that, is because the Legislature didn't do their job and I predict a number of incumbents won't be returning to Sacramento.

"In the absence of a deal, the administration could fall back on a plan to bypass the legislature in which Mr Schwarzenegger would sponsor an initiative incorporating his recovery plan and put it to the popular vote next November."

Schwarzenegger plans for spending cap under fire

[Dimples]

The Republicans blew it.

Hardly. According to Jim Brulte (CA Senate Minority Leader) the final 34-0 vote to kill the Governor's Spending Cap Proposal was a symbolic vote by the Senate Republicans. Their point was to protest even the Governor's spending cap as "too weak."

Aren't you the guy who said "Vote for Arnold because McClintock can't win ... look at the polls ... he can't get enough votes?" Well might I be so bold as to point out that there is NO WAY the Republican in the Legislature can win this (or any other) vote. Look at the numbers ... they don't have the votes. They took the opportunity of lost vote to cast a meaningless protest vote (for all the good that'll do.)

The job of swaying the Democrats lands squarely with your guy, and this time he couldn't pull it off (not the anyone else could have either.)

Unfortunately, the financial disaster will have to roost before anything happens. And even then, I predict we'll go through a period of emergency short term borrowing until that is either adjudicated as unconstitutional, or until the price of that borrowing gets so high that even the Democrats will cry uncle.

It appears that no one in power, not the Dems in the Legislature nor the Governor will make any meaningful attempt to cut spending. Once the debt well is dry, there is only one choice left: tax increases.

Then and only then can you make a judgement about whether it will have been the Senate Republicans or the "Vote for Arnold" crowd who "blew it."

[winker]

Instead of increased taxation they had better adopt restrictive Budgetary reform NOW! Its the LIFESTYLE I tell ya! Arnold had better listen and take action now otherwise he is going to find himself very alone in a liberal/socialist quagmire of his own making. He can claim he inherited all this mess but now he is charged with carrying the load. Gray Davis is the cause of all this and nobody out there in Colleyfornia knows how to spell BUDGET! Now as a result; all of you will be fitted with a personal Budget Harness so Restrictive but so Necessary if you are to survive. The LIFESTYLE GOTCHA is forcing your hand it is the best thing for all of YA! What you have now is proposed taxation that will increase the debt load you cannot pay now. Soon enough you will be forced to sell off your personal assets; state and otherwise! The time for realism has finally been forced on Colleyfornia; time to rejoin the real people "We already know you ACCUMULATE by not spending!" Otherwise we will just have to see and feel your Pain out there! We won't however bail you out!

[FairOpinion]

"Hardly. According to Jim Brulte (CA Senate Minority Leader) the final 34-0 vote to kill the Governor's Spending Cap Proposal was a symbolic vote by the Senate Republicans. Their point was to protest even the Governor's spending cap as "too weak."

====

As I said, the Republicans blew it.
They are back to their same "if we can't get everything, we want nothing", instead of taking something pretty darn good.

In their symbolic vote, they just shot themselves in the foot bigtime, because come election time, they won't be able to say that it's the Dems fault, that Arnold couldn't solve CA's budget crisis, because ALL the Republicans voted with the Dems.

Stupid and pathetic are the words for them.

[ridesthemiles]

Looking forward to Scwartzenneger's next move

TV this am is reporting that Arnold froze all new contracts, extensions to existing contracts, and froze all non-essential travel by state workers.

I want him to remove their cell phones, also. This is one area where millions are being spent every month, because the "worker" thinks the cell phone is a perk for him/her and he/she should be able to have contact at all times with family, etc.

Prios investigations be media have shown as much as $5 thousand a month of charges on some cell phones by state employees. I'ss bet Bush doesn' run up that kind of bill.
The bleeding of tax money HAS to STOP.

[ridesthemiles]

Looking forward to Scwartzenneger's next move

TV this am is reporting that Arnold froze all new contracts, extensions to existing contracts, and froze all non-essential travel by state workers.

I want him to remove their cell phones, also. This is one area where millions are being spent every month, because the "worker" thinks the cell phone is a perk for him/her and he/she should be able to have contact at all times with family, etc.

Prior investigations by media have shown as much as $5 thousand a month of charges on some cell phones by state employees. I'ss bet Bush doesn't run up that kind of bill.
The bleeding of tax money HAS to STOP.

[Dimples]

So what would you have the Congressional Republicans do?

And how would that have changed the outcome?

And what "pretty darn good thing" would they have gotten by losing the vote say, 22 to 12?

And I guess when the Governor says "Give me MY version of the spending cap, or give me nothing" he's saying something different than your claim that the Senate Replicans are saying "if we can't get everything, we want nothing?" (In reality neither said anything remotely approaching your claims ... but you seem unable or unwilling to see that.)

