FYI | Aug 15 2008
By Greg Peel
“I never dreamed that working as a state employee that I’d have to worry every budget year whether I’m gonna get a paycheck or not,” a California state prison guard told local Fox television last night.
The outburst came as a result of drastic measures implemented by Californian governor Arnold (this would never happen in Vienna) Schwarzenegger this week. The state legislature blocked the budget 45 days ago, refusing to allow the Governator to do what every Californian administration has done before it – issue bonds. Despite being America’s most populous state, and once the world’s sixth largest economy by itself, California’s budget runs on debt.
That debt is now US$17bn.
In the past the practice has been to make up shortfalls on interest payments on those bonds by borrowing more money. Can you see where this might be going? California is among the handful of US states that have seen house prices not just fall, but absolutely crash. It’s Subprime Central and the Republic of Resets. The Republican governor wants to carry on in the same manner, but can’t sign off on the budget, as it is blocked by the state’s Democrats.
The Democrats note that California’s credit rating is now at junk level, and hence is refusing to endorse the issuance of yet more bonds (despite the fact that is exactly what the Federal government has been doing with gusto). The Dems blame the Republicans for getting into this mess AND enacting tax cuts in rosier years. The Republicans will not endorse tax increases as a solution and suggest the problem can be solved with “spending reductions and meaningful budget reform”.
They have not actually suggested where reductions or reforms might be made. Perhaps they could take a lead from the state of New York, which at present is agonising over just which public services to cut in order to get out of its own budget mess. Healthcare perhaps?
Arnie’s solution – or at least desperate measure – in the meantime is to cut every state public servant’s wage, no matter how high, to the minimum wage. Hence the spray from the prison worker to Fox. Nor will he sign any legislation until he can sign off on a budget. He will make up for lost wages thereafter.
No one knows quite how. There are 200,000 public servants in California, already struggling to pay their mortgages.
The state controller, Democrat Professor Navarro, shrugged as he suggested to CNBC that “California’s pain will eventually be everyone’s pain”. On screen he was holding up a sign that read “Will teach for food”.
If it wasn’t so catastrophic, it would indeed be laughable. To top things off, the Californian wage-paying system runs on a computer program written in COBOL. You’d have to go back to when I was at university to know what that is. It’s so antiquated the Amish would probably not protest its use. And it just doesn’t have the capacity to figure out, in the time provided, how to reset every public servants paycheck. To wit, nothing has actually changed yet.
And all the while, fighting California’s wildfires is costing the state US$13 million a day.
