And a tip of the hat to the man who must be the smartest Democrat in America:
California’s government risks a financial “meltdown” within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state’s controller said on Wednesday.
Underscoring the severity of California’s cash crisis, Controller John Chiang, who has previously warned the state’s government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.
Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger’s budget plan by $827 million, Chiang said…
…California’s revenues have been on a dramatic slide as a result of recession, rising unemployment and its lengthy housing downturn.
The state’s revenues from personal income taxes tumbled by 39.3 percent in May from a year earlier while revenues from corporate taxes fell by 52.1 percent and revenues from sales taxes sagged by 7.6 percent, according to a report released by Chiang’s office.
“A truly balanced budget is the only responsible way out of the worst cash crisis since the Great Depression,” Chiang, a Democrat, said.
Memo to President Obama: Get Chiang in charge of your budget as fast as possible.
Only drastic cuts in spending can save California from disaster – even if they cobble together something which appears to get CA through the immediate crisis, the fact remains that revenues next year are almost certain to be less than projected, and any hang-over from this year will just be added to a worse situation next year. This goes for the federal government as well. We’re speeding down the road to complete fiscal disaster, and if we put on the brakes real hard and right now, we can stop ourselves from going over the cliff – but it has to be right now, not six months from now.
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