Let's see. The State is approaching a $14 billion deficit. Some have already said it could go as high as $20 billion. The Governor is about to call for a fiscal emergency. He also wants to provide a water management program and health care coverage for everyone in the State at a cost of $14 billion.

Boy, here's a hard decision! Shall we have a 100 billion dollar boondoggle luxury high-speed train for the well-to-do with an initial cost of $10 billion, paid by a mortgage -- sorry -- bond issue on the '08 ballot?

Or, shall we make sure we have enough drinking water and health care coverage for everybody in California? That's really a tough one, isn't it, Judge Quentin Kopp? (Kopp is chairman of the board of directors of the CHSRA.)

By the way, will future bond issues in California be like sub-prime mortgages in the current financial markets? Will the high speed rail bond issue be like that? And, if that's the case, wouldn't we, the taxpayers, have to bail them out?

Martin

December 15, 2007

Schwarzenegger to Declare an Emergency Over Budget By JENNIFER STEINHAUER
LOS ANGELES - With several costly policy problems awaiting a legislative repair, Gov. Arnold Schwarzenegger said Friday that the state's budget deficit had grown to between $10 billion and $14 billion and that he would call for a state of fiscal emergency next month.

"The system itself needs to be fixed," he said at a news conference
in Sacramento, "and I think this is a good year, this coming year, to fix it."

The deficit stems from a variety of factors, including the state's heavy debt, the governor's decision to cut a fee on cars and trucks when he came into office - which removed billions of dollars annually from state coffers - and the mortgage crisis and weakness in the housing market that have caused budget problems in other states.

California constantly faces deficits, in large part because the budget is walled in by voter initiatives. Over time, there has been less wiggle room in the budget.

"We may have a smaller problem in percentage terms" compared with
previous years, said Jean Ross, executive director of the California Budget Project, a nonpartisan budget research group. "But we also have fewer tools to address it."

The impact of declaring a state of emergency is limited. It would prompt a special session after the regular session begins in January and would require lawmakers to present Mr. Schwarzenegger with a bill to address the shortfall within 45 days of the declaration. But he is not required to sign it.
Mr. Schwarzenegger will meet legislators next week to discuss the budget.

The shortfall occurs as Mr. Schwarzenegger pursues an agenda that includes a comprehensive water management program and a health care plan to cover all Californians, at a price tag of about $14 billion.

The governor said Friday that a budget gap would not hurt negotiations with the legislature over health care because the program would be paid for through federal Medicaid matching funds, a requirement that employers spend on health care up to 6 percent of the amount they spend on payroll and a $1.50-a-pack tobacco tax used to help subsidize the working poor.

"We don't have to raise anything," Mr. Schwarzenegger said. "We don't
have to do anything."
Ms. Ross was less sure.

"A budget shortfall of this magnitude," she said, "makes it difficult
to move forward on policy agenda."

Copyright 2007 The New York Times Company

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Martin Engel
1621 Stone Pine Lane
Menlo Park, CA 94025
650:323-1670
martinengel@earthlink.net
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