California, Indiana, 3 Other States Brace For Shutdowns

Los Angeles Times:

Reporting from Indianapolis and Denver -- The last time Indiana missed its deadline for passing a budget and had to shut down the government was during the Civil War.

But on Monday, as lawmakers raced to hammer out an agreement over school funding, state agencies began preparing 31,000 workers to be temporarily out of a job. Republican Gov. Mitch Daniels has warned residents that most of the state's services -- including its parks, the Bureau of Motor Vehicles and state-regulated casinos -- would be shuttered unless a budget is passed today.

Read the whole story: Los Angeles Times

Comments

[inorbit]

Indiana - Not the casinos!

Say it ain't so!

[rogerthat21]

Take back the trillions of $$$ given to the banks, who just sit on it and make it totally ineffective then start government incentive to create realistic industries that give employment and generate real productive income, some of which would hopefully be from exports.

Every other country, especially China and most of Europe have goverment incentives to protect it's industries. No matter what you call it it's a form of protectionism and its inevitable. We should stop being naive and take care of our own house. The only ones who win if we don't are the multinational corporations who don't care where they get their hand out.

hat tip to: http://investmintideas.blogspot.com for the good articles

[markm8128]

Roubini is now changing his tune, and saying that Obama's economic efforts will be sucessful. He is even praising Tim Geithner.

http://www.rgemonitor.com/blog/roubini/257162/dr_doom_has_some_good_news

[themodernleader]

This emerging depression finds the states broke. And the draconian cuts that must be made to balance the budgets are forcing legislators to face their political graves. In the meantime, the Obama-Hoover- JPMorgan team are unabashedly optimistic about the mysterious ways of creative bankers and the borrowed monies that is flattered upon their every whim and lavish life style.
The breakdown of state services endangers the civility of the local communities and cities and rural confines. The Federal government can not assist. Why not? Thireteen trillions have been obligate to pay off investors in Fannie Mae, Fredie Mac, the corrupt banks to big to fail, the corrupt insurance companies and so on. It is fair to assert that we may have saved investors and some of our bankers at the cost of our governance and future. We are led by timid, fearful, corrupt and incompetent leaders.

[JoeBlough]

"We are led by timid, fearful, corrupt and incompetent leaders." - They didn't sneak in through the back door. They were voted in by the majority of Americans to use their "best judgement" in leading us. What we have is what we asked for.

[VikingQuest]

If you want to know why California is on a downward spiral, all you need to do is check their budget history:

1983-84 - $26.8 billion (Population 26 million)

2006-07 - $131.4 billion (Population 36 million)

So the budget & spending has increased 5 fold, the people paying in hasn't even doubled . . . yet the California Government never thought this could be a problem . . . LOL

[Choicelady]

Every cost of private sector living in CA skyrocketed, too - housing, education, salaries of the rich, contracts for public services such as highways (which did NOT include huge increases in wages), health care - especially health care - causing a huge burden on the state to provide basic services when the costs were determined in the private sector. And then we had huge tax breaks to the rich, to corporations even ones not here, and huge salary increases to governor's appointees. And oh - by the way - the 2006 budget was $101 Billion. Get your figures right before you try to prove government is wasteful. It was not CA that caused the collapse of our economy.

[MamaBird62]

Are those numbers adjusted for inflation? That's a 23 year span.

[VikingQuest]

Inflation? No they are not.

Give me a break, California has a spending problem and have for a long time.

[LiarLiarIraqsOnFire]

Mitch Daniels could resolve Indiana's budget crisis if he'd let the Legislature dip into the 'Rainy Day Fund'.

[nomorefed]

People now are getting paid the SAME WAGES as they did in 2000. But are prices at 2000
levels? H3LL NO. So they go into debt, adding more layers tothe USA debt ponzi scheme.

good finance articles: http://heavysidetrade.blogspot.com/

[Steamboater]

They can shut down the DMV for all I care. All they care about are quotoa of tickets issued to bring in money for the state. Other than that, here in California we're in deep sh*t. Healthcare services are something that shouldn't be discounted though. Too many people are without even decent healthcare so what they do have shouldn't be ommited. If people get sick and sicker because they have no healthcare the crisis gets worse because then they go to hospital emergency rooms when they could have gotten preventive care and and even when sickness hits they go there and don't pay, so the state has to pay and that's the law. In the end it costs us more. If you can't get people jobs, at least keep them healthy.

[davidwayneosedach]

California will be the first stateto receive a Federal bailout.

[Steamboater]

If that were only true. Obama has said no more money for California and come the next presidential election, no more votes for Obama from California, at least not enough to win the state.

[Lorianne]

The entire state are prostitutes?

