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Schwarzenegger plan won't work, legislative analyst says [Updated]

Declaring that California faces thorny choices to avoid insolvency, the state legislative analyst said that Gov. Arnold Schwarzenegger’s plan to borrow and sell off key assets to help overcome a $21.3-billion deficit won’t work.

Updated at 11:38 a.m.: New estimates of revenue suggest the budget deficit may be as much as $3 billion larger than the governor estimated.

In a 28-page report released this morning, Legislative Analyst Mac Taylor said the governor’s proposal for $5.5 billion in short-term borrowing would only shift trouble to the future and set a “dangerous precedent.”

Taylor’s report also expresses doubts about the proposed $1-billion sale of a state-owned workers’ compensation insurance program and a plan to save $750 million on the state’s costly Medi-Cal program by potentially cutting healthcare reimbursements or slashing the number of eligible participants.

But the report says several of the governor’s budget proposal “merit serious consideration,” including eliminating some state boards, selling property and changing retirement health benefits for future state employees.

Taylor also emphasized a need for the Legislature to “make the difficult decisions” and act quickly, which would “likely boost the confidence of the public and investors in the budget process” as well as prevent an anticipated cash crush in early July.

-- Eric Bailey in Sacramento

Comments () | Archives (41)

Reduce the size of the government by cutting spending. Governement jobs shouldn't be an entitlement. The rest of the people have to live with layoffs and no pensions.

I like Arnold. No governor of California has done more to close the bipartisan gap. The State Legislature is to blame for California's woes, period! And what woes we're in. But this happening virtually all over the country. Why? Blame the Republican party leadership. It's that simple. Dems are 100% innocent, but the "serve the rich and the corporations" policies of the GOP, and their undying support of Big Oil, Big Pharma, Big Ag, and the military industrial complex - while enriching them and securing their futures - has GREATLY harmed this country, or more accurately, the American People. We MUST fight back.

Meant to say that Dems are NOT 100% innocent, but they are FAR less to blame than the GOP for the simple reason that they have controlled the agenda that got us into this mess for decades. Only Clinton brought some semblance of stability. Look at the numbers...

This is a good start but how are you going to stop all the good people with business and money from leaving California ? The real problem is the state has been overrun with illegal alians and people just looking for a hand out. If you want a REAL HOT WAR just raise the taxes once more. People are already yelling "Get a Rope".

Maybe request Mexico to share the burden of educating and providing services to roughly half the population of California. We don't have the money to fund all the goodies. Not to hard to understand.

The states only hope is to go bankrupted. Then all of the contracts it has with all the State labor unions can be tosed. New ones that are more in line with the rest of the general work force can be put in place. We also need to stop supporting all of the programs for illegal aliens. This alone would save well over 10 billion each year. This would take care of our budget problems.

I saw a lot of false conjecture on the "meaning" of the recent vote....
Here's the bottom line.

illegal immigration has been the PC elephant in the room for over a decade now. Frankly, "We" the CITIZEN Taxpayers of Ca. are sick of our $ going to the health, education, welfare (& incarceration) of citizens from OTHER COUNTRIES who owe this country no allegiance.

We STILL want Prop 187 on the books and enforced! We STILL want employers of illegal workers sanctioned and FINED!

Every penny counts. We should make sure that the money goes to LEGAL RESIDENTS and CITIZENS first. If we stopped funding programs for illegal aliens we would REDUCE the budget deficit. This reduction is a good first step and is a necessary step.

Why reduce education spending when you can simply remove the illegal aliens from the classroom?

Why reduce medical spending when you can simploy remove illegal aliens from the program as well?

I do not like Arnold, I can not believe he was chosen to replace Davis without any credentials. He has not done anything that helped our state, as a matter of fact if he would have left the cartax alone, which would have generated 4 billion dollars a year, times 6 = 24billion, we would not have this enourmous problem now. I think Americans should not be so much against raising taxes. It disgusts me to see somebody drive in a brandnew Lincoln Navigator with a sticker against raising taxes; maybe "take" a little less and give to the good of all people. Just because you are lucky enough to make more money than the average person does not mean you are not responsible for the society as a whole.

Holy Crap Batman- just when citizens need help most- we find an empty box from giving it away to illigals and thier illegal children. I say we end most benifits to anyone who is not a citizen, and that includes children of illigal citizens. People do just fine in Mexico. Everyone take birth control and only have one child-okay? That way- employers are begging for workers! Let's not over populate!

I was born here, and I have whatched this state on a trajectory to bankruptcy for decades. Imagine you give someone a credit card that someone else is paying for, well of course every touchy feely idea sounds great, especially if you can buy votes with it. Well we cared for the million of illegals, we protected the environment, we gave state employees(supposed to be working for us) the most amazing benefits on this earth. Well I'm tired of working for them. Any suggestion of a reduction in spending brings forth the school children-teacher-police-fire scare campaigns and the voters go along like sheep. They tried it again, but I think that ploy is pretty much played out.Let see if it really possible to fire a state employee with out the world coming of it's axis

Enough is enough lets draft a new state constitution by getting a convention on the ballot go to www.californiarelief.org for info

Correction evryone on that website address it is actually Sorry about that.

I strongly believe this state is headed for total bankruptcy (whether or not is "legal" to do so) and we need to act now as voters to take responsibility. STOP blaming everyone (the gov. legislature and illegals) and lets start a constitutional convention to actually deal with the issues we face.

Or just opt for the alternative which is to have the federal gov. run our entire state. NO THANKS

Finally- a minor mention of cutting beneits! Who would have thunk it? How about raising the deductible for health beneftis on EXISTING employees?? The pensions are a scam as well. It's almost like if benefits and salaries are not addressed, no one is serious about the budget...

