SACRAMENTO, California (AP) — California's controller will start paying many of the state's bills with promissory notes as soon as Thursday after lawmakers failed to close the state's worsening budget deficit, adding a new measure of indignity to a state sinking deeper into dysfunction.
Lawmakers' failure to act on Tuesday, the end of the fiscal year, also widened California's deficit from what already had been a whopping $24.3 billion — more than a quarter of its general fund.
The failure to balance the state's main checkbook prompted Gov. Arnold Schwarzenegger on Wednesday to declare a fiscal state of emergency.
Under the declaration, state offices will be closed three days a month to conserve cash. If the Legislature fails to solve the deficit within 45 days, it cannot adjourn or act on other bills until the crisis is resolved.
The partial government shutdown also will lead to a third furlough day for 235,000 state employees, bringing their total pay cut this year to about 14%.
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"California needed the Legislature to act boldly and with conviction. Their response was not a solution to California's budget problem but an invitation to actually a bigger financial crisis," Schwarzenegger told reporters Wednesday.
On Tuesday, as the previous fiscal year was drawing to a close, the Senate rejected three bills designed to save $5 billion, including $3.3 billion in education funding cuts that had to be enacted. Passing those bills would have given the Legislature time to work out a broader solution to the deficit.
Instead, the budget shortfall is set to grow even wider because of California's complicated school funding formula, meaning the state will not have enough money to pay all its bills.
State Controller John Chiang said his office is prepared to issue promissory notes totaling $3.3 billion in July.
It will be the first time since 1992 that California will have issued promissory notes. The move is almost certain to further damage the state's credit rating, already the lowest of any of the 50 U.S. states, saddling taxpayers with billions of dollars in higher interest payments on bonds that have yet to be sold.
Issuing the promissory notes — formally referred to as individual registered warrants — also will have real-world consequences for those on the receiving end. Small businesses that rely on state contracts will be most affected.
The promissory notes also will be sent to California counties, which now must find other ways to fund a wide array of social programs, ranging from alcohol abuse and mental health treatment to services for the elderly and disabled. California's universities were evaluating ways to assist students whose grants will not be funded to pay education expenses.
It was unclear whether some of California's largest banks will accept the notes as payment. They would be paid back, with interest, but the state's precarious financial condition and legislative gridlock might be making some bankers nervous.
Bank of America announced Wednesday it would cash the state's promissory notes for its customers through July 10, bank spokeswoman Colleen Haggerty said. Schwarzenegger and state officials asked other banks to do the same, noting that California has never defaulted.
"We will make those payments," he said. "We are responsible."
People who get California IOUs
Grants to aged, blind or disabled persons
People needing temporary assistance for basic family needs
Persons with developmental disablities
People in mental health treatment
Small Business Vendors
People California pays in cash
University of California
Public Employees’ Retirement System
Legislators, legislative employees, and appointees
Judges
Department of Corrections
Health Care Services payments to Institutional Providers
"If scientists and inventors who develop disease cures and useful technologies don't get lifetime royalties, I'd like to know what fucking rationale you have for some guy getting lifetime royalties for writing an episode of Full House." - Mike Wong
"The present air situation in the Pacific is entirely the result of fighting a fifth rate air power." - U.S. Navy Memo - 24 July 1944
People who get California IOUs
Grants to aged, blind or disabled persons
People needing temporary assistance for basic family needs
Persons with developmental disablities
People in mental health treatment
Small Business Vendors
So, folks who require the money the most are the ones getting the shaft? I can't see how this will go badly in any way.
I certainly hope that the food banks in California are well stocked.
M1891/30: A bad day on the range is better then a good day at work.
California is going to be as bad off as NOLA was after Katrina at this rate; oh sure, the buildings will be intact, until they get burned down, but basically a third world garbage can with burning trash in the streets.
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The Duchess of Zeon wrote:California is going to be as bad off as NOLA was after Katrina at this rate; oh sure, the buildings will be intact, until they get burned down, but basically a third world garbage can with burning trash in the streets.
Not exactly. The wealthy parts will still be wealthy, the upper-middle class parts will still be upper-middle class. As the situation degrades, services will quietly prioritize based on wealth, so the haves will still have, and the have-nots will have even less. Our society is very well configured for isolating different classes and their problems from each other.
"It's not evil for God to do it. Or for someone to do it at God's command."- Jonathan Boyd on baby-killing
"you guys are fascinated with the use of those "rules of logic" to the extent that you don't really want to discussus anything."- GC
"I do not believe Russian Roulette is a stupid act" - Embracer of Darkness
"Viagra commercials appear to save lives" - tharkûn on US health care.
The Duchess of Zeon wrote:California is going to be as bad off as NOLA was after Katrina at this rate; oh sure, the buildings will be intact, until they get burned down, but basically a third world garbage can with burning trash in the streets.
Not exactly. The wealthy parts will still be wealthy, the upper-middle class parts will still be upper-middle class. As the situation degrades, services will quietly prioritize based on wealth, so the haves will still have, and the have-nots will have even less. Our society is very well configured for isolating different classes and their problems from each other.
