Daily Archives: January 8, 2010

Thank the unions for  the current financial crisis in California.    Firemen making 250,000 a year.  Prison guards making 250,000 a year.  Teachers making 150,000 a year.   Retirement pays 104 % of wages.   This is what America will be like in ten years.  Four years if health care reform passes.    JD

SACRAMENTO, Calif. — Republican Gov. Arnold Schwarzenegger asked for $6.9 billion in federal funds in his state-budget proposal Friday and warned that state health and welfare programs would be threatened without the emergency help.

Mr. Schwarzenegger’s proposed $82.9 billion general-fund budget for the 2010-11 fiscal year would close a $19.9 billion gap over 18 months. In addition to the federal aid, he called for $8.5 billion in cuts and $4.5 billion in alternative funding to balance the budget.

“It’s time to enact long-term reforms that will change the way the most populous state and the federal government work together,” Mr. Schwarzenegger said. He and state legislative leaders plan to visit Washington to lobby for bailout money. White House budget officials weren’t available for comment on the governor’s request.

Mr. Schwarzenegger said that without the federal aid, he would propose cutting $4.6 billion from state assistance programs and raise another $2.4 billion, largely by extending the suspension of tax breaks.

The governor said California deserved the federal help because the state sends far more tax money to Washington than it receives in return. Federal mandates, he added, “force us to spend money that we do not have.”

The budget proposal said the federal government should reimburse California $2.8 billion for costs related to the state’s Medicaid program, as well as more than $1 billion for special-education spending and $2.1 billion in federal-stimulus money.

Mr. Schwarzenegger called the state legislature into a special budget session. He proposed cutting $2.4 billion from health and welfare spending and $1.2 billion from prison spending. He also called for cuts in salaries and pensions for state workers.

Republicans praised the plan. “It’s a good first step,” said Bob Dutton, vice chairman of the state Senate’s budget committee.

State Senate President Darrell Steinberg, a Democrat, said: “I have one reaction: You’ve got to be kidding me.” He and other legislative leaders said they opposed any more cuts to welfare and health programs. Instead, they said they preferred federal help or taxes on, for example, oil drilling and tobacco sales.

“These cuts would come at a bad time because there is growing demand from families who are struggling to make ends meet,” said Jean Ross, executive director of the nonprofit California Budget Project, which studies policy impacts on the poor.

Mr. Schwarzenegger has been mired in a budget crisis for much of the past two years. California revenues have plunged amid double-digit unemployment and high foreclosure rates. The state has delayed billions of dollars of payments and issued IOUs to keep the government from defaulting.

The return of partisan statehouse clashes over the budget is likely to revive worries on Wall Street over the state’s ability to resolve its fiscal troubles. “My concern at this point is that the negotiations could go on longer than the amount of cash the state has on hand,” said Gabriel Petek, analyst at Standard & Poor’s Corp., which has California on a negative ratings outlook.

A deeply divided legislature finally closed a cumulative $60 billion shortfall last year — long after its budget deadline.

There are signs California is beginning to slowly emerge from recession. Housing sales have been growing for several months, and state Controller John Chiang on Thursday released his December cash report that showed the month’s receipts rose above estimates by $481 million, or 5.7%.

“December receipts showed signs of improvement, but the state continues to face tremendous fiscal challenges,” Mr. Chiang said. “At best, this is the beginning of a long and gradual recovery.”

Refocuses?   What the hell does that mean?   Sure Obama inherited the bad economy,  but after a year of trying to turn America into France,  and watching the debacle that has become Afghanistan all the while Obama was trying to get the Olympics in Chicago,  one would think that Obama would see the writing on the wall and focus on the economy.  Jimmy Carter says what?  JD

His agenda altered by the Christmas bombing attempt, President Barack Obama pivoted back to the domestic economy on Friday, promoting new U.S. spending to create tens of thousands of clean-technology jobs.

He outlined the initiative after a weak government jobs report raised new questions about the sustainability of the recovery.

