California May Pay With IOUs for Second Time Since Depression
December 5th, 2008Via: Bloomberg:
California, the world’s eighth largest economy, may pay vendors with IOUs for only the second time since the Great Depression, State Finance Director Mike Genest said.
In a letter to legislative leaders Dec. 2, Genest said the state “will begin delaying payments or paying in registered warrants in March” unless an $11.2 billion deficit is closed or reduced. California, which approved its budget less than three months ago, may run out of cash by March, state officials say.
Governor Arnold Schwarzenegger warned that he may issue the warrants, which are a promise to pay with interest, to suppliers and contractors as the seizure in credit markets may make it too costly to borrow.
“It’s getting worse very quickly,” Schwarzenegger, a 61- year-old Republican, told reporters Dec. 1 after declaring a fiscal emergency and ordering the Legislature into a special session to find ways to close the deficit. “It’s like an avalanche in that it gains momentum. And that’s what we’re in right now, so it’s a real crisis.”
California is reeling more than any other state from budget woes that pushed the nation’s governors to seek help from Congress. States say federal money is needed to ease the pain from spending cuts and tax increases that would be a further blow to an economy in the throes of a recession.
The warrants would be given to landscapers, carpet cleaners, construction firms, food services companies and other state vendors. They would pay an interest rate of as much as 5 percent, based on state law. California last issued the IOUs in 1992 when lawmakers and then-Governor Pete Wilson deadlocked on a budget for 61 days past the start of the fiscal year.
And still, they never make a move on our state prison industry (this is an issue I get angry about). Even though the prison guard’s union started a drive to recall Schwarzenegger when he said something they didn’t like, he’s largely continued to give them whatever they want. Their wages start at $80,000 and many make six figures due to overtime. This is much higher pay than Arizona, Nevada, Oregon. Also, due to their lobbying, California has a really high ‘recidivism’ rate by parolees who haven’t recommitted any crime, but are found out after 10pm curfew, miss a meeting, or move out of the county they’re required to stay in. http://www.contracostatimes.com/danielborenstein/ci_10464433
wait…. Schwarzenegger is 61?!!
Do any of Arnold’s suppliers or contractors pay taxes in Calif.? Just issue tax credits in the same denomination as the bill give it to them, and they can pay their bills or taxes with them. As long as everyone understands that it is “money” they will circulate back to the state and be received as taxes.
The probation and parole system here in Missouri is equally insane: The newly released parolee has onerous requirement to meet with the parole officer, who is usually located a vast distance from the parolee–assuming he/she has a place to live. The parolee has no money, no car, and no job, yet is supposed to attend meeting of this kind–along with others for rehabilitation. Plus the parolee is supposed to pay hundreds of dollars for attending some of these meetings.
All this is nearly impossible to do (and pay for) if you don’t have a car or a job. Women parolees may have to resort to turning a few tricks; males may have to steal or sell drugs because of the urgent need for cash.
The idea seems to be to keep offenders (often minor offenders) cycling back through the system–meaning back to jail.
I knew a woman who broke parole on a minor drug charge and was forced into hiding for about ten years because she couldn’t make a meeting. She had a school-age son who never attended school, because his enrollment in school would have allowed the authorities to locate her.
The overall crime rate would probably diminish if they shut the whole damn system down.
The correctional system here in the State of Maine has similar issues as noted above by quintanus and sharon. I have worked as a PO for over 30 years. The whole system IS set up to keep probationers/inmates cycling back and forth through the system. You should hear the bitching by PO’s in our office when a probationer does well and gets a better education or a good job. This is supposed to be what we are encouraging offenders to do yet the personal jealousy and US versus THEM mentality causes PO’s to sabotage an offender’s effort to better himself or herself. If one of our PO’s hears that a guy has an interview for a job on a certain day, the PO will order the PO to report that day and hang around our waiting room until he misses the interview. I have actually seen PO’s “drop a dime” on an employer after an offender is hired for a decent job and get the offender fired. It’s disgusting and results in a less safe public and wasted tax dollars as well as eliminating any chance for an offender to succeed. And this is not just an issue with poorly educated prison guards. Our PO’s are almost all bachelor’s degree or higher. You would think more highly educated people would take pride trying to be effective change agents with offenders. In my office, if one of us tries to be an instrument of success for a probationer, we get labeled as a “wuss” or soft on crime. And the beat goes on…