More likely the upper classes will just go to states not so utterly fucked and get jobs there (or relocate if they're so rich they don't need jobs).
The economic engine of California might melt away like a block of ice on a summer day if the state government completely fails to function, turning the state into the Rust Belt of the Silicon Age.
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The fun thing is, the Judges decided in a past lawsuit, that the state cannot issue IOUs to State Employees during a previous bout of IOUs.
Seeing as a lot of Judges are essentially in many cases, State employees, unless at the Federal Level, isn't that a huge conflict of interest?
Naaaaaaaah.
"If scientists and inventors who develop disease cures and useful technologies don't get lifetime royalties, I'd like to know what fucking rationale you have for some guy getting lifetime royalties for writing an episode of Full House." - Mike Wong
"The present air situation in the Pacific is entirely the result of fighting a fifth rate air power." - U.S. Navy Memo - 24 July 1944
MKSheppard wrote:The fun thing is, the Judges decided in a past lawsuit, that the state cannot issue IOUs to State Employees during a previous bout of IOUs.
Seeing as a lot of Judges are essentially in many cases, State employees, unless at the Federal Level, isn't that a huge conflict of interest?
Naaaaaaaah.
It doesn't matter. Even if they didn't have the power to rule on it, they're high-income, and high income people always win. It's the American Way!
"It's not evil for God to do it. Or for someone to do it at God's command."- Jonathan Boyd on baby-killing
"you guys are fascinated with the use of those "rules of logic" to the extent that you don't really want to discussus anything."- GC
"I do not believe Russian Roulette is a stupid act" - Embracer of Darkness
"Viagra commercials appear to save lives" - tharkûn on US health care.
Cpl Kendall wrote:So, folks who require the money the most are the ones getting the shaft? I can't see how this will go badly in any way.
I wonder when the riots and lynch mobs are gonna start, or if the people even have the balls to riot these days.
aerius: I'll vote for you if you sleep with me. Lusankya: Deal!
Say, do you want it to be a threesome with your wife? Or a foursome with your wife and sister-in-law? I'm up for either.
aerius wrote:
I wonder when the riots and lynch mobs are gonna start, or if the people even have the balls to riot these days.
People would probably just bugger off to another State, though if I was on the "have" list I would be grateful for all that money spent on gun control in California.
I guess it really depends on what they have to lose, I'd expect people with families to look for better pastures.
M1891/30: A bad day on the range is better then a good day at work.
Things are certainly going to get very rough in the Golden State. However, this isn't the 1st time IOU's were issued and the immediate question will be are banks going to honor them as they did the last time around?
Leaving the State will be difficult for anyone who isnt A) Wealthy by California Standards or B) a middle class renter with no debt. Even then the question is where do you go? Oregon? Nevada? Arizona? All our neighbors are hit hard too.
This crisis is so much worse than the last time the State issue IOU's that I really don't know what will happen. Perhaps California will contrict in population and economy for a while till we get back to a more sustainable model of doing business.
Cpl Kendall wrote:So, folks who require the money the most are the ones getting the shaft? I can't see how this will go badly in any way.
I wonder when the riots and lynch mobs are gonna start, or if the people even have the balls to riot these days.
When they get hungry and desperate enough there will be mobs in the streets. They just haven't gotten hungry enough yet.
A life is like a garden. Perfect moments can be had, but not preserved, except in memory.Leonard Nimoy.
Now I did a job. I got nothing but trouble since I did it, not to mention more than a few unkind words as regard to my character so let me make this abundantly clear. I do the job. And then I get paid.- Malcolm Reynolds, Captain of Serenity, which sums up my feelings regarding the lawsuit discussed here.
If a free society cannot help the many who are poor, it cannot save the few who are rich. - John F. Kennedy
This reminds me of a quote from an Irish priest which is engraved on the side of an Irish immigrants' memorial in New York, to the effect that hunger takes precedent over property rights. In other words, if you need food, take it. Ultimately, even Republican propaganda can't compete with hunger when it comes to motivating people.
"It's not evil for God to do it. Or for someone to do it at God's command."- Jonathan Boyd on baby-killing
"you guys are fascinated with the use of those "rules of logic" to the extent that you don't really want to discussus anything."- GC
"I do not believe Russian Roulette is a stupid act" - Embracer of Darkness
"Viagra commercials appear to save lives" - tharkûn on US health care.
TrailerParkJawa wrote:Things are certainly going to get very rough in the Golden State. However, this isn't the 1st time IOU's were issued and the immediate question will be are banks going to honor them as they did the last time around?
According to this article on CNN Money, quite a few credit unions will accept the IOUs but not that many banks are taking them, and the ones which are accepting them are only doing so through July 10th. Strangely enough, the banks taking IOUs are the ones in the biggest doo-doo (BAC, Citi, JPMC, Wells Fargo) and supposedly too big to fail. Hmmmm...
