California Delays $2.9 Billion School, County Payments In September Amid Budget Impasse

california-governor-arnold-schwarzenegger

Aug. 24 (Bloomberg) — California will delay paying $2.9 billion of subsidies to schools and counties in September, a month earlier than projected, to save cash amid an impasse that has left the state without a budget for 54 days.

The state’s top financial officials — the controller, treasurer and finance director — told lawmakers today that the 90-day deferrals need to start next month instead of October to make sure there’s enough money to pay bondholders. The amount is in addition to $3.2 billion the state pushed back in July.

California began its fiscal year on July 1 without a spending plan after Republican Governor Arnold Schwarzenegger and Democrats who lead the Legislature remained deadlocked over how to fill a $19 billion deficit. Controller John Chiang has warned he may need to issue IOUs within two weeks to pay for everything from supplies to contracted services and health-care costs if the impasse continues into next month.

“This is the salt in the wound,” said Rick Pratt, assistant executive director of the West Sacramento-based California School Boards Association, which represents districts statewide. “It’s the state taking its cash flow problem and making it a school district problem,” he said. He said deferrals from previous years have raised costs while the state has cut aid.

The deferrals will help the state meet four major payments in October that total about $1.74 billion, according to H.D. Palmer, a spokesman for Schwarzenegger’s budget office. He said that includes about $803 million in interest on general- obligation bonds.

Read more

Gov. Arnold Schwarzenegger to speak at Bohemian Club

schwarzenegger-to-speak-at-bohemian-club-conclave
PD FILE, 2009 The entrance to the Bohemian Grove in 2009.

Gov. Arnold Schwarzenegger is scheduled to address a throng of rich and powerful men on Friday under the towering redwoods at the Bohemian Grove as the annual encampment along the Russian River in Monte Rio enters its final weekend.

No one other than Bohemian Club members and their guests will hear the governor’s speech, which is – like everything that transpires during the 17-day midsummer enclave – done in absolute privacy.

Plutocrats and powerbrokers, including former presidents, annually flock to the 2,700-acre wooded retreat where neither women, other than grove employees, nor outsiders of either gender are permitted.

“It’s a private gentleman’s club,” club spokesman Sam Singer said. “People are coming to get away from the duties of daily life. They don’t desire to be on the front page of The Press Democrat or The New York Times.

“In real life, they get there often enough,” he said.

The club has about 2,000 members.

Mixing their revelry and weird rituals with serious issues, the Bohemians hear from a series of speakers, this year including media mogul Rupert Murdoch, who discussed “the future of news” and former secretaries of state George Shultz and James Baker on international relations and terrorism threats.

The speakers list, including ex-President George H. W. Bush in 1995 and not-yet President Richard Nixon in 1967, remains a well-guarded secret.

Read more

Gov. Schwarzenegger Mobilizes National Guard to Border

soldiers-watch-for-criminal-activity-in-the-us-mexico-border
Soldiers watch for criminal activity in the US-Mexico border.

SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger on Friday mobilized members of the California National Guard as part of a federal effort to deter drug trafficking and illegal immigration along the border with Mexico.

His order supports President Barack Obama’s plan to have 1,200 National Guard troops assist with federal border protection, customs and immigration agents.

The move comes amid a national debate over an Arizona law that directs police to conduct immigration checks when they are questioning people about possible legal violations. There must be a “reasonable suspicion” the person is in the country illegally.

Obama asked California to deploy 224 Guard members for as long as a year, but California National Guard spokesman Lt. Patrick Bagley said as many as 260 soldiers and airmen will head to the border by Oct. 1.

Read more

Schwarzenegger administration orders minimum wage for state workers

arnold-schwarzenegger
Gov. Arnold Schwarzenegger

The Schwarzenegger administration today ordered State Controller John Chiang to reduce state worker pay for July to the federal minimum allowed by law — $7.25 an hour for most state workers.

The instructions from the Department of Personnel Administration exclude roughly 37,000 state workers in six bargaining units that recently came to tentative labor agreements with Gov. Arnold Schwarzenegger.

Some employees, such as doctors and lawyers, would get no pay because federal exempts them from any minimum wage requirement. Managers, supervisors and others who don’t get paid for working more than 40 hours per week would receive $455 per week until a budget deal got done.

