Quick loans could help California
Lawmakers had a tough weekend.
Looks like California could use some quick loans right about now. The state with the world’s eighth-largest economy can’t seem to get its budget on track. Even after lawmakers worked through the weekend, the state must continue budget negotiations.
Rough rules
California has a couple of things working against it. First, the state requires that two-thirds of the legislature approves the budget. The last word on the $40 billion proposed bill was that it was one vote short of passing. But a vote is a vote.
Secondly, the state’s constitution forbids running at a deficit. So unless California can get some quick loans for more than $40 billion, it needs to make cuts and raise cash.
Cold cuts
Cutting is exactly what the state will do. The California government has cut down on the cost of employee salaries by forcing some state employees to take unpaid leave. The state is also planning an additional $15.1 billion in spending cuts.
New taxes
The budget now contains higher sales tax, income and gasoline taxes and higher vehicle licensing fees. Some of these measures will be put up for a vote in May. So, even if California lawmakers do reach an agreement and sign the budget, they could face more challenges later.
Still doesn’t add up
Even with $15.1 billion in spending cuts and $14.4 billion in new taxes, it still doesn’t make up for the $42 billion budget gap the state is facing. California is hoping some federal funding is coming its way and planning to borrow some quick loans to the tune of about $11.4 billion.
Related articles
- States Looking To Cut Services, Raise Taxes As Revenue Declines, Budget Deficits Mount (medicalnewstoday.com)
- Big Government, Schwarzenegger-Style (usnews.com)
- California Residents Hit With Sales, Personal Income Increases (shoppingblog.com)
10,000 California state workers could lose jobs if new budget is not passed says Governor Schwarzenegger (telegraph.co.uk)
I know that a lot of people are going to be angry about paying new taxes, and state workers can’t be happy about taking two more days off a month, but this about whether or not the state is going to fiscally survive. This isn’t an issue that can really wait for too long.