California Woes Continue–IOU’s Probable

posted at 7:06 am on June 30, 2009 by Rovin
[ Economics ]   

The Sacramento Bee has published two stories today concerning California’s date with insolvency.  While Schwarzenegger is promoting a reform package for state employees pension programs, (a process that has been in need for years), Jim Sanders at the Bee goes after the governor for “picking” on the poor public employees.  Instead of calling it a reform, Sanders prefers to label this a “two-tier system”:

“California public employee unions already reeling from pay cuts have been dealt a new blow by Gov. Arnold Schwarzenegger – a push to lower pension and retiree health care benefits for state workers hired after today.

Schwarzenegger‘s call for creation of a two-tier system of retiree benefits was part of a package of proposals submitted to Democratic leaders Saturday in tense negotiations over the state’s $24.3 billion shortfall.” LINK

Sanders and the Bee, (an often un-noticed left coast socialist paper), continues to pummel Arnold for attempting to rein in the largest financial expense–state worker’s compensation:

“The governor previously had imposed about a 9 percent pay cut on state workers by requiring two unpaid furlough days per month. Last week he threatened to add a third furlough day unless a budget deal was struck immediately.”

This is our elected government, (and the media), again playing their “political games” at the expense of the electorate and hard working taxpayers of this state. The Bee, meanwhile contorts that the “poor state workers” have to take two days off a month unpaid, as if this situation is catastrophic or permanent—which is neither. This state has grown (over a period of years) into a giant quagmire where an unbalanced portion of the jobs sector is controlled by public employment and their unions that wield far too much power, (and influence) to sustain free market principals. Every aspect of the public jobs sector has had concrete guarantees in salaries, pensions, and to a large extent, job security. And we ask the private jobs sector to compete against these parameters or fail.

To add to the state’s fiasco, now they plan on issuing IOU’s to guess who–private vendors and local communities:

“With the state poised to issue billions in IOUs in lieu of cash this week, California‘s budget crisis could create serious headaches for some private vendors and local governments.

The deciding factor could be California‘s banks. If they’re willing to honor the registered warrants, or IOUs, then the problem becomes manageable for the scores of small businesses and local governments that rely on dollars flowing from Sacramento.They’ll be able to cash the IOUs.”

 But, guess who’s exempt?  Those “poor” state workers:

‘State workers, already dealing with furloughs and layoffs, won’t have to put up with IOUs. Warrants for payroll were ruled illegal by the courts in the 1990s. Payments to CalPERS and CalSTRS for pensions and health insurance also will be made in cash. But IOUs can be used for reimbursing travel expenses…….”

Can anyone guess how long before California puts in its formal request for a Federal bailout?  I’m certain Obama was praying he could avoid sending funds to Cal, so he could continue his multi-trillion dollar climate change and health care policies.  But what’s a few billion to the Golden State?  Can-of-worms or a blessing in disguise?  You make the call.

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