Read more

JP Morgan Chairman: California Is A Greater Risk Than Greece

Jamie Dimon, chairman of JP Morgan Chase, has warned American investors should be more worried about the risk of default of the state of California than of Greece’s current debt woes.

arnold-schwarzenegger
Governor Arnold Schwarzenegger is desperately trying to reduce California’s $20bn deficit Photo: BLOOMBERG

Mr Dimon told investors at the Wall Street bank’s annual meeting that “there could be contagion” if a state the size of California, the biggest of the United States, had problems making debt repayments. “Greece itself would not be an issue for this company, nor would any other country,” said Mr Dimon. “We don’t really foresee the European Union coming apart.” The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.

California however poses more of a risk, given the state’s $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.

Earlier this week, the state’s legislature passed bills that will cut the deficit by $2.8bn through budget cuts and other measures. However the former Hollywood film star turned politician is looking for $8.9bn of cuts over the next 16 months, and is also hoping for as much as $7bn of handouts from the federal government.

Earlier this week, John Chiang, the state’s controller, said that if a workable plan to reduce the deficit and increase cash levels is not reached soon, he will have to return to issuing IOU’s, forcing state workers to take additional unpaid leave and potentially freezing spending.

Read more

S&P downgrades California’s credit rating again as cash crunch looms

arnold_schwarzenegger_001

SAN FRANCISCO (Reuters) – California’s main debt rating was cut on Wednesday by Standard & Poor’s, which said the government of the most populous U.S. state could nearly run out of cash in March — and another rating cut might follow.

The state government’s budget gap of nearly $20 billion over the next year and a half leaves it in a precarious situation, requiring tax increases or spending cuts, either of which may slow economic recovery, the agency said in a statement.

See also:

California’s worst-in-nation credit rating cut again (Sacramento Bee)

California downgraded by S&P, weighing on state’s bonds (MarketWatch)

“If economic or revenue trends substantially falter, we could lower the state rating during the next six to 12 months,” S&P said after cutting the rating on $63.9 billion of California’s general obligation debt one notch to A- from A.

The new level is four notches above “junk” status, a level at which many investors refuse to buy debt.

“The big question is, is there any fear they will get downgraded out of investment grade (so) you may have to sell … that’s where I think it would get interesting or hairy,” said Eaton Vance portfolio manager Evan Rourke.

Bond prices did not move much, though, since many expected the downgrade, he said.

S&P’s downgrade was overdue because the state’s revenues have been so weak, said Dick Larkin, director of credit analysis at Herbert J. Sims Co Inc in Iselin, New Jersey. “Frankly I can’t understood why it took S&P so long,” he said. “They could have made that decision back in September.”

$1 BILLION SHORT IN MARCH

Read more

Schwarzenegger set to ban ‘energy-guzzling’ big screen plasma TVs in California

As if Schwarzenegger does not have enough other problems to solve:
California Budget Is Already in the Red Only 10 Weeks After Passage


california-is-set-to-ban-big-screen-plasma-tvs
California is set to ban big
screen plasma TVs

Big screen plasma televisions are to be banned in California because they use too much energy.

In a world first, Governor Arnold Schwarzenegger has given his backing to the crackdown on sets more than 40 inches wide.

These liquid crystal display and plasma high definition sets can use as much as three times the power of smaller cathode ray models.

Read more

Lindsey Williams on Alex Jones: ‘The Elite have changed there Timeline’ – ‘Within two years you will not recognize America’ – ‘War is planned after two years, starting in the middle east area and spreading to the entire world’

Yes, Lindsey Williams is repeating himself all of the time, also advertising his new DVDs and he could have said all of it in maybe 5-10 minutes but …

… I did not want to keep this information from you.

Remember this is just “information” of what Lindsey Williams has been told.


“Within two years you will not recognize America.”

“After two years you will be so poor you will not be able to rebel.”

“Gold and silver are all you can rely on.”

“By 2012 the dollar will be dead.”

“War is planned after two years, starting in the middle east area and spreading to the entire world.”

October 19, 2009

Part 1 of 8:

Read more

California Budget Is Already in the Red Only 10 Weeks After Passage

arnold-schwarzenegger-00

Oct. 10 (Bloomberg) — California Governor Arnold Schwarzenegger will know within a month whether a $1.1 billion drop in revenue collections is part of a growing budget shortfall or an isolated event, his budget spokesman said.

Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.

“The culprit here appears to be estimated quarterly personal income tax statements,” H.D. Palmer, the governor’s budget spokesman, said yesterday. “The numbers are cause for concern, but the issue now for us is to determine if this is a one-time event or whether it has more long-term implications.”

Read more

California Lawmakers, Schwarzenegger Strike Deal Over $26 Billion Deficit

arnold-schwarzenegger
Arnold Schwarzenegger, governor of California, speaks at a news conference in Sacramento, California, July 1, 2009. Photographer: Ken James/Bloomberg News

July 21 (Bloomberg) — California lawmakers reached an agreement with Governor Arnold Schwarzenegger over how to close a $26 billion budget deficit that pushed the most-populous U.S. state to the brink of insolvency.

The deal, reached by legislative leaders after two months of frequently acrimonious negotiations, would slash spending for schools, public works and welfare programs amid the longest recession since the 1930s. If approved by the full Senate and Assembly, the agreement will also siphon money from municipalities, force companies and individuals to pay income taxes sooner and make it more difficult to receive state aid.

“We came to a basic agreement, a budget agreement,” Schwarzenegger told reporters outside his office last evening. “This is a budget that has no tax increases and this is a budget that is cutting spending and it deals with the entire $26 billion deficit.”

Read more

The Biggest US Banks Don’t Want California’s IOUs

Don’t miss:
Day of Reckoning for California and, ultimately, for all of America:
“Why I Expect a Default on California’s Bonds”


A group of the biggest U.S. banks said they would stop accepting California’s IOUs on Friday, adding pressure on the state to close its $26.3 billion annual budget gap.

The development is the latest twist in California’s struggle to deal with the effects of the recession. After state leaders failed to agree on budget solutions last week, California began issuing IOUs — or “individual registered warrants” — to hundreds of thousands of creditors. State Controller John Chiang said that without IOUs, California would run out of cash by July’s end.

But now, if California continues to issue the IOUs, creditors will be forced to hold on to them until they mature on Oct. 2, or find other banks to honor them. When the IOUs mature, holders will be paid back directly by the state at an annual 3.75% interest rate. Some banks might also work with creditors to come up with an interim solution, such as extending them a line of credit, said Beth Mills, a California Bankers Association spokeswoman.

Meanwhile, on Monday morning, a budget meeting between Gov. Arnold Schwarzenegger and legislative leaders failed to produce a result. Amid the budget deadlock, Fitch Ratings on Monday dropped California’s bond rating to BBB, down from A minus, the latest in a series of ratings downgrades for the state.

The group of banks included Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and J.P. Morgan Chase & Co., among others. The banks had previously committed to accepting state IOUs as payment. California plans to issue more than $3 billion of IOUs in July.

Read more

Schwarzenegger declares fiscal emergency; California issues IOUs

arnold-schwarzenegger-00
California is inventing its own currency

AFTER weeks of trying to fix California’s budget, Governor Arnold Schwarzenegger and state legislators have fought one another to a standstill.

A day after the state Senate failed in a late-night bid to close part of a deficit now projected at $US26.3 billion ($A32.6 billion), California Controller John Chiang took steps to begin issuing IOUs to tens of thousands of companies and individuals owed millions of dollars by the state.

Mr Schwarzenegger declared a fiscal emergency, ordering state workers to take a third unpaid day off each month.

A meeting between Mr Schwarzenegger and the state’s top four legislative leaders ended abruptly within half an hour. Assembly Speaker Karen Bass, a Democrat from Los Angeles, charged out of the Governor’s office, clearly distraught, and walked briskly down the hall.

Related articles:
State’s budget gap deepens $2 billion overnight (San Francisco Chronicle)
Schwarzenegger declares emergency in California (AFP)
Schwarzenegger to shut state offices to save money (Sydney Morning Herald)
Governor dumps plan to build prison hospitals (San Francisco Chronicle)

“He broke it. He should fix it,” Ms Bass said tersely, alluding to Mr Schwarzenegger’s refusal to accept a budget deal that would have averted IOUs but not closed the entire deficit. “Nothing more to say.”

