California Faces $42 Billion Shortfall
CBS Evening News: Largest U.S. State Could Be Out Of Cash By February
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Play CBS Video Video Golden State Out Of Cash With a massive 42 billion dollar fiscal deficit, the state of California is now facing a widespread economic emergency. Bill Whitaker reports from Los Angeles on this financial crisis.
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Video California Budget Crisis With California expecting to run out of cash by late October, Gov. Schwarzenegger says his state may need a federal bailout of its own. Ben Tracy reports.
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Video Calif. Feels Budget Crunch California is struggling to balance a budget $17 billion short. The state is facing tough decisions after being acutely affected by the foreclosure crisis. Sandra Hughes reports.
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California Gov. Arnold Schwarzenegger, who swept into power partly thanks to unhappiness over his predecessor's inability to pass a budget, is now fascing a much larger budget crisis -- an unprecedented $42 billion shortfall. (AP)
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State Fast Facts California Learn about the people, economy and geography.
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Gov. Arnold Schwarzenegger has called it a fiscal emergency.
"Our economy is crying out for relief," he said. "We are running out of cash by February."
The country's biggest state soon won't have money to pay its bills - things like highway maintenance - or fund its schools or other critical services.
Californians expecting a state tax refund have been told they might get IOUs instead. State workers may be forced on unpaid furloughs, effectively cutting their pay by 10 percent.
"Ten percent is somebody's car payment, or their gas bill," said state employee Crystal Johnson. "Please stop picking on us. We do your work and we're good employees."
California may be facing the worst budget crisis, but it's not alone. Thirty-seven other states face gaping budget shortfalls this year. In Iowa, schools are taking a hit. In Kentucky, library hours have been cut. The governor of Minnesota says cuts in state services are "inevitable" to close a $5 billion state deficit.
All 50 states are required to balance their budgets, but California is one of only three requiring a two-thirds majority in the legislature to approve any tax increase. Republicans in the legislature have sworn not to raise taxes. Democrats say the problem is too big to solve with budget cuts alone.
See a map showing the extent of budget shortfalls in every U.S. state.
It all should sound familiar to Schwarzenegger. He swept into office on a wave of voter discontent when his predecessor, democrat Gray Davis, failed to pass a budget. Schwarzenegger promised to fix the political impasse and cut taxes, especially the much-loathed vehicle tax, which he bid "Hasta la vista, baby," at a jubilant public ceremony.
Five years later, the deficit has mushroomed and Schwarzenegger now says new taxes are necessary - maybe even that despised car tax.
"This is a critical time in California's history," Schwarzenegger said recently. And on that, all sides can agree.
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See all 178 CommentsThe fact of the matter is that the middle class in California is getting squeezed. The state, every year is in a fiscal emergency and every year it just squeezes a little harder. It isn''t my problem to fund every liberal do-gooder program, to solve global warming, and make life fair. I just want to get by, pay my bills, and put my kids through college. That is way easier to do in Texas. So, the middle and upper middle class is being incentized to leave California.
Who is John Galt?
I mean, how can I be earning an income of 86,000 a year, get married, have two children and by the time they are preschool aged and I am ready to go back to work, not only are there NO jobs here in SoCal, but I can''t even get one paying minimum wage and let''s not even bring up the fact that more than half of the jobs that are listed are REQUIRING that the applicant be bilingual English/Spanish. What the hell is that?
Can you please tell me why everyone here shouldn''t at the least learn to speak English to be a citizen?
My point, everyone has fought so hard for minority rights and no discrimination for the Spanish speaking, well shouldn''t we have the same rights? Why can I not get a job because I only speak English? Isn''t that the same thing? Oh, and by the way do you know how much I paid in taxes to California as a single woman making 86,000.00 a year. But now when I need work I can''t get any until I become bilingual.
Trust me, the first chance I see, or job I find that is as far away from California as I can get, I will be on the first plane out of here. How does Arnold say it "Hasta la vista, baby".
Hurray, hurray, hurray!!!
Posted by Platteman at 09:19 PM : Jan 04, 2009
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Too late, we''re already broke before Obama can take the oath.
Over $60 TRILLION in deregulated derivatives, much less over $8 TRILLION borrowed for bailouts that included million dollar bonuses to management.
Posted by lisarzep
where are your facts?? come on, state them.
The $8.5 TRILLION used so far should shore up individual bank accounts and states/municipal budgets instead of private institutions. Did you hear how they don''t have a clue on how the banks are using the billions of bailout money?
Top ten states for unemployment: MICHIGAN (9.6%), RHODE ISLAND (9.3%), CALIFORNIA (8.4%), SOUTH CAROLINA (8.4%), OREGON (8.1%, DISTRICT OF COLUMBIA (8%), NEVADA (8%), NORTH CAROLINA (7.9%), GEORGIA (7.5%), ALASKA (7.3%).
California liberals, all idiots who think money grows on avocado trees and grapevines.
I''m sure California, like any other state (read: self serving entity) will demand tax increases must pass or libraries will close, garbage collection will be halted and old ladies will be thrown out on the streets.
At what point will the people get back control of their government (that would be a government that does the bidding of the people instead of what the government wants)?
Posted by DoctorWho6 at 06:52 PM : Jan 04, 2009
I am from a flyoversville state, a Federal Tax TAKER state. I already stated why it is that there has been nothing done about it, and it has nothing to do with socialism and everything to do with downward pressure on laborer wages. Tell me, genius, how does that make me a liberal?
After a year or so of this, there will be nothing to redistribute, so we will all be broke.
Hurray, hurray, hurray!!!
They are an easy target arent they.
Typical nutjobs passing the buck. They sre complete failures.
Republicans waste your money.
Republicans know nothing about an economy.
You''ve learned right?
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