Is California Sliding into a Depression?
05/09/2012 11 Comments
California’s tax revenues are down 20.2% in a month that citizens normally pay their taxes. From Controller John Chiang’s Press Release:
“Year-to-date through April, total revenues were down $3.5 billion (-5.1 percent) from estimates in the Governor’s proposed budget. Leading that disparity was income tax, down $2.7 billion (-6.2 percent). Sales tax missed estimates by $411 million (-2.7 percent), and corporate tax receipts were down $464 million (-7.0 percent).”
“The State ended last fiscal year with a cash deficit of $8.2 billion. The combined current-year cash deficit stands at $19.2 billion. Those deficits are being covered with $12.8 billion of internal borrowing (temporary loans from special funds) and $6.4 billion of external borrowing.”
To pay the bill the State is stealing from key Trust Funds and borrowing from Wall Street banks. How long can this go on? California unemployment is not recovering, being the second highest in the nation. Small business new starts are down according to the Census.
This press release does not consider the $10 Billion the the State borrowed from the Federal government to pay unemployment checks. It does not address the $500 Billion of underfunded retirement programs.
When are the Democrats going to come clean with California citizens? We cannot fix the problem, until we admit we have one. When will they admit we are in a depression? More taxes are not the solution, the only effective solution is to revive the economy. Other states are drilling their way out of a national recession and we are sliding in to depression.