Read more

Governor Arnold Schwarzenegger’s Last Stand: His Way or IOUs

California is on track to run out of cash by the end of July.

arnold-schwarzenegger1
Gov. Arnold Schwarzenegger tells reporters that he is resolute about state fiscal reforms. Schwarzenegger’s high-stakes strategy could close the budget abyss or cause a meltdown of state government.
(AP)

Reporting from Sacramento — Gov. Arnold Schwarzenegger, seeking to conquer what could be the last budget crisis of his tenure, is engaged in a high-stakes negotiating strategy with lawmakers that could force him to preside over a meltdown of state government.

As legislators have scrambled to stop the state from postponing payment of its bills and issuing IOUs starting next week, the governor has vowed to veto any measure that fails to close the state’s entire $24-billion deficit.

In doing so, Schwarzenegger has sent the message that he would rather allow the state to begin shutting down than let lawmakers push its troubles off for months by closing only part of the shortfall. The latter prospect could swallow up the rest of his governorship.

“Whatever needs to be done,” Schwarzenegger told reporters outside his Capitol office Friday when asked why he would be willing to delay payments to needy Californians. “I know that there is a history in this building of always being late with the budget, to drag it out and to kick that can down the alley. . . . I don’t think we have this luxury this time.”

Read more

Budget Crisis: States Turning to Last Resorts

“Our wallet is empty, our bank is closed and our credit is dried up.” (Governor Arnold Schwarzenegger)


arnold-schwarzenegger
Gov. Arnold Schwarzenegger saying this month that he would veto any budget bill that included new taxes beyond what he had proposed.

In Hawaii, state employees are bracing for furloughs of three days a month over the next two years, the equivalent of a 14 percent pay cut. In Idaho, lawmakers reduced aid to public schools for the first time in recent memory, forcing pay cuts for teachers.

And in California, where a $24 billion deficit for the coming fiscal year is the nation’s worst, Gov. Arnold Schwarzenegger has proposed releasing thousands of prisoners early and closing more than 200 state parks.

Meanwhile, Maine is adding a tax on candy, Wisconsin on oil companies, and Kentucky on alcohol and cellphone ring tones.

With state revenues in a free fall and the economy choked by the worst recession in 60 years, governors and legislatures are approving program cuts, layoffs and, to a smaller degree, tax increases that were previously unthinkable.

All but four states must have new budgets in place less than two weeks from now — by July 1, the start of their fiscal year. But most are already predicting shortfalls as tax collections shrink, unemployment rises and the stock market remains in turmoil.

“These are some of the worst numbers we have ever seen,” said Scott D. Pattison, executive director of the National Association of State Budget Officers, adding that the federal stimulus money that began flowing this spring was the only thing preventing widespread paralysis, particularly in the areas of education and health care. “If we didn’t have those funds, I think we’d have an incredible number of states just really unsure of how they were going to get a new budget out.”

Read more

California’s credit rating may be cut several levels: Moody’s

June 19 (Bloomberg) — California’s credit rating, already the lowest among U.S. states, may be cut several levels by Moody’s Investors Service as government leaders seek ways to eliminate a $24 billion budget deficit.

The move would affect $72 billion of debt, Moody’s said in a statement today. California’s full faith and credit pledge is rated A2 by Moody’s, five steps above high-yield, high-risk status, or junk.

Related articles:
Judgment Day: Broke California Faces Shutdown
California nears financial meltdown as revenues tumble

A downgrade may increase the state’s borrowing cost and raise the yield paid to investors on its bonds. Standard & Poor’s put California on watch for a possible reduction earlier this week, and Fitch Ratings did the same thing May 29. The rating companies cited the most-populous state’s deficit — amounting to more than 20 percent of the general fund — and lawmakers’ inability to agree on how to close the gap.

“If the Legislature does not take action quickly, the state’s cash situation will deteriorate to the point where the controller will have to delay most non-priority payments in July,” Moody’s said in a report today. “Lack of action could result in a multi-notch downgrade.”

Read more

Judgment Day: Broke California Faces Shutdown

redwood-tree
California’s famed redwood forests will have to close to visitors

The state of California is in crisis and time has almost run out. Arnold Schwarzenegger, the Governor, has spent this week haggling with state legislators to agree cuts to basic services in one of the world’s largest economies.

