California may seek Treasury financing

[SlowwHand]

Ok, then. Take a ride on the gravy train, since the federal government is in the "hand out money" mode.
What a crock.

SAN FRANCISCO (Reuters) - California Gov. Arnold Schwarzenegger has informed Treasury Secretary Henry Paulson that the most populous U.S. state may need to turn to the federal government for short-term financing because of a lack of liquidity in credit markets.

California needs $7 billion to cover short-term expenses and has planned to issue revenue anticipation notes for it.

"Absent a clear resolution to this financial crisis that restores confidence and liquidity to the credit markets, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the Federal Treasury for short-term financing," Schwarzenegger said in a letter to Paulson dated October 2 and provided to Reuters on Friday.

"The economic fallout from this national credit crisis continues to drain state tax coffers, making it even more difficult to weather the continuation of frozen credit markets for any length of time," Schwarzenegger said, adding he supports a $700 billion emergency financial rescue plan due to be voted on Friday by the House of Representatives

[snoopy369]

Saw that on CNN...

[Kidlicious]

How is federal financing of the states a bailout?

[SlowwHand]

Excuse me? What's the difference? They can't manage their finances for crap.

[Kidlicious]

Originally posted by SlowwHand
Excuse me? What's the difference? They can't manage their finances for crap.

None of the states can manage their finances in a recession for crap. That's because they can't borrow as well as the federal government can. Lack of the ability of state government to finance their state in a recession leads to worse recessions.

[SlowwHand]

So, you're saying that all 50 states are going to get in the soup line? The most populated state, and they have state income tax, which Texas, as a for instance, doesn't?

[Kidlicious]

Originally posted by SlowwHand
So, you're saying that all 50 states are going to get in the soup line? The most populated state, and they have state income tax, which Texas, as a for instance, doesn't?

If it gets bad enough, sure they will all ask for assistance. California was already having trouble making ends meet though. They have been for some time.

[SlowwHand]

I fail to see your point. What you just said would seem to validate mine.

[Kidlicious]

Originally posted by SlowwHand
I fail to see your point. What you just said would seem to validate mine.

Do you want the schools and garbage collection to shut down in California?

[SlowwHand]

Frankly, I couldn't care less about their garbage.

[Timexwatch]

Time for the CA legislature to tear up Prop 13 and a slew of other propositions that are screwing state finances over.

[Kidlicious]

Originally posted by SlowwHand
Frankly, I couldn't care less about their garbage.

I figured as much. Maybe California will have to stop paying into the federal government.

[chequita guevara]

Considering that California contributes more to the Federal treasury than any other state, and probably subsidized the entire South on its own, I think they have a right to ask the Feds for some of their money back.

[Zkribbler]

Originally posted by SlowwHand
... They can't manage their finances for crap.

Correct. We're one of three state which requires a 2/3 vote of the Legislature to get a budget. Voters keep using the initiatives to vote for more projects, and Repugs block any attempt to raise revenue for them.

Our budget is now based upon deficit financing, even though we have TWO constitutional provisions prohibiting that.

And a fun time is had by all.

[Dinner]

Originally posted by snoopy369
Saw that on CNN...

Yeah, it is a crock. "Hey, they're giving away free money so lets see if we can get some!"

The big problem is the politicians won't cut spending or raise taxes. It's just political cowardice.