The Ongoing State Budget Crisis In California And Many Other States

California is often called a microcosm of the nation, with one of every eight people living in the Golden State, and the state being one of the top ten economies in the world.

The state has been reeling from record budget deficits, which have led to budget cuts, tax increases, and a constant state of crisis relating to social services, including education, health care, and aid to the poor, the young, the elderly, and the state work force.

Governor Arnold Schwarzenegger is in his last year as Governor, and it will be difficult for him to gain any traction on these problems in a political year where there is such a total collapse of cooperation with the legislature, and everyone is up for election.

Many other states have similar budget gaps in the double digits, but at a lower level than California. These states include Arizona, Colorado, Hawaii, Iowa, Maryland, Nevada, New Jersey, New York, and Vermont. 36 states have some budget gap that is creating a crisis.

It typically takes two years beyond a recession for state economic outlooks to improve, but with the high level of foreclosures and unemployment at present, the collection of sales, income, and corporate taxes is far lower than is needed to meet social service needs across the country.

Despite conservative opposition, it seems necessary for more federal aid to the states, with the argument being if Wall Street, the banks, and the auto industry could get federal aid, then the states must also be assisted, probably by another economic stimulus, which has helped to some extent to lessen the pain of the recession in many states, although not solving it.

This crisis comes just as the demand is growing to cut government spending because of deficit concerns, but if the states are not assisted by the US government, future chaos and massive suffering seems likely. What an unfortunate mess the Obama Administration faces to deal with the reality of tremendous poverty and suffering in much of the country!

It seems to me the only alternative is more assistance, as FDR increased in the second year of his administration during the Great Depression. Lack of action would be far worse!

One comment on “The Ongoing State Budget Crisis In California And Many Other States

  1. rich mckone January 4, 2010 10:19 am

    The Governor should cut prison system waste before asking for a federal handout or cutting critical programs for the poor!

    He could save about $220 million annually by telling the Board of Prison terms to speed up the technical parole revocation process by one month.

    He could save over $750 million in annual prison operating costs and avoid spending billions for prison construction by adding 25,000 county operated contract beds to house technical parole violators.

    He could save about $220 million annually by increasing inmate work/ good-time credits by a month.

    He could save about $250 million annually by implementing Little Hoover Commission recommendations to realign responsibility for serious juvenile offenders from the State prison system to the counties.

    He could save up to $250 million annually by contracting with counties to provide parole supervision.

    He could save billions by adopting the national correctional prison bed standards rather than relying on unique California prison bed standards.

    He could save billions if he could exercise actual political leadership.

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