The news is full of discussion about the California legislature failing to set a new lower budget to match expected lower income. Below is just one article.
As always (I am from California), they threaten to layoff masses of employees, and it may actually happen this time, with up to 20,000 State Government employees losing their jobs. Additionally, like in Florida, they are reducing funds to local governments, which have overpromised fire and police pensions, throwing them into a possible default position.
The house of cards of overtaxation and excess government wages is about to collaps, starting in California in a big way. Florida can't be much behind, because they don't have an income tax, but the employee groups have usually managed to get wages higher than the growth of gdp or long term tax income trends, thus we will see the same collapse here. That means constant turmoil in elected offices, government managers, etc. because they all ignore basic economics related to the taxpayer's ability to fund excess government spending and wages, thus causing a constant turmoil. You ain't seen nothing yet. Wait until the School District SEIU is pitted against the Teacher's union, and fire department funding is pitted against the Sherrif for the few remaining dollars in the future.
No surviving business would do what the local government and State agencies do, increasing spending beyond objective forecasts of revenue.
vj
Cash-strapped California is to start notifying 20,000 state workers that they may lose their jobs.
A spokesman for Governor Arnold Schwarzenegger made the announcement after California lawmakers failed to approve a $40bn (£28.2bn) budget.
California, the world's eighth biggest economy, has been hit by the housing crisis, unemployment and falling consumer spending.
The jobs on the government payroll would be cut in June.
It would be done in preparation for the next fiscal year, which starts in July.
"In the absence of a budget, the governor has a responsibility to realise state savings any way he can," said Aaron McLear, a spokesman for Republican governor Schwarzenegger.
"This is unfortunately a necessary decision."
The budget would include spending cuts and tax increases to close the state's budget deficit.
California has already laid off state workers for two days a month, put 2,000 public projects on hold and delayed tax refunds.
The state controller predicts California will run out of cash by the end of February if lawmakers do not solve the budget crisis.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7893965.stm
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