[JoeBlough]

This is just a game of chicken. All will be resolved and life will go on. Don't get all worked up.

[Queen Regnant]

I don't like games of chicken where my household is at stake. Here we are in Pennsylvania. I dislike Ed Rendell, have previously dropped out of the Democratic Party due to his grifter mentality. This time I'm doing it for good.

[Mildmannered]

It is time that we have private entities run our states; private entities like Enron, Washington Mutual, General Motors and Madoff

[viperhawk2k4]

I hope this is sarcasm? Otherwise you're NUTS!

[Lilith33]

Grover Norquist;

Jack Abramoff pled guilty to conspiracy to corrupt public officials, mail fraud and tax evasion on January 3, 2006. According to an investigative report on Abramoff's lobbying released in June 2006 by the Senate Indian Affairs Committee, Americans for Tax Reform (ATR) served as a "conduit" for funds that flowed from Abramoff's clients to surreptitiously finance grass-roots lobbying campaigns. A second group Norquist was involved with, the Council of Republicans for Environmental Advocacy, received about $500,000 in Abramoff client funds.[19]

Norquist has been close friends with Abramoff since college, when he ran Abramoff's successful campaign to become national chairman of the College Republicans

[Bitsko]

God bless the free market system. What, there is no god? Oh never mind.

[Lilith33]

Grover Norquist;
WIKI;

In 1996, the Choctaw tribe, an Abramoff client, donated $60,000 to ATR to oppose a tax on Indian casinos. The funds continued; in 1999, Norquist moved $1.15 million in Abramoff client money to Ralph Reed's for-profit political consulting company, Century Strategies, and to anti-gambling groups working to defeat a state lottery in Alabama. The money routing was deliberate: in one email reminder to himself, Abramoff wrote: "Call Ralph re Grover doing pass through."

In May 1999, Norquist asked Abramoff "What is the status of the Choctaw stuff?", in an email. "I have a 75g [$75,000] hole in my budget from last year. ouch." Abramoff eventually grew annoyed at the amount that Norquist took off the top before sending the money on, e-mails show. "Grover kept another $25 k!" Abramoff wrote in a February 2000 note to himself

[larry278]

A vast # of the comments on this blog &/or thread seek to put the blame on somebody else for causing the conditions that the commenter alleges caused the conditions which have 5 states facing de facto bankruptcy in a few weeks; absolve themselves of any blame or responsibi­lites(sp?) as citizen of a state & the USA; present wool gathering rambling which resemble flatulent emissions or excretions of urine or feces.
Does anybody have any solutions to the problems that the de facto bankruptcy of a states or states will cause? I haven't seen any solutions in any of these comments.
Will Rogers was wrong; we aren't going to the poor house in a limo or private car. We're going to hell in a hand basket.

[rbspickles]

How about slashing state pensions programs??? They are one of the main problems with IL's woes and they could easily be reduced to more moderate levels and still give IL workers good pensions. Plus we could cut all state spending by 5%, accross the board. Lawmakers could cut their pay raises and stop unneeded traveling expenses bringing 6 or 7 "associates" with them to talk about the color of pencils for 30 minutes at a lunch in Honolulu. There's many, MANY things that could be done OTHER than raise taxes.

[JoeBlough]

"Lawmakers could cut their pay raises and stop unneeded traveling expenses " - you just lost their support.

[MamaBird62]

You're right Larry, it's much easier to complain than offer solutions.
Here on a very local level, our school district has just gone through an amazing budget planning process. Our state, like most others, has a deficit and will have less money to give the schools. With fantastic input from the entire community, we are ending up with no teacher layoffs, cuts only at the administrative level and not in teaching, most programs staying in place, including music, art, athletics, etc. We introduced "pay to play" for some performing arts programs and some athletic programs, like junior varsity. Parents who can afford it will pay a little extra for their kids' participation, kids in need of financial help will all get it. This is so much better than just cutting programs and firing teachers, which is the usual knee jerk reaction.
Again, it's very local, and small, but isn't every problem that way when you get right down to it?

[Mildmannered]

how much did the cuts you mentioned, e.g., at administrative level, pay to play, etc., amount to?

[Mildmannered]

the states probably had their savings (e.g., pension) in the stock market, got slammed by reduced revenues because the nationwide employment rate increased and the housing market collapsed, and got slammed by increased safety net expenditures due to the nationwide recession

[Queen Regnant]

I'm not paid to offer solutions - my elected officials are.

[Roguer]

No, elected officials are paid to serve the will of the people.

You are supposed to think for yourself.

[Lorianne]

Cut spending.
Once you havea balanced budget, don't spend more than you take in.
Reserve 10% of all you take in for unforseen circumstances and don't raid it.