Schwarzenegger budget: No new taxes, deeper cuts

Let’s face it, the California budget is a mess. With the unemployment rate so high and the tax revenue low, California faces a 19.1 billion budget deficit, according to the Associated Press. So, Arnold Schwarzenegger is rolling up his sleeves—not to show off his large muscles this time, but to propose some pretty big cuts across most state agencies and eliminating many health and social programs.

The fight is what it has always been: Republican lawmakers vote against raising taxes and Democratic leaders oppose more cuts to social programs, nothing new there. The good news is that Schwarzenegger vows to protect public education. Earlier today, I read he might propose to end state worker furloughs. Some people suggest the Governor cut corporate tax credits instead of low-income assistance programs that will hurt California’s poorest citizens and children. Finding the answer to our budget problem is not easy. There’s no doubt that we need a creative solution to the budget problem, and quickly. Tweet me your thoughts on this at www.twitter.com/ronideutch.

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Can Budget-Strapped California Afford More Wildfires?

My struggling home state of California took another hit the past week, as rampant wildfires consumed trees, houses, buildings, etc. As such, the State has been forced to spend millions of dollars on supplies and labor fighting the fires, and assisting evacuees. However, as this article on Time.com pointed out, many are wondering how the budget problem riddled state can afford these expenses?

For more than a week, much of the Angeles National Forest has been an inferno as a ferocious fire, spurred by abnormally high temperatures and single-digit humidity, ripped through steep canyons, dense brush and forest untouched by flames for 60 years. The advancing fire has cut a moonscape swath through the middle of the mountain range that forms a barrier between the greater Los Angeles area and the Mojave Desert.

In addition to the lost lives of two firefighters, 76 destroyed homes and thousands of evacuees, the fire's financial toll has climbed to nearly $45 million. That has been the cost so far of a ground and air assault on the nearly 160,000-acre Station Fire, as it has been called, with more than 4,000 firefighters working the fire lines and an air fleet of 12 helitankers, seven helicopters and 11 airplanes — including a Boeing 747 and a DC-10 — pouring thousands of gallons of fire retardant on blazing hillsides. Only heroic work by firefighters saved the historic Mt. Wilson Observatory located 5,700 feet above Pasadena. (See pictures of this year's wildfires in California.)

But this season's firefighting in California comes just as the state has made vast and deep cuts in nearly all services to balance its books. Can California afford to fight fires given its budget woes? And when does the federal government step in? (What things should you save if your home is threatened by fire?)

California Government Doles Out More IOUs

Another 12,500 IOUs were issued by California on Tuesday, as a way to make up for bills they were unable to pay. This decision brings the total number of California’s IOUs issued to over 72,000, and that number is only expected to rise. Check out the following clip from a new Sacramento Bee article discussing this disastrous situation below.

Last week's decision by state Controller John Chiang to issue "registered warrants" instead of checks to taxpayers owed refunds, vendors and other groups was the most dramatic step a state has taken this year to confront billions of dollars in budget shortfalls. A total of 72,000 IOUs have been written since last week.

Gov. Arnold Schwarzenegger, a Republican, and the Democratic-controlled Legislature have been unable to agree on a package of spending cuts and tax increases to close a massive budget gap.

The result is a standstill — and IOUs that reached a total of $109 million Tuesday.

California issued IOUs in 1992 during a 61-day budget impasse. Some states issued IOUs during the Great Depression. The notes, now worthless, can be bought at antique shops, says Chicago bankruptcy attorney James Spiotto, an expert in government finance. Spiotto says he doesn't know of any state other than California to issue IOUs since the Depression.

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