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Darth Wong wrote:Ultimately, even Republican propaganda can't compete with hunger when it comes to motivating people.
That's why we have the strikebreaker's broom -- the Gatling.
"If scientists and inventors who develop disease cures and useful technologies don't get lifetime royalties, I'd like to know what fucking rationale you have for some guy getting lifetime royalties for writing an episode of Full House." - Mike Wong
"The present air situation in the Pacific is entirely the result of fighting a fifth rate air power." - U.S. Navy Memo - 24 July 1944
Darth Wong wrote:Ultimately, even Republican propaganda can't compete with hunger when it comes to motivating people.
That's why we have the strikebreaker's broom -- the Gatling.
Truly hungry and desperate people won't necessarily form picket lines. They might just rob people and businesses in increasing numbers, resulting in a decentralized crime rate increase rather than a mob which you can identify as a target. What are you going to say? Deter them with weapons? 24/7? A man who thinks he or his family is going to starve will not be easily deterred, even by such threats.
"It's not evil for God to do it. Or for someone to do it at God's command."- Jonathan Boyd on baby-killing
"you guys are fascinated with the use of those "rules of logic" to the extent that you don't really want to discussus anything."- GC
"I do not believe Russian Roulette is a stupid act" - Embracer of Darkness
"Viagra commercials appear to save lives" - tharkûn on US health care.
Some enterprising state senator trying to score points introduced a bill today that would allow people who have received IOU's to use them to pay any outstanding fees or bills owed to the state. Car registrations, licensing fees, all of that sort of thing. He felt turnabout was fair play.
Not sure if its dickish or not.
Stuart: The only problem is, I'm losing track of which universe I'm in.
You kinda look like Jesus. With a lightsaber.- Peregrin Toker
CaptainChewbacca wrote:Some enterprising state senator trying to score points introduced a bill today that would allow people who have received IOU's to use them to pay any outstanding fees or bills owed to the state. Car registrations, licensing fees, all of that sort of thing. He felt turnabout was fair play.
Not sure if its dickish or not.
From my limited understanding of Cali politics, he's being a dick if he supported Prop 13, as the 2/3'rds requirement for tax hikes is the proximate cause of the current impasse.
If I'm wrong, please disregard the above.
"You say that it is your custom to burn widows. Very well. We also have a custom: when men burn a woman alive, we tie a rope around their necks and we hang them. Build your funeral pyre; beside it, my carpenters will build a gallows. You may follow your custom. And then we will follow ours."- General Sir Charles Napier
CaptainChewbacca wrote:Some enterprising state senator trying to score points introduced a bill today that would allow people who have received IOU's to use them to pay any outstanding fees or bills owed to the state. Car registrations, licensing fees, all of that sort of thing. He felt turnabout was fair play.
Not sure if its dickish or not.
That isn't already part of the deal?
I guess it would effectively constitute establishing a state currency, I can see how that wouldn't go over well.
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Christ. If there's an exodus out of California it's probably going to be headed north.
Supposedly, there's talk of whether or not banks will cash the IOUs. If they do, it'll ameliorate the situation for at least a little while.
aerius wrote:
Cpl Kendall wrote:So, folks who require the money the most are the ones getting the shaft? I can't see how this will go badly in any way.
I wonder when the riots and lynch mobs are gonna start, or if the people even have the balls to riot these days.
Won't happen in America unless the televisions stop working.
"There is no "taboo" on using nuclear weapons." -Julhelm
What is Project Zohar? "On a serious note (well not really) I did sometimes jump in and rate nBSG episodes a '5' before the episode even aired or I saw it."- RogueIce explaining that episode ratings on SDN tv show threads are bunk
Uraniun235 wrote:Christ. If there's an exodus out of California it's probably going to be headed north.
I don't know if Oregon is going to want masses of Californians clutching Schwarzenegger's IOUs.
The mountains along the California-Oregon border are really rugged without much way to support large amounts of life, so if millions of refugees start fleeing north, we can probably air-deploy minefields in Siskyou Pass and at a couple of other places and stop the fuckers cold. Long live the Republic of Cascadia!
*crooked grin*
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Maybe northern Cali should dust off those plans for Jefferson.....
”A Radical is a man with both feet planted firmly in the air.” – Franklin Delano Roosevelt
"No folly is more costly than the folly of intolerant idealism." - Sir Winston L. S. Churchill, Princips Britannia
American Conservatism is about the exercise of personal responsibility without state interference in the lives of the citizenry..... unless, of course, it involves using the bludgeon of state power to suppress things Conservatives do not like.
DONALD J. TRUMP IS A SEDITIOUS TRAITOR AND MUST BE IMPEACHED
CaptainChewbacca wrote:Some enterprising state senator trying to score points introduced a bill today that would allow people who have received IOU's to use them to pay any outstanding fees or bills owed to the state. Car registrations, licensing fees, all of that sort of thing. He felt turnabout was fair play.
Not sure if its dickish or not.
I think it's a viciously good idea, but that it's unconstitutional. States are not allowed to make their own paper money.
