Update on the unemploymet rate

Seems that unemployment rate has risen to 20%

Some quotes on the crisis

"California's budget as it stood projected a deficit of over fifteen billion dollars, requiring program cuts and/or additional taxes, as the California budget requires a 2/3s "supermajority" for passage, the Republican minority could stick to their pledge of no additional taxes without consideration of compromise with Democrats who have pledged to not balance the budget solely by reducing services to children, impoverished citizens, or the elderly."

"Bring a toothbrush, bring any necessities you want to bring, because I will not allow anyone to go home to resume their lives ... as long as we know ... that 20,000 people will be laid off,"

'll Owe You One July 2, 2009 After a February tax hike and major budget cuts fail to slash its swelling debt, California issues its first round of IOUs. The figure is expected to reach $3 billion by the end of July"

Why its diffcult for the state to bounce back and how to fix things

A state can not file for bankruptcy like a person can. If a person runs out of money they can ask the state for money to help them out for a time. A state on the other hand cant just ask for 27 billion dollars. Governor Swartzenager is doing what he thinks is best for the state. Its true hes failing but California has has troubles in the past and bounced back. California needs to find a way to fix their economy before their entire economy collapses under them. In my opinion if they were hire to back the 60,000 they fired then in the short term they would be in a small bind paying their salaries but in the long run those jobs would actually help stabilize the economy of the state. Lets do the math. The average household income in the U.S is between 30-50 thousand. If you do the math there is then at the least another 1.8 billion flowing back into the economy from purchases made by the 60 thousand employed.

Whats being done ?

- Mandatory furloughs for many state employees Feb 2009 – June 2010. This is estimated to save $1.3 Billion.(Forced off days)

- Additionally, layoffs, reductions and other efficiencies will be instituted in an
effort to cut payroll by 10%. This is estimated to amount to as many as 60,000 state jobs.

- As of April 1, 2009 Sales tax was increased by 1%.

- As of July 2, 2009 the State began issuing IOUs for state tax refund payments.

- The Vehicle License Fee (VLF) rate increased from 0.65 percent to 1.15 percent from May 19, 2009, to June 30, 2011.

- More than $3 B in cuts to public education.

- Nearly $1 B in cuts to public health care.

- As many as 200 of California’s 279 State Parks may be closed.

- A suspension of Cal Grants and Cal Works – state programs that provide health and education services to low-income families.

Whats happening now

Presently the state owes 27 billion dollars. The states funding is about 100 billion. That 100 billion is what the state requires to run at full capacity. With over 1/4 of the states funding missing California is in trouble. The worst part is the 27 billion they owe is only what the owe now, it is predicted that by the end of 2010 the state will owe over 40 billion.The democrats and republicans have agreed to raise taxes on high paying jobs and to increase the price on items like gas and cigarettes.

Another opinion

Phill voices his thoughts on the budget crisis and whats being done to counteract it.

The crisis and how it started.

The state was long characterized by its numerous economic opportunities, inviting business climate, and bustling real estate industries. But, the state was also regularly in deficit for the last several decades. This did not seem to matter. The state continued to borrow against future revenue, in order to finance its budget requirements – much like an individual would borrow against the speculative increase in their home’s value to pay for existing bills. The way they were able to do this, was by the sale of short-term notes for cash.

Californians always expected growth. Unemployment would stay low and businesses would continue to grow. They expected debt to always be paid off buy future profit. Loans upon loans were taken out to use on some endeavor or another. I.e(cars, vacations)

No one had expected the states method of income was going to backfire in till in 2008 when the country's economic crisis would come to its melting point. All the borrowing and expectation of return had left the state in disrepair since the money was not flowing anymore.

From the states heavy loss of money 68,000 jobs were lost.