And I guess the Dems are blameless here. You seem to have nothing to say about them; you only seem to blame Senate Republicans for the failure of the Democrats to "get on board."

All this makes me wonder just who's side your on here.

[FairOpinion]

"So what would you have the Congressional Republicans do? "

===

Vote FOR Arnold's proposal, so come November the voter can see clearly who scuttled Arnold's proposal.

By not making the symbolic stand, they gave up on that issue. Now the Dems can say, "see, the Republicans didn't like Arnold's proposal either".

[Tamzee]

Let's see... two ways a government can help stimulate an economy, lower taxes or increase spending.

Lowering taxes or increase spending are both out of the question right now because Arnold is required by law to close the deficit immediately. He has to both balance the budget AND grapple with over $10 billion of inherited debt from Gray.... all while trying to repair the state economy and reverse the job losses/businesses moving out.

He's already cutting billions with the measures he's ordered... wouldn't also cutting another 10-15 billion at this moment slow the economy even further? CA is in a financial spiral downward, I don't see how Arnold could have stopped the spiral any other way but the one he proposed.

[cynicom]

The socialist professional politicians of both parties cannot bring themselves to accept fiscal restraint. They might be voted out of office. I hope CA goes bankrupt.

[Dimples]

Vote FOR Arnold's proposal, so come November the voter can see clearly who scuttled Arnold's proposal.

In other words, nothing of substance; only something of symbolic meaning. The fact you are whining about the Republicans choosing a different symbol than you would have chosen sound more like sour grapes than anything meaningful.

Blame the Republicans all you want (you seem not to equate the Governor with the Republicans) but in the end, it's up to the Governor to sway the Congressional Democrats to see it his way. But he's gonna have to get more than ZERO Democrats to support his proposals if he wants to have a chance doing anything through legislation (like he did with the Driver's License repeal.)

Failing that, what the minority Republicans do with meaningless votes is truly irrelevant. If you truly had a "Fair Opinion" (using "just and honest" definition of fair, rather than the "mediocre" definition of fair,) you would see that and focus your daggers against the real obstacle in this battle: the Congressional Democrats.

I can only hope that the Governor will use whatever power he has to stop the state from spending money to put pressure on the Dems. Failing that, we'll just have to run out of money to get their attention.

Remember who the opposition is here. Beating up on the only likely ally you and the Governor can hope to have over something as irrelevant as the symbology of a meaningless vote is surely not going to you anywhere.

[Dimples]

Economic stimulus isn't the issue. If it was, Gray Davis would still be Governor. He and his pals in the Legislature are spending enough dough to simulate the dead back to life.

The issue is runaway spending. (Of course, if you're a Democrat, the issue is terminally inadequate taxation.)

The Constitutional requirement to have a balanced budget doesn't seem to have any teeth (anyone who thinks borrowing to finance cash flow is "balancing a budget" is hoplessly fiscally irresponsible.) Without spending cuts and spending caps, any borrowing merely postpones and increases the pain (not to mention failing to actually balance the budget.)

[Tamzee]

Economic stimulus isn't the issue. If it was, Gray Davis would still be Governor. He and his pals in the Legislature are spending enough dough to simulate the dead back to life.

Gray's "spending" wouldn't have helped the economy while he was also raising taxes, Workmens Compensation was increasing exponentially and regulation/socialist employer requirements were cutting businesses at the knees. An economy won't improve if you have a flood of businesses, jobs and investment flooding OUT of the state.

I certainly don't advocate that Arnold increase spending, and I don't think he could legally cut taxes at this point... he then has to find a way to make cuts without further delaying the economic recovery and entice employers/jobs back to the state. Revenue going up might also lead to the tax relief CA needs so badly. If he can close the deficit with cuts and temporarily refinance Gray's debt, this could possibly give him the room to also cut taxes next year.

[William Tell]

Can someone help me understand what is happening right now?

I was anticipating that the legal challenge to Davis' "deficit bonds" would have been successful now and that the $3 billion reserve would be exhausted. I was expecting that Kalifornia would be in default now.

Instead, the various articles are suggesting that Kalifornia will run out of cash in June. If we run out in June, it must be that spending was exceeding revenue in June and sufficiently prior to June to exhaust any reserve.

What are the present tax receipts? What is the present expenditure level. What is the present reserve? There must be some model used to predict running out of cash in June. What is it?

[Iris7]

"I want him to remove their cell phones, also. This is one area where millions are being spent every month, because the "worker" thinks the cell phone is a perk for him/her and he/she should be able to have contact at all times with family, etc."

Good idea. Publicize the most extreme cases first. Use TV ads.

Send the Governor a hand written letter complaining about the unfairness of paying for such a perk. I am from out of state.