What can you say to Gov. Schwarzenegger's latest ploy to balance the budget except that he now has indeed, just gotten silly. Our supposedly fiscally conservative governor wants to borrow $2 billion from CalPERS, the giant state public pension fund, to help balance the still-to-pass California budget for 2010-2011. There's just so much wrong with this bizarre idea that it's difficult to know where to start.
First, and foremost, the state will pay CalPERS $3.6 billion this year to cover their immense funding shortfall. Then the governor wants to borrow back $2 billion of that money? This is nonsensical. Since CalPERS can legally force the state to cover its deficits, could it just come back and ask for the $2 billion again? Maybe this is a ploy by Schwarzenegger to simply not fund CalPERS fully. It certainly seems to be a desperation move ((especially considering that he also just ordered a delay in payments of $2.9 billion a month to school districts and counties so the state can pay debt and pensions.)
Then Bloomberg posts on another gimmick:
California is offering interest-free loans to rural hospitals and community clinics struggling with the state's budget impasse, the Treasurer's Office announced.
The California Health Facilities Financing authority made $9 million in loans available to rural hospitals and clinics facing cash shortages because of delayed Medi-Cal reimbursements.
What can I say? This is what a state does when it has no legal path to bankruptcy.
Then we hear about another ratings drop:
The state may need to issue IOUs to pay bills by next month and Standard & Poor’s has said it may cut California’s A- rating, already the lowest among states.
Does it matter what California ratings are? The problem is not going away, it is tied up in the federal problem of overmandating.
2 comments:
I just found your site and you are so correct about the state of California almost going bankrupt. Your article struck an area I am "kicking and screaming" about: rural health. We have a hospital, Kern Valley Healthcare District, which is rotten along with the rest of the apple, and they are coming to their community for taxes to supposedly only build a new ER which lacks any foresight in itself. California is on the brink kids and this article that has been mentioned is a lot of the reason why this is happening. Rob Peter, defer Paul, and try to vote in Jerry Brown. Not working. My name is Laura Hart, a freelance reporter, watching government fail in a small valley above Bakersfield. Cause: the Govenator and the Attorney General, Jerry Brown. The issues I am working on directly reflect this article. You can find our brutal battle at "KVHD under FIRE!" or at "Your government, your problem: an owners manual." I enjoy seeing sites like this where we can sort, use logic and information to see the reality of our economic situation. I will be posting a letter from an office called OSHPD/Cal Mtg. It is dramatic in that the state admits they could be losing their jobs if something doesn't happen quickly. If I get permission from this author's site I will add this link...Thanks for the information and insight. Laura
Link away to my site but if you scan my posts you find a lot of this is unrelated to government finance issues. If you find a particular post, be sure to link to that post only, not to the general site.
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