The state’s top finance officials warned that unless an emergency austerity plan is agreed by Monday – and there is little chance that it will be – they will not be able to borrow the billions of dollars needed to keep the current government functioning. If California was a company, it would have gone bust months ago.

The breadth and depth of Mr Schwarzenegger’s cuts are unprecedented and no one in the state, not even its dozens of billionaires, will be unaffected. His more radical proposals include wiping billions of dollars from the education budget, with the school year shortened and larger classes.

Hundreds, possibly thousands, of police and firemen will be laid off, and state employees who keep their jobs face pay cuts of at least 10 per cent.

Parks will close, shutting access to thousands of square miles of beaches, redwood forest and other attractions that draw 80 million visitors a year. Thousands of prisoners will be released early and the notorious St Quentin penitentiary will be among state buildings put up for sale.

All financial aid for university students, affecting 200,000 people from low-income families, will end.

Local governments will no longer have to provide absentee ballots in elections, nor run programmes to help infants exposed to drugs. Even stray animals will no longer be kept alive for the statutory three days.

Read more

California nears financial meltdown as revenues tumble

california-los-angeles-sunset
The skyline of downtown Los Angeles is pictured at sunset (Reuters)

SAN FRANCISCO (Reuters) – 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.

He warned California’s state government is speeding toward a financial disaster unless officials act urgently to balance its books.

“Without immediate solutions from the governor and legislature, we are less than 50 days away from a meltdown of state government,” Chiang said in a statement.

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.

Read more

California’s day of reckoning is a warning for Europe

California ‘IS’ broke and the US ‘IS’ broke too.


California is the salad bowl in which the world serves up its more exotic lifestyle experiments. Mix sunshine with self-indulgence and dress it with surf-wear and you get a glimpse of how we might live in the future – if we could only afford the plastic surgery.

Unfortunately, it appears that even Californians can no longer afford the lifestyle of the Valley Girl.

The Golden State is almost bust, but its inhabitants, even if they believe it, do not want to know and they certainly do not want to pay for it. The state has been running huge budget deficits for years; the till in Sacramento, the state capital, is now empty and the last-ditch attempt by Arnold Schwarzenegger, the Governor, to balance the books with a series of tax increases and budgetary shuffles was roundly rejected by voters in referendums a week ago.

With a $21 billion (£13 billion) deficit and the lowest credit rating of any American state, the choices are few and grim. California cannot hope to borrow such large sums, except at extortionate rates, which leaves the option of massive cuts in public spending – the sacking of thousands of teachers.

California could run out of cash in a few months. Mr Schwarzenegger has already warned that 5,000 state employees face being fired. The state education budget is in line for a $5 billion cut, alongside the end of funding for parks and the closure of at least one state agency.

Read more

California Teachers Rally as 26,000 Job Cuts Loom

March 13 (Bloomberg) — California teachers organized protests in more than a dozen cities today as about 26,000 may lose their jobs because of spending cuts the Legislature approved last month to keep the state from running out of money.

School districts across the most-populous U.S. state have been warning thousands of teachers that they may be fired as a result of California’s declining tax collections. The plan signed by Governor Arnold Schwarzenegger last month cut $8.4 billion from schools and community colleges out of $15 billion trimmed from state spending through June 2010.

“These cuts are going to hurt an entire generation of children and damage California’s public education system for years to come,” David Sanchez, president of the California Teachers Association union, said in a statement.

Read more

FEMA Camps Outed – Glenn Beck on Fox

Posted for the information on the FEMA camps and for the army combat unit deployed within the U.S.:
Army combat unit to deploy within U.S. (CNN)
Pentagon: 20,000 Troops to Bolster Domestic Security (Washington Post)


The gloves come off

During the Bush Administration, FEMA was given hundreds of millions of dollars to retrofit former military bases and other existing infrastructure so they can be used as “camps.”

Not camps as in summer camps. Camps as in prison camps and perhaps even concentration camps.

One of the first thing the Obama Administration did was to legitimize their existence.

These camps, which can be found in every state in the union, currently sit empty and are intended to be pressed into service in the event of an “emergency.”

Funny that we’ve made it over 200 years without needing a national network of on-demand concentration camps.

Why do we need them now?

Read more