Tag: state budget crisis

  It’s that time of the year again.

No, not Christmas. It’s the time of the year when the state of California starts paying its bills in IOU’s.

 California lawmakers passed a bill to let recipients use state IOUs to pay fees and taxes owed to the government in Sacramento, if the warrants are issued.

  The bill, from Assemblyman Joel Anderson, a San Diego Republican, passed the Senate unanimously. It requires all state agencies to accept registered warrants issued to pay for goods and services. The Assembly unanimously approved the measure in September.

 The state could start handing out these IOU’s as soon as two weeks from today.

 One thing you can count on is that blame and suggestions on how to fix the budget mess will start flying fast and furious. Some ideas will be crazy. Some reasonable, but long on image and short on impact. Many good ideas will never be considered.

  What is also sure to happen is you will see a blizzard of numbers. Some will be created out of thin air. Most will be half-truths. Almost none of them will give you an honest perspective on what the actual problems are.

 That’s why I am presenting this essay, so that you can make a rational judgment for yourself.

The 2011 fiscal year for 46 states begins in 10 days. In many cases it is a countdown to financial doom.

Despite what you may have heard from conservative sources, state and local government have been cutting and cutting. 231,000 state and local government jobs have vanished since August 2008 – 22,000 in just the past month. Most of those jobs were at the local level, such as police, firefighters, and school teachers.

The fat has already been trimmed. The muscle has been cut into. There is nothing left to cut but bone.

At least 19 states are getting the saws ready, because knives won’t cut bone.

According to Mark Zandi, the chief economist at Moody’s, states are facing a budget gap of $180 billion next year. The shortfall could lead to the destruction of 900,000 jobs at the state level, an employment source that is often thought of as an economic safety net.

Up to 300,000 of those laid off will be school teachers, and some estimate the total number of government workers to be let go in the 1-to-2 million range.

  The municipal budget crisis currently striking the largest states in America is about to enter its worst phase. This NY Times article warns that as many as 300,000 teachers could be laid off this summer.