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California budget crisis could bring lasting economic harm
LA Times ^ | 5/23/09 | Martin Zimmerman, Marc Lifsher and Andrea Chang

Posted on 05/23/2009 10:26:12 AM PDT by NormsRevenge

As bad as California's budget crisis is for the state's $1.8-trillion economy, just wait. It could get worse.

The spectacle that played out in the national media this week of a state unable to get its fiscal act together is reinforcing the notion that the Golden State is a rotten place to do business, experts say.

Corporate leaders and Wall Street investors, watching the daily festival of seeming incompetence, political partisanship and governmental dysfunction, could be persuaded to limit or eliminate their investments here.

...

The budget crisis threatens to further weaken the state's job market, which lost 63,700 more jobs last month, according to figures released Friday. The state's overall unemployment rate actually fell slightly, to 11% from 11.2%. But new job losses could prolong the vicious cycle in which the California economy is now trapped, with rising joblessness reducing consumer spending and delaying a housing rebound, thus leading to more layoffs.

The long-term effects of Sacramento's financial woes, meanwhile, could far outweigh the near-term effects. In particular, the expected deep cuts in education spending could thin the state's human capital, potentially forcing California companies to look elsewhere for skilled workers as well as new plants or even headquarters.

It's the equivalent of "eating the seed corn," said Levy, chief economist at the Center for the Continuing Study of the California Economy in Palo Alto.

Of course, there would still be plenty of short-term pain to go around. How much won't be known for a while. But eliminating as much as $24 billion from the proposed $95.5-billion general-fund portion of the 2009-10 state budget would further corrode an economy already creaking under the weight of a national recession.

(Excerpt) Read more at latimes.com ...


TOPICS: Business/Economy; Government; Politics/Elections; US: California
KEYWORDS: budgetcrisis; calbudget; caleconomy; california; calinitiatives; economic; harm

1 posted on 05/23/2009 10:26:12 AM PDT by NormsRevenge
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To: NormsRevenge

—as California goes, so goes the nation—


2 posted on 05/23/2009 10:28:17 AM PDT by rellimpank (--don't believe anything the MSM tells you about firearms or explosives--NRA Benefactor)
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To: NormsRevenge
DUH! F’in geniuses. Yes, 10% of the population does make a difference.
3 posted on 05/23/2009 10:29:39 AM PDT by mad_as_he$$ (Nemo me impune lacessit)
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To: NormsRevenge

bookmark


4 posted on 05/23/2009 10:33:59 AM PDT by GOP Poet
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To: rellimpank

exactly, wait untill california, and the rest of the nation too, lose their income from closed Chrysler dealers...buildings sitting empty, soon we will look like Detroit.. cities, counties, states, will be affected....Thanks to Obamamobile... taking over the car business... plus all the unemployment the state will have to pay out..The feds just extended it to over a longer period of time now..


5 posted on 05/23/2009 10:34:51 AM PDT by JoanneSD (illegals represented without taxation.. Americans taxed without representation)
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To: NormsRevenge
1. Get rid of ALL services for the ILLEGALS.
2. GET RID OF ALL department of redundancy departments
3. Severly rein in the SIEU and the teachers union
4. Severly lower ALL taxes ESPECIALLY those for businesses
5. Severly de-regulate businesses

and Viola Surplus budget

6 posted on 05/23/2009 10:39:53 AM PDT by clamper1797 (FUBO ... protege of the unholy union of Karl Marx and affirmative action)
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To: JoanneSD

“The feds just extended it to over a longer period of time now..”

No, they did not. All the state had to do was refuse the money.


7 posted on 05/23/2009 10:48:36 AM PDT by patton (Oligarchy is an absorbing state in the Markov process we find ourselves in. Sigh.)
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To: NormsRevenge
In particular, the expected deep cuts in education spending could thin the state's human capital, potentially forcing California companies to look elsewhere for skilled workers as well as new plants or even headquarters.

Typical liberals. They spend more $ per capita on education than they ever have yet more students drop out or are barely literate when they graduate. Perhaps that curriculum might have something to do with it? Why not replace "Harvey Milk Day" with "Math Day" and actually teach the students something useful for a change?

8 posted on 05/23/2009 10:59:52 AM PDT by calcowgirl (RECALL Abel Maldonado!)
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To: NormsRevenge

Put the quill down and back away from any additional regulatory legislation such as shutting down and prohibiting all suction dredge mining in the entire state of California. Also Cap and Trade.

Put the quill down and back away from any additional entitlement and social benefit legislation such as universal health care.

Rescind much of the global warming, extreme water quality and endangered species permitting legislation that regulates family owned natural resources businesses to death and diverts the local use of resources from people to critters. (Like the Central Valley water issue that is causing 40% unemployment.)

Lower taxes on businesses to increase investment, employment and revenues to the state. Offer incentives such as Enterprise Zones in depressed areas. Increase the economic development department of the state. Engage in a major campaign to become more business-friendly.