I grew up and lived most of my life in California. It makes me sick to see what is happening to what once was a great state because of lousy leadership at the top and an apathetic population that continues to vote in a dysfunctional legislature.

I understand that the legislature's approval rating is near single digits in the state. Is it possible that the person or party that you personally vote for and overwhelmingly reelect every two or four years may be part of this awful legislative problem? Duh! Why do you keep supporting them? Why are you not in the streets demanding answers and taking back control of the state?

I have no interest as a non-California taxpayer seeing any federal money go to your state until somebody wakes up and gets a clue.

RE comment from John van der Fluit - do you really believe that the 24 Billion from the car tax would have kept this from happening? They would have spent that on pensions and benefits and we would still be where we are today. Lets have a vote for CA going BK - lets burn the house down and same us all.

YOU are to blame, you and me alike. California's constitution gives WAY too much power to the common citizen whom is often ill-informed and ignorant to the intricacies of running the worlds 8th largest economy. You quibble about inept politicians that don’t have the people’s best interest at stake, well Californians we made it that way by imposing term limits keeping PROFESSIONAL politicians out of Sacramento and replacing them with part time under qualified no-nothings that bend to the will of the masses (read the Federalist Papers to understand why this is dangerous and why we are a Republic, not a democracy) and to the persuasive information givers that are the true power brokers in Sacramento the lobbyists. We squawk that nothing gets done is Sacramento, well Californians again look at them mirror and find your answer. You “cherish” the states Proposition Political Process which effectively takes the decision power away from the legislature and makes the ill-informed masses the Legislature, Executive and Judicial arm of the State. What Californians don’t realize is that a passed prop is an inalienable amendment to the laughing stock that is the California State Constitution. Look we exist in a Republic to put leaders in power to have the best interest of the majority while abiding by set moral and legal guidelines set forth in a Constitution. A right decision may not be the most popular one (see abolishment of slavery, voting rights, etc) but they are what is best for the Country, State, City and Town. Grow up Californians and take a long hard look in the mirror, WE are the problem.

The only sensible path out of this mess involves raising TAXES. I am happy to pay higher taxes in exchange for the services provided by the state.

I don't understand how UNDOCUMENTED folks are to blame for this mess. This all resulted from bad choices particularly prop 13 and the notion that Californians are over taxed. Please. If that were the case then you would not have the super wealthy of Silicon Valley, SF or LA. We need to provide services and maintain our infrastructure and this costs money. I am surprised by how people have been reading into the defeat of these measures. The true message to the so called leadership in Sacramento is...YOU...YES YOU MAKE THE TOUGH CHOICES. That is why we elected YOU. We do not need to provide YOU with cover for your stupid policies. So people move off your xenophobic, racist rants and identify the true problem...bad public policy guided by short term political gains.

But of course when many of the voters saw the chance to
put the blame on Gov. Gray Davis for his spending 10 Billion
that the state had in the bank, the purpose being to rebuild our
power complex that the previous deregulation had caused to be disassembled, which made California vulnerable to the big power people back east who were milking us. So the voters
recalled Gov. Gray Davis. Seems the voters could not turn down Arnolds' offer to not raise the car tax as the law said
it should be. Oh, never mind that the news article on the front
page of the L.A. Times says this was the reason for the deficit. They could afford to buy a big SUV to put in that house they bought on a Sub Prime mortage. Oh, life was good when the legislature could borrow money so they could meet the needs without having new taxes. Then came the $4.50 gallon gas. Now the voters are screaming about taxes. Time to pay the piper, folks.

I remember when I first moved to the land of milk, honey and sunshine- we got a check back because there was a SURPLUS in the State Treasury- yup we got money BACK from the state to us!!! so what changed- we have half of Mexico living here, collecting and not paying taxes, we have a cesspool of crime, we have more people with their hands out and fewer people paying into the system, we have overpaid state officials (ask them if they are still getting FREE cars, gas and perks! while I pay for you!) ; we have people who are out to "beat the system"... for example, one of my neighbors a teacher who makes over $70,000/yr and SLEEPS in her car when she should be teaching- I pay for her salary!!! This is the new America and the new California - I can't wait to get the h*ll out of here... I use to love it here; now it's just another Detroit City!!

I think it is about time California went bankrupt.
Finally, Mexico can buy back California with all its hard earned drug money. Let us not forget, MEXICANS are NATIVE to CALIFORNIA. Hence the name California, Los Angeles, San Diego, San Francisco. Besides, Caucasians have taken over Cabos San Lucas.

There's nothing wrong with hard-working government workers earning pensions, a living wage, and healthcare. What's wrong is when illegal aliens and welfare parasites live off the working class. It's bad enough that the rich exploit workers in a capitalistic boom/bust cycle, but having the criminal element prosper at their expense is beyond reason. Enforce Proposition 17 -- the will of the people. If the courts don't like it, let them pay for illegal aliens!

Cutting will be done, many of your neighbors will lose jobs. The prices of houses in your neighborhood will continue to tank, and...... then I will be your neighbor (cause I made a bunch of money in the real estate "boom" and am sitting on a ton of cash to buy up property again when this baby tanks)

We will then restart the game - I make money, you pay later beoooooootches

Californians have benefited from illegal immigrants for decades, but will never admit that we have enjoyed a certain lifestyle due to cheap labor and services provided by illegals. Not to mention, it was stolen from Mexico with a ruse known as the Mexican-American war. But do Californians understand that? He** no.They're products of LAUSD!

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