[Jul 25: States Slammed by Budget Shortfalls]
[Apr 25: Shoes Beginning to Fall in the States]
[Dec 16: California in a State of Emergency - Coming to a Theater Near You]
Normally I'd worry when I read a story like this but since Jim Cramer has called the bottom in the stock market, we have nothing to fear but reality itself...
- With California's cash dwindling and legislators still debating a new budget, Gov. Arnold Schwarzenegger eliminated 22,000 part-time and temporary state positions Thursday and ordered that 200,000 state workers receive the federal minimum wage.
- His signing of the executive order had been expected since last week but stood as a stark illustration of the cash problem facing the nation's most populous state. Schwarzenegger apologized to state workers but said he had no choice.
- Lawmakers have yet to agree on a spending plan a month after the state's fiscal year began, leaving California without the ability to pay for contractors, the higher education system and legislative employees.
- As of June, more than 30 states faced deficits totaling a projected $40 billion, or more than triple the gap of the previous year, according to the National Conference of State Legislatures. ($40 billion? Can't you just write it off?? - works for our banking system - that's not even 1 good earnings season for our banks. That's peanuts! Uncle Ben - to the presses! Pronto!! Oh wait, you only do that to bail out the executives at our banks - never mind then - let the states and their people suffer. Suckers.)
- Schwarzenegger also cited a 2003 California Supreme Court ruling allowing him to slash the pay of regular full-time employees when the state lacks a budget. By law, those workers must be paid at least the federal minimum wage of $6.55 an hour and will be reimbursed once a budget is approved.
- The administration estimates that immediately terminating the contracts and suspending overtime would save the state about $80 million a month. The deferred wages would take several weeks to implement, saving the state $300 million to $400 million a month starting in late August.
- The governor's order is certain to be challenged. The state controller has said he will not comply, in part because he said the move is likely to invite lawsuits from employee unions. Controller John Chiang, a Democrat, has said will issue employees their regular paychecks, setting up a potential legal skirmish between his office and Schwarzenegger's.
Now about that next stimulus plan to spend money we don't have....