9 posted on 05/23/2009 11:05:47 AM PDT by marsh2
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To: calcowgirl

California must serve the Nation by providing a real life example of the consequences of ignoring the ‘seven fat years, seven lean years’ lesson. So a government is expected to spend more when the larger economy is suffering? Too bad they spend everything they had and more on non-critical (and largely politically correct) nonsense during the great Reagan period of wealth creation.


10 posted on 05/23/2009 11:10:34 AM PDT by dogcaller
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To: dogcaller

are you kidding me? the problem is that you’re not paying enough taxes!


11 posted on 05/23/2009 11:12:03 AM PDT by GreatDaggar
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To: rellimpank

“—as California goes, so goes the nation—”

We’re screwed...


12 posted on 05/23/2009 11:19:53 AM PDT by y6162 (uish..)
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To: NormsRevenge

Of course, “bailing out” the state and keeping it on artificial life support would only extend the agony. No one is going to move to or invest in a state that won’t balance it’s books and preys on it’s own.

It’s as simple as that.


13 posted on 05/23/2009 11:27:48 AM PDT by sinanju
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To: NormsRevenge

Well if you little people would just give us all your stuff, we wouldn’t have to take it from you...

-the American Left


14 posted on 05/23/2009 11:32:21 AM PDT by Tzimisce (http://groups.myspace.com/nailthemessiah)
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To: sinanju
Everyone was amply warned by us last year (from March to November). Now, the real chickens (not Rev. Wright's chickens), are coming home to roost. Let the liberals debate contraception for pre-teens while the masses have nothing to eat and no gainful employment.

I bet America will become awful conservative awful quick. Liberalism is the luxury of the pampered. Our days of pampering are quickly coming to an end.

15 posted on 05/23/2009 11:33:40 AM PDT by johnnycap
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To: clamper1797

And how about the excessive pensions and benefits—royalty
in CA exists. I am still waiting for elimination of some of the many agencies which are useless. Some don’t even answer phones. Many overlap....or really just have employees who do very little. I know, I called some to inquire! Why don’t they just put all retirees —no matter if govt or private—on SS? They could still have a smaller pension.


16 posted on 05/23/2009 11:34:53 AM PDT by Achilles Heel
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To: NormsRevenge

But eliminating as much as $24 billion from the proposed $95.5-billion general-fund portion of the 2009-10 state budget would further corrode an economy already creaking under the weight of a national recession.


You can’t further corrode what’s already completely corroded. The people of California are fed up and won’t take it anymore. That’s the message. California’s government should quit crying and start earning their salaries.


17 posted on 05/23/2009 11:35:48 AM PDT by Joan Kerrey
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To: calcowgirl

and actually teach the students something useful for a change?


Speak for yourself. My electronics company always looks for young brains who are majoring in Harvey Milk history, black studies, basket weaving designs of American Indians and other useful subjects that will help staff my engineers and math gurus. We need our work force to be well rounded. /s


18 posted on 05/23/2009 11:42:05 AM PDT by Joan Kerrey
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To: Joan Kerrey

Why don’t they just raise the property and income taxes and institute a lottery?

Oldplayer


19 posted on 05/23/2009 12:13:56 PM PDT by oldplayer
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To: NormsRevenge
California can't balance its budget. Its become a national laughingstock.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

20 posted on 05/23/2009 12:18:52 PM PDT by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives In My Heart Forever)
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To: Joan Kerrey
My electronics company always looks for young brains who are majoring in Harvey Milk history, black studies, basket weaving designs ...

ROFL!

21 posted on 05/23/2009 12:25:50 PM PDT by calcowgirl (RECALL Abel Maldonado!)
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To: oldplayer
Why don’t they just raise the property and income taxes and institute a lottery?

They already raised income taxes (and sales taxes and vehicle taxes). And we already have a lottery.

The problem is not that the state doesn't have enough revenue. It is that they spend too much. Give them more money, they will just spend 110% of it and create another deficit. It's an addiction. The only way to cure it is to cut them off.

22 posted on 05/23/2009 12:29:12 PM PDT by calcowgirl (RECALL Abel Maldonado!)
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To: clamper1797

Wow. They always threaten that — without education spending, we (the economy) will all collapse!

Hey, give us School Vouchers, Teachers Unions, and we will see how “bad” the economy will be. We have a 50% drop-out rate for LA public (government)schools. Can vouchers & school competition be worse than that? No, that’s not what the data shows.

Competition among schools helps IMPROVE educational outcomes, forces public schools to improve performance to retain revenues.

It also means better quality at a LOWER COST to taxpayers.


23 posted on 05/23/2009 12:47:38 PM PDT by 4Liberty (End of civilization. 'Who cares about a little pork?' - Senator Schumer)
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To: NormsRevenge

Apple today is looking to build a server farm in North Carolina. Even the uber-liberal’s are fleeing. I love their products, hate their politics.


24 posted on 05/23/2009 1:10:14 PM PDT by itsahoot (Each generation takes to excess, what the previous generation accepted in moderation.)
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