Credit Card Bill for State Skyrockets (California Liberal Fiscal Mismanagement 101 Alert)

Los Angeles Times ^ | 12/20/04 | Evan Halper

[goldstategop]

It is generally agreed on Wall Street that states should keep the share of their budget that goes to paying down debt to below 6%. California was at less than 3.4% last year. Next year, it will be at 6.4%. Assuming the state stops borrowing now and doesn't authorize any more bonds for anything — an unlikely scenario — the number is projected to grow to 7.5% by 2009. ...

Assemblyman Keith Richman (R-Northridge) described those accounting shifts to a group of business leaders at a recent economic conference at UCLA this way: "If you used them in your own business, you would probably be thrown in jail."

[goldstategop]

These two paragraphs in a LOOOOOOOOONG article spell it out. Its going to get worse in California before it gets better. Thanks to the folly of the state's august liberal leaders, California is dead-broke. About the only good news in this dire picture is the money has to go to service the debt not to new pet social spending programs. California is a national lession in the dangers of liberal fiscal mismanagement.

[Prime Choice]

Its going to get worse in California before it gets better.

And der Governator's support of Prop 71 (which added another $6 billion to the state's already-burgeoning debt) didn't help things any, lemme tell ya.

California's gonna tank...and it's gonna tank so hard, when it turns into a Mexican ghetto, it'll actually be an improvement.

[EGPWS]

Its going to get worse in California before it gets better.

And it had better stay in California, for if it becomes a national issue then federalism is lost!

[goldstategop]

Yep. The good news is it'll destroy the Democrats and their Country Club RINO friends. Somehow all this makes me positively cheerful.

[Prime Choice]

The good news is it'll destroy the Democrats and their Country Club RINO friends.

The bad news is that when that flush finally comes, it'll probably take all of California, parts of Arizona, Nevada and Utah with it. And, considering the way things are going, I would hardly be surprised if the Federal Government let Mexico reclaim their illusory Aztlan in order to "keep the peace."

[Ernest_at_the_Beach]

Oh No....time to sell my adobe.....

[Prime Choice]

Oh No....time to sell my adobe.....

Be sure to list the price in pesos, mi amigo.

[Ernest_at_the_Beach]

It's a cash only deal in my locale....

[OldFriend]

Kind of explains Ahhrrnnooollddd's little distraction while in Germany.

Talk about republicans moving left and maybe no one will notice our state's pitiful financial mess.

[snopercod]

From CALIFORNIA'S BLACK-RUPTCY [IBD Editorial] published in May, 2001:

"The fiscal recklessness shown by California’s politicians may be unsurpassed by any state in American history."

[Gritty]

One has to read the entire article to see what a mess this is.

Kalifornia is in deep kimchi. The continuing influx of illegal hordes can only make it worse.

[Carry_Okie]

California is a national lession in the dangers of liberal fiscal mismanagement.

Would that be "lesson," "lesion," or both? :-)

[calcowgirl]

From the article:

Debt costs

Because the state has borrowed heavily, it must set aside more and more money 
for payments and interest, leaving less for other needs.

Fiscal year / annual debt costs (in billions)

'01-02 / $2.7
'02-03 / $2.8
'03-04 / $2.1
'04-05 / $2.4
'05-06 / $3.0
'06-07 / $5.5
'07-08 / $6.2
'08-09 / $6.6
'09-10 / $6.8

2004-05 and later years are projections.

[goldstategop]

I mean lesson. Sorry for the typo. :)

[goldstategop]

And they probably low-balled the real costs involved. I suspect we're gonna find out the true magnitude and it won't be pleasant.

[calcowgirl]

Here's a few more telling paragraphs. The strategy of trying to borrow ourselves out of debt cannot be put entirely on the dems. Prop 57/58 was the biggest abuse and all of the Gray Davis smoke and mirrors borrowing gimmicks, and then some, were adopted by this administration.

• On top of the $51 billion in bonds yet to be repaid, the state has a backlog of $30 billion worth of borrowing that has been approved for things such as school construction, housing and environmental programs but has yet to be sold. The $3-billion measure that voters approved in November to promote stem cell research also is in that pool.

• Few states have ever taken on such proportionately high levels of debt in their budgets. In the cases of those that have, it almost always involved paying for infrastructure programs that helped drive their economy. That is where California is different. Here, taxpayers borrowed just so the state could keep spending on day-to-day programs without raising taxes.

• The state's situation is made worse by all the additional loans it has drawn against itself — akin to using one credit card to pay another. Billions of dollars that were supposed to be going to road projects, schools and local governments have instead been used to narrow the past deficit. Much of that money has to be paid back now.

[goldstategop]

I just love it when liberals are hamstrung into servicing existing debt instead of expanding government! They outsmarted themselves with these gimmicks. Nothing like schadenfreude coming home to roost with CA's loony Left.

[calcowgirl]

I just love it when...

Will you love it when they raise your taxes? Arnold may soon come to that conclusion. Gimmicks have consequences, and they are rarely positive.

[goldstategop]

You're right, I'll be mad as hell. In the meantime, I can at least enjoy their discomfort.

[Mr. Jeeves]

That's why I can't see buying real estate here. The state has to make up that deficit somewhere, and they are casting envious eyes at all that "equity wealth" held by Californians. Future imposition of a 1% annual real property tax on home values over $500K wouldn't surprise me.