California Budget Resolution puts Band-Aid on Failing Dike
by ilene - July 25th, 2009 10:32 pm
California Budget Resolution puts Band-Aid on Failing Dike
Courtesy of Mish
After months of political wrangling between Democrats, Republicans, and the governor, California Approves Budget, Sends Bills to Governor.
California Governor Arnold Schwarzenegger said he supports the plan the Legislature approved today to erase a $26 billion deficit that pushed the most-populous U.S. state to the brink of insolvency.
The Senate and Assembly passed the package of more than two-dozen bills though a marathon 18-hour session. Schwarzenegger told reporters afterwards that he will sign the budget reduction plan within days after using his line-item veto authority to trim spending and bolster state reserves.
The package cuts spending by $15 billion, including $6 billion from schools and community colleges, $3 billion from universities and $1.2 billion from prisons. It also raises $4 billion, in part by accelerating personal and corporate income- tax withholding and increasing the amount withheld by 10 percent.
The passage will allow the state to use $2 billion of local property taxes meant for cities and other local jurisdictions and some $1.7 billion earmarked for redevelopment agencies.
The deficit plan also shifts $1.5 billion between accounts and moves the last payday for workers this fiscal year to the next 12-month period.
Hollingsworth, the Republican leader, said he hopes that lawmakers don’t have to redraw the budget yet again should the state’s revenue keep falling.
Budget Incorporates Fiscally Unsound, Possibly Illegal Budget Gimmicks
For starters, the much ballyhooed budged is not even balanced. Borrowing money from local governments is fiscally unsound and possibly illegal.
Please consider California Cities Knock State Budget, Wary of Bonds.
California local governments criticized the budget deal struck last night and expressed doubts about plans to tap $2 billion of their property taxes to close the $26 billion state deficit.
McKenzie and Paul McIntosh, the executive director of the California State Association of Counties, said localities may file a lawsuit challenging the use of their gasoline tax and redevelopment funds, which they said violates the state constitution.
“They don’t want to cut spending and they don’t want to raise taxes,” said McKenzie. “They find it’s easier to steal the money.”
The Los Angeles County supervisors voted unanimously today to sue the state if $400 million of funds it expected are withheld, the Associated Press reported.
Numerous Unsolved Structural Defects
California has numerous unsolved structural