“It’s clear why such an effort is so important. Building a robust clean energy sector is how we will create the jobs of the future, jobs that pay well and can’t be outsourced,” Obama said in late-afternoon economic comments at the White House.

Obama spoke after the Labor Department said the U.S. jobless rate was unchanged at 10 percent in December, following a decline the previous month. But the government’s broader measure of unemployment — which includes people who have stopped looking for work or can’t find full-time jobs — ticked up 0.1 percentage point to 17.3 percent.

That, plus the larger-than-expected loss of 85,000 jobs in December, put new pressure on the administration to step up job creation.

“The road to recovery is never straight,” Obama said, although he added that the trend is pointing toward an improving jobs picture.

Riveted for the past two weeks on terrorism, the White House has been eager for a subject change. And Friday’s remarks were an attempt to return national attention to Obama’s domestic agenda, particularly jobs.

As long as the focus remains on terrorism, Obama is vulnerable to criticism that he isn’t aggressively addressing the jobs crisis — potentially damaging politically for Democrats in this year’s midterm elections. Polls show that jobs are the No. 1 concern of Americans.

At the same time, the constant focus on the botched Christmas Day attempt to blow up an airliner bound for Detroit — and U.S. intelligence failures surrounding the episode — has offered Republicans an easy opportunity to keep pounding Obama for national security lapses.

SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger proposed an austere budget plan Friday for the coming fiscal year that takes California back to its spending level of six years ago.

To make up for a drastic drop in tax revenue and plug a $20 billion deficit, Schwarzenegger proposed making cuts to health and human services, welfare, transportation and environmental programs.

He also seeks to raise money by rolling back recent corporate tax breaks, expanding oil drilling off the Santa Barbara coast and calling on the federal government for more assistance.

The Republican governor vowed to protect spending for public schools and colleges after cutting their funding by billions of dollars in recent years, actions that have sparked student protests throughout the state.

The continued austerity measures are a fallout from the national recession, which has pummeled California’s economy and boosted the state’s unemployment rate to 12.3 percent, third highest in the nation.

Schwarzenegger said the state is slowly beginning to emerge from the worst economic downturn in decades but that it would be three to four years before tax revenue recovers.

“Tough times still lie ahead,” he said.

Schwarzenegger’s budget proposal for the fiscal year that begins in July contains $82.9 billion in spending from the general fund, the state’s main account to pay for its daily operations. The amount is $3.1 billion lower than last year and is the lowest amount California has had to spend on government operations since the 2004-05 fiscal year.

It is $20 billion less than the high point of general fund spending three years ago.

The total budget for the coming fiscal year, which includes special funds from fees and taxes dedicated to specific purposes, is $118.7 billion, nearly $6 billion lower than a year ago.

“I know that the budget I laid out today is difficult and it is painful, but California is resilient,” Schwarzenegger said at a news conference. “We know that we will get through these tough challenges.”

The political divisions over the governor’s plan began showing earlier this week after Schwarzenegger previewed some of his proposals in his final State of the State address. As it did last year, debate over which programs will get money from a shrinking pie will dominate state government this year.

Democrats, the majority party in both houses of the Legislature, want to explore more ways to raise money and protect health and human service programs. Republicans, whose votes are needed to reach the two-thirds majority required to pass a state budget, refuse to raise taxes and want to focus on ways to help the private sector create jobs.

Schwarzenegger includes stimulus measures in his budget proposal, including a $500 million plan to train 140,000 workers and create 100,000 jobs. Finding the money to pay for those initiatives will be a point of negotiations in the months ahead.

The governor also vowed to continue targeting the state payroll after ordering government workers last year to take three furlough days a week, which cut their pay by 14 percent. His proposal for the coming year would replace furloughs with a straight 5 percent pay cut and would ask state government employees to contribute 5 percent more to their pension plans.

Departments across state government would be required to reduce their payrolls by 5 percent by mid-July.