Official says California could be broke in 2 months

SACRAMENTO, Calif. (AP) – California’s chief financial officer warned Monday that the state would run out of money in about two months as hopes of a Christmas budget compromise melted into political finger-pointing by the end of the day.

Republican Gov. Arnold Schwarzenegger began the day on a cheerful note, suggesting that negotiations with Democratic leaders could lead to a budget deal as early as this week to help close the $42 billion shortfall that is projected through June 2010.

“Yesterday we sat there for hours and we worked through it step by step and we made some great progress,” the governor said during a morning news conference in Los Angeles. “So we feel like if we do that two more times like that, I think we can get there … before Christmas Eve or Christmas Day.”

The thaw didn’t last long, as legislative leaders later in the day criticized Schwarzenegger and indicated their work was done until the start of the new year.

The governor faulted lawmakers for “failing to take real action” in addressing the state’s budget deficit but said he will continue working with them on a solution that includes spending cuts, new revenue and an economic stimulus plan.

Assembly Speaker Karen Bass responded by suggesting the governor should sign an $18 billion package Democrats sent to him last week containing both cuts and tax increases.

“The single biggest roadblock to having construction on the 405 (freeway) move forward is Arnold Schwarzenegger,” said Bass, a Los Angeles Democrat.

Read moreOfficial says California could be broke in 2 months

Schwarzenegger Orders Unpaid Leave for State Workers

Dec. 19 (Bloomberg) — California Governor Arnold Schwarzenegger today ordered all state workers to take two days of unpaid leave each month to conserve money amid a record budget deficit and a legislative impasse over how to fix it.

The furloughs will begin in February and will last through June 2010, Schwarzenegger said in an executive order. He also ordered all departments to cut 10 percent of their workforce costs, through firings if necessary.

“Every California family and business has been forced to cut back during these difficult economic times, and state government cannot be exempt from similar belt tightening,” Schwarzenegger said in a letter to state workers.

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Interview with Peter Schiff (12/13/08)

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Source: YouTube

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Schwarzenegger: California faces financial Armageddon unless lawmakers take decisive action

California’s budget deficit this year has ballooned to nearly $15 billion, Gov. Arnold Schwarzenegger said Wednesday, warning that the state faces “financial Armageddon” unless lawmakers take decisive action.

The projection of a $14.8 billion gap at the end of the fiscal year in June surfaced just a month after the governor announced an $11.2 billion shortfall, and the deteriorating economy is likely to make the problem even worse next year, Schwarzenegger said.

Without action this year, the state could be staring at a deficit as great as $40 billion by June 2010, an administration official said. Schwarzenegger is expected to share the bad news with legislative leaders in a budget negotiating meeting today.

“If we don’t put aside our ideological differences and negotiate to solve this problem, we’ll be heading toward our financial Armageddon,” Schwarzenegger said at a hastily called news conference at the state Capitol.

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Schwarzenegger Calls Fiscal Emergency in California

The US are broke. The Dow Jones lost 7.7% today. This is going to get much worse.
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Arnold Schwarzenegger, governor of California, speaks during a news conference in Sacramento, California, on Nov. 6, 2008. Photographer: Ken James/Bloomberg News

Dec. 1 (Bloomberg) — California Governor Arnold Schwarzenegger, saying his state is going broke, declared a fiscal emergency and ordered the incoming class of lawmakers into a special session to fix a widening $11 billion deficit.

Schwarzenegger, a 61-year-old Republican, wants lawmakers to raise taxes and cut spending to narrow the gap that is projected to swell to $28 billion over the next 18 months. He invoked powers granted him in 2004 to declare a fiscal emergency, which gives the Legislature 45 days to plug the shortfall. If they fail to find a solution in that time, they are barred from doing any other legislative work until they do.

“Without immediate action, our state is heading for fiscal disaster,” Schwarzenegger told reporters today in Los Angeles. “I’ve had to make tough choices that I wish I didn’t have to make, and I know this is a terrible time to raise taxes, but it’s also a terrible time to make cuts to very important programs. But in an emergency like this, we have to take quick action to avoid even worse problems, even if they include decisions that we don’t like.”

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Three wildfires ring Los Angeles

California wildfires wreak havoc


Aerial footage of fires across northern Los Angeles

Three separate wildfires in southern California have destroyed hundreds of homes and forced thousands of people to flee the fast-moving flames.

The fires, to the north, north-west and south of Los Angeles have burnt through dry brush and forest in the suburban canyonlands around the city.

California’s governor has declared states of emergency in Orange, Los Angeles and Santa Barbara counties.

A drop in the wind force has given some relief to the hard-pressed fire crews.

The largest of the fires is in the northern Los Angeles suburb of Sylmar, up against the canyons of the Angeles National Forest.

See map of the California fires

Ten-thousand people were ordered to evacuate their homes as the flames raced through the Oakridge Mobile Home Park late on Friday, destroying about 500 of the structures.

Firefighters were braving 50ft flame lengths as they swept across the mobile homes
Los Angeles Fire Captain Steve Ruda
In pictures: Los Angeles wildfire

“We have never lost in recent times anything close to this number [of homes],” said Los Angeles Mayor Antonio Villaraigosa.

He blamed the spread of the fire on “absolutely atrocious” winds of up to 80 mph (130 km/h) that pushed the fire out of the forests and into the suburbs, jumping wide highways in the process.

