UP Ibalon Bicol: California inches close to bankruptcy

California inches close to bankruptcy

6/16/2009 | Posted by mesiamd | Edit Post

Affected by the biggest recession gripping the country, the state of California has failed to come up with a budget, bringing the golden state near financial insolvency. The state is spending like crazy more than it can generate income. Government revenue is down by 27%. Business has been slow forcing companies to down-size or stop operation.

If no budget is agreed upon, the state is expected to run out of money by the end of July.

“It will run out of cash within weeks if it does not balance its books, leaving it little option but to postpone a variety of payments, according to State Controller John Chiang, who estimated last week that California was "less than 50 days away from a meltdown of state government."---Reuters (06/15/09, Christie, J; Gevirtz, L.)

California's income has dwindled with rising joblessness rate of 11% and unchecked housing crisis making it hard to close the budget gap of about $24 billion. One option is to cut spending --- the curtailment of entitlements and welfare programs including health insurance.

Budget cuts may be needed by putting teachers, firefighters and police officers out of work and stopping medical-care services. More taxes could be levelled on the residents to generate income. Unlike in the past, Californians are learning to live within their means just lilke Americans across the country. (Photo Credit: Jose Antonio Galloso) =0=

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Labels: bankruptcy, budget, California, financial, Health, jobs, money, recession, social services, Totie Mesia, unemployment

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California inches close to bankruptcy

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