Posted by: jhamon | July 29, 2009

Abracadabra! It’s California’s Budget

California Governor Arnold Schwarzenegger

California Governor Arnold Schwarzenegger

“Watch my right hand very carefully, ladies and gentlemen, because the trick is happening in my left hand.”  16, count ’em 16 paragraphs into a article about California’s new budget are these gems:

The governor and lawmakers hope the revised spending plan will end California’s cash crisis and let the state stop issuing IOUs. As of Monday, the state had handed out nearly 210,000 registered warrants worth $1 billion, according to the Controller’s Office.

Schwarzenegger’s finance director, Michael Genest, said it would take days for finance officials to finish analyzing the revised budget’s impact on cash flow.

“It’s not going to happen overnight, but they’re going to work on it,” Schwarzenegger said of Genest and the state treasurer and controller.

Genest warned that even with the revised budget deal, California will need to borrow $8 billion to $10 billion to cover its cash needs this year, and the state is likely to face a new $7 billion to $8 billion deficit in the 2010-11 fiscal year.

Matt Fabian, a bond analyst at Municipal Market Advisors, based in Concord, Mass., said California’s plan was filled with accounting tricks and will likely do little to improve the state’s poor credit rating.

And the beat goes on… Fitch already cut California to close to junk bond rating.

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  1. Dear Mr. Hamon,
    It’s bad in California but it’s even worse in Washington. Look at Fed Chm Ben Bernanke. The way it looks, he’s defending ETFs (Exchange Traded Funds). So the government keeps using IOUs and keeps going deeper in debt.
    Yours truly, LaVern Isely, Disgusted Middle Class Taxpayer, Public Citizen and AARP Member

    • Are you sure your AARP membership supports your perspective? Just asking.

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