California's Begging Bowl

"California hoped passage of the $700 billion rescue plan Friday would avert financial disaster for the most populous U.S. state, which a day earlier had called for a possible emergency federal loan. Its precarious financial position is an example of how the credit crunch has spread to states and municipalities. ... State Treasurer Bill Lockyer will go ahead with a planned $7 billion bond offering, but market conditions remain dire. ... Schwarzenegger said that if the state couldn't borrow on its own, it would again 'go to the federal government and ask for help.' ... Tom ... Dresslar ... added that the U.S. Treasury has the authority to grant an emergency loan to the state and that the rescue bill reinforces those powers. ... At the local level, 'there are examples every single day of counties hitting the wall,' said Jacqueline Byers, research director for the National Association of Counties, an organization that represents 3,066 counties in the U.S. ... In California, property tax revenue is falling becaue plummeting home prices have resulted in lower assessments, even as cities are tied up by long-term labor contracts, said Mark Moses, chief financial officer for Stockton, Calif. That makes many California cities vulnerable to involvency, he said", my emphasis, WSJ, 4 October 2008.

"California State Controller John Chiang warned Tuesday that the state's revenues and cash flows are deteriorating quickly, in another sign of how the financial downturn has spread beyond Wall Street to state and local governments. In a statement, Mr. Chiang, ... said California is already short $1.1 billion after the first three months of its fiscal year", WSJ, 8 October 2008.

"With credit markets in New York in crisis last week, California Gov. Arnold Schwarzenegger sent an extraordinary letter to Treasury Secretary Henry Paulson asking for $7 billion. Although the governor has since withdrawn that request, it testifies to the dire state of his budget. ... Actually, the state's budget woes should give voters pause--especially since high-speed rail is a fantasy that has as much chance of delivering on its promises of creating 450,000 jobs, vanquishing road congestion and lowering greenhouse gases as 'Conan the Barbarian' had of winning the Oscar. The Golden State's finances are a mess. California's general obligation debt has tripled in the past six years and is now almost equal to the state's $145 billion annual budget. ... But there is little reason to believe [high-speed rail] cost or revenue projections. ... To attract riders, California's rail will have to out-compete cars and airplanes by keeping a lid on commute times and fares. ... It seems California is promising to build a train that is faster, cheaper, more efficient and serves more riders than any high-speed train in the world. And all it has to do to pull off this miracle is defy the laws of economics and physics. This is the kind of creative thinking possible only in the land of Hollywood, but odds are that eventually reality will sink in and California will have to abandon its rail just like Texas, Florida and Southern California were previously forced to do with their far less ambitious proposals", Shikha Dalm, at the WSJ, 11 October 2008.

The credit crunch? Or California government wild spending? These idiots want to give 5 million illegal aliens government services, let 'em. The rest of the US should not pay for it. The idiots thought real estate would increase 20% in value yearly forever and found it won't. Tough. Go bankrupt.

"Credit crisis" or no, California would be insolvent.

The California high-speed rail project looks like another boondoggle. Now wouldn't it be nice if the WSJ applied this kind of thinking to the Paulson Plan and wrote an editorial, "Just Say No" as Nancy Reagan used to say.