“It was an absolute firestorm,” said Los Angeles Fire Department Captain Steve Ruda of the Oakridge blaze.

“Firefighters were braving 50ft flame lengths as they swept across the mobile homes,” he told the Reuters news agency, adding that heat from the flames had melted his firefighters’ hoses to the road.

The Sylmar fire has burnt through 8,000 acres (3,200 hectares) since it broke out late on Friday. Fire officials said it was 20% contained as of late Saturday.

About 2,000 firefighters are using aircraft, helicopters and bulldozers to beat the flames back from populated areas.

Pillars of smoke

Meanwhile, more than 12,000 people were ordered to leave their homes in Orange County, in the south of the Los Angeles urban sprawl, as another fire flared up early on Saturday in the communities of Yorba Linda and Corona.

That fire has so far scorched 2,000 acres (800 hectares) and damaged or destroyed about 100 homes or other buildings.

Read moreThree wildfires ring Los Angeles

California to cut water deliveries to cities, farms

SACRAMENTO, Calif. – California said Thursday that it plans to cut water deliveries to their second-lowest level ever next year, raising the prospect of rationing for cities and less planting by farmers.

The Department of Water Resources projects that it will deliver just 15 percent of the amount that local water agencies throughout California request every year.

Since the first State Water Project deliveries were made in 1962, the only time less water was promised was in 1993, but heavy precipitation that year ultimately allowed agencies to receive their full requests.

The reservoirs that are most crucial to the state’s water delivery system are at their lowest levels since 1977, after two years of dry weather and court-ordered restrictions on water pumping out of the Sacramento-San Joaquin Delta. This year, water agencies received just 35 percent of the water they requested.

Farmers in the Central Valley say they’ll be forced to fallow fields, while cities from the San Francisco Bay area to San Diego might have to require residents to ration water.

Read moreCalifornia to cut water deliveries to cities, farms

Fed May See Companies, States as Next Crisis Fronts

Oct. 6 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke may find the next fronts of the financial crisis to be just as chilling as last month’s downfall of Wall Street titans: its spread to corporate America and state and local governments.

Companies from Goodyear Tire & Rubber Co. and Duke Energy Corp. to Gannett Co. and Caterpillar Inc. are being forced to tap emergency credit lines or pay more to borrow as investors flee even firms with few links to the subprime-mortgage debacle. California Governor Arnold Schwarzenegger says his and other states may need emergency federal loans as funding dries up.

A cash crunch on Main Street would endanger companies’ basic functions — paying suppliers, making payrolls and rolling over debt. The widening of the crisis suggests that Bernanke and Treasury Secretary Henry Paulson may have further fires to put out even as the Treasury sets up the $700 billion financial- industry rescue plan approved last week.

Read moreFed May See Companies, States as Next Crisis Fronts

Governor plans to slash state workers’ pay to the federal minimum

Gov. Arnold Schwarzenegger plans next week to slash the pay of more than 200,000 state workers to the federal minimum of $6.55 per hour to help ease the state’s budget crisis, according to a draft executive order obtained by The Chronicle on Wednesday.

The governor also will order an end to overtime pay for all but critical services, a freeze on state hiring and the immediate layoff of nearly 22,000 temporary, seasonal and student workers.

“As a result of the late state budget, there is a real and substantial risk that the state will have insufficient cash to pay for state expenditures,” the executive order states.

Read moreGovernor plans to slash state workers’ pay to the federal minimum

California faces water rationing due to drought

Californians could face mandatory water rationing unless they drastically reduce consumption because of a state-wide water crisis, governor Arnold Schwarzenegger has said.

The warning came as he declared the first official drought in California in 17 years, citing two years of arid conditions that threaten the state’s massive agriculture industry and increase the risk of wildfires such as those that destroyed 1,500 homes last October.


Kern River in California is dry and is expected to remain so

The governor called for a state-wide reduction of 20 per cent and issued an executive order commanding water officials to direct supplies to the driest areas, help districts conserve and aid stricken farmers who have already suffered huge losses.

Mr Schwarzenegger said mandatory restrictions could follow if residents and water authorities failed to make cutbacks and another dry winter ensued.

“We must recognise the severity of the crisis that we face,” the Republican governor said.

California has never resorted to statewide water rationing to cope with shortages. Since the last drought, however, its population has shot up as water supplies have decreased.

The governor himself does not have the authority to impose statewide rationing but the Department of Water Resources could slash water supplies to local authorities, who in turn would have to enforce limits.

Some regions already impose rationing with the threat of punitive measures for violators and many areas have appealed for conservation. Restrictions on outdoor water use, such as bans on washing cars or driveways, are in force in some cities along with orders stopping restaurants from automatically serving drinking water.

This week, Los Angeles approved a fleet of “drought busters” to patrol residential areas and enforce a ban on some types of outdoor water use. More districts are expected to impose limits of some kind as the long, hot days of summer loom.

This spring, the driest on record, follows two years of below average rainfall. The situation has been exacerbated by reduced mountain snow packs, which normally provide much of the state’s supply, and a court order limiting the amount of water that can be taken from a key river delta to protect a threatened fish.

“We’re suffering the perfect storm, if you will,” said Timothy Quinn, executive director of the Association of California Water Agencies.

The prospect of cuts alarmed some sectors of the business community who feared it could harm productivity and increase the chance of full-blown recession.

Read moreCalifornia faces water rationing due to drought