We’re days away from a new year, but economists say California will stay in the red throughout 2010 and won't see an improvement until 2011.
Warnings of what to expect in 2010, an upside to the budget fiasco and how college coaches are dealing with their furloughs complete this California Budget Crisis Diary.
Better days in 2011 not 2010: A California economist said brighter economic days in the Golden State won’t be seen until 2011.
Los Angeles County Economic Development Corp. chief economist Jack Kyser said there is “the threat of the state defaulting on its billions of dollars in bond debt, with most of the debt, $64 billion, in general obligation notes, which are financed by the state’s general fund.”
Kyser told IMarketNews.com that no one probably “really knows what will happen” if a state the size of California defaults on its accounts or in layman’s terms, goes bankrupt.
Kyser isn’t alone in his evaluation of California’s current budget mess.
“Bill Watkins, executive director the Center for Economic Research and Forecasting at California Lutheran University in Thousand Oaks, Calif., agreed and urged state officials to begin discussions with the Obama administration and the Federal Reserve in case California defaults on its debt.
‘In my opinion, California is now more likely to default than it is to not default,’ Watkins wrote in an economic forecast released Dec. 16. ‘It is not a certainty, but it is a possibility that is increasingly likely.’
In his report, Watkins argued said that if lawmakers and the governor cannot draft an ‘honest balanced budget,’ they must prepare a worst-case scenario plan for a default.
‘They need to work with federal government and Federal Reserve Bank officials to insure a coordinated plan to limit damage to financial markets,’ Watkins said.”
“California’s budget coffers are emptier than a politician’s promise, but there may be a silver lining to the state’s dark financial clouds: Fewer new laws.
Legislators approved only 872 bills in their 2009 regular session, and just 632 have become or will become law by Jan. 1.
While that may seem like a lot more new laws than we need, it’s actually the fewest bills passed, and the fewest signed into law, in more than 40 years.”
Bee reporter Steve Wiegand digs back to previous years to find that there are “131 fewer [bills] to become laws than last year, 393 fewer than 10 years ago, and a whopping 1,093 fewer than in 1967, the first year after voters made the Legislature a full-time institution.”
There’s one main reason for the depreciating amount of laws.
“The biggest reason for the drop-off is money - or the lack thereof. Simply put, most new laws have a price tag, and the state is too broke to afford more than a relative handful.
Still, that didn’t keep lawmakers from trying. During 2009’s regular session and seven ‘extraordinary’ sessions, they introduced 3,056 bills, proposed constitutional amendments and resolutions - an average of 25.5 per member.”
Taking one for the team: University coaches throughout the state have been forced to take furloughs like many other state employees - causing a distinctive change in the field.
“Most coaches and administrators have taken furloughs and pay cuts, just as professors and staff have been. Budgets have been slashed, sports have been dropped and sharp tuition hikes - 32 percent at U.C. schools next year - have resulted in skyrocketing scholarship costs.
The Cal football team, instead of flying to Los Angeles for a game against UCLA earlier this season, took buses, saving close to $30,000. San Jose State did the same when it played at USC.”
But at least some coaches are getting creative with their game plans. For example, the Times noted that Cal State Fullerton gymnastics coach Jill Hicks recruited the efforts of a Olympic gold medalist to fundraise. A $400 plate-luncheon brought in nearly $30,000.
Be sure to not let California’s budget mess bring you down. Check out SDNN’s New Year’s Eve guide because there is still much to celebrate!
Hoa Quach is the political editor for the San Diego News Network. Follow her on Twitter or add her on Facebook.