This story was reported for San Diego News Network on December 17, 2009.
Let me just apologize for this abnormally sad entry of California Budget Crisis Diaries during such holiday glee. In fact, this is so sad – I’m going to link to a few cheery stories at the end of this entry because I don’t want to leave any of my readers in despair despite the importance of all Californians knowing this information.
So here goes. And keep reading until the very end and promise that you’ll read the happier stories when you’re done with CBCD.
Dwindling revenue: The state’s estimate for revenue has faltered by $1 billion as reported by Reuters.
According to California’s monthly revenue report, November saw a cash flow of $4.9 billion into the state — $439 million below estimates. Additionally, “year-to-date revenues are $1.035 billion below the expected $30.414 billion.”
Declining revenues are based on several problems facing our sunny California.
“The combined shortfall for the two years has been pegged at about $21 billion — the result of a state economy battered by a steep decline in its housing market, weak consumer spending, widespread layoffs and 12.5 percent unemployment,” stated a Reuters analysis of the report.
“The broad economic weakness gripping the most populous U.S. state was reflected in the state Department of Finance’s November revenue report released on Tuesday.”
But other problems exist too, noted the news outlet. Like the problem of politics.
“Some analysts believe California’s budget politics could become so contentious and drawn out that the state may be forced to default on its debt obligations.”
Failing bonds: An appealing bond deal offered by three major banks failed Californians.
According to Bloomberg, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. gave the state an offer “too good to refuse.”
As it turns out, it was too good — for the banks.
“When the October offering failed to sell as planned, California was forced to accept 8 percent less money than it needed and to pay as much as $123 million more in interest than the banks said was sufficient for the market,” stated the Bloomberg report.
What did the big three banks get out of the deal with the Golden State? $12.4 million.”
But there’s more to it than just this one deal of borrowing. According to The Press Enterprise, “California will pay $6 billion in debt service in the current fiscal year, or nearly 7 percent of the state’s general fund. And that expense is only for part of the bonds voters and legislators have approved: California has $83.5 billion in outstanding debt, including $64 billion in general obligation bonds. But the state has $47.5 billion in already authorized bonds that it has yet to sell, too.”
Rating the politicians: Amid California’s budget woes and an expected shortfall of $20 billion plus next fiscal year, a recent report shows 60 percent of Golden State adults disapprove of the Governor.
The poll, conducted by the Public Policy Institute of California, asked Californians in December what they thought of Gov. Arnold Schwarzenegger and the State Legislature – showing 68 percent of Democrats, 50 percent of Republicans and 54 percent of Independents don’t dig Sacramento’s top dog.
But Schwarzenegger isn’t alone. The institute found that 70 percent of adults disapproved of the California Legislature. The breakdown shows 71 percent of Democrats, 80 percent of Republicans and 76 percent of Independents aren’t pleased with their assemblymembers and senators.
Potholes are here to stay, for now: The state is short $11 billion on transportation funding.
According to The Sacramento Bee, “adequate spending on streets, highways, bridges and public transportation,” are going to see a lot less love for the time being.
“It [report] notes that the state Department of Transportation (Caltrans) has declared a need for spending $5.5 billion a year for the next decade on highways, but only $1.5 billion a year is projected to be available. Meanwhile, the report estimates that public transportation systems need another $8.6 billion a year, but only $1.7 billion will be available annually. The cumulative shortfall, therefore, is $10.9 billion a year.”
So, there’s your Thursday round-up of the California budget crisis. I don’t want to ruin your almost -TGIF moment though – I’m going to leave you with stories about fun gifts for San Diegans, cute pets and yummy cookies.
Hoa Quach is the political editor of the San Diego News Network.