Saturday, October 10, 2009

More Bad News for the Golden State

Things have not been going well for California. Despite the State's efforts to balance its budget and reform its tax system, revenue is still declining.

From Bloomberg:
Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.
And this is after drastic shock treatment:
The latest figures show that California is facing resurgent fiscal strains brought on by the U.S. recession. Since February, Schwarzenegger and lawmakers have cut $32 billion from spending, raised taxes by $12.5 billion and covered $6 billion more with accounting gimmicks and borrowing. Even with those actions, state budget officials predict an additional $38 billion in deficits in the next three fiscal years combined, including $7.4 billion in the year starting July 1.
Other than Professor Stark's novel proposal, no one seems to have a good solution for what ails California. Meg Whitman, the former CEO of eBay and a candidate for governor, suggests that California should fire 40,000 state employees to help reduce spending. Of course, firing that many politically well-connected people smells a bit of unreality to me.

Alas, without further spending cuts and with a legislature unable to secure public approval for more tax increases, it looks increasingly likely that California will need a constitutional convention to save itself from the poor house.

Stay tuned for an article about what the California constitutional convention would entail and how it would reform the State's budget system. Creating a government from scratch? It's a law student's delight.


  1. So was a constituional amendment proposed?

  2. No, a constitutional convention. Meaning that California would create a body to re-write the entire document from scratch.

  3. Actually, an amendment has been proposed (to be submitted via referendum), which would change the current requirement of 2/3 of the legislators calling for a constitutional convention to allow the voters to call a constitutional convention by initiative (see For another good article on the political system in CA, see Chief Justice George's remarks:

    Hat Tip: ATL


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