Ladies and Gentlemen, it's time to play...

[Arcanis]

In other words, expect the Golden State to be in desperate need of a bailout soon, one that will certainly gain a receptive ear in the White House because Washington can’t conceive of our largest state defaulting on its debt, even though the prospect has now sunk California’s bond rating lower even than Louisiana’s.

Thanks Cali now we don't have the worst credit ever

I think those in congress who are proposing all of this new spending, increased taxes, more regulation, ect... should look at how good a job it did for California before they vote on anything even remotely like that. It would be great if Obama vetoed some of this if it passed, not like he will. Or if congress refused to pass some big spending bill Obama pushes for. I just want to see congress and the president act in the people's best interest rather than their own for once.

[Mr Bubbles]

My poor state is so dysfunctional. Sigh.

The 2/3rds rule to pass budgets combined with the initialive process leads to gridlock and cowardice.

Right, because if only the California legislature had more power to overspend, everything would be peachy.

FWIW, here's a somewhat sobering write-up of California's fiscal fuckwittery (that was actually written back in February) titled 'Should We Let California Go Bankrupt?':

While many states are grappling with budget problems, none are nearly as large as California’s relative to its size--$41 billion in a state of 37 million, or $1,108 per resident. Even New York, the next most fiscally pressed state, clocks in with a mere $13 billion for 19 million residents, or $685 per capita.

There’s good reason why most states won’t fall down the fiscal black hole where California now dwells. This is a state whose politicians, public sector unions and advocacy groups have been living in a fantasy world of overspending, investment-deadening taxation and job-killing regulation. Looking out over the state’s prospects and examining the budget deal that legislators have put together (jerry-rigged as it is with revenue gimmicks and unrealistic projections), the only question is who will be begging Washington for more money sooner, the banks, the auto companies or the Terminator?

The similarities between California and the auto companies are especially striking. Neither can afford their workforce. California schools pay their employees 35 percent more on average in wages and benefits than the national average (17 percent more when adjusted for the state’s higher standard of living), a significant bite because the state funds much of local education (to the tune of $42 billion last year). Benefits are a big part of these costs. A public employee in California with 30 years of service can already retire at 55 with more than half of his salary as pension, and public-safety workers can get 90 percent of their salary at age 50.

Another budget buster is California’s spending on social services, clocking in at about 70 percent more per capita than the national average. Leading the way is state spending on cash assistance programs (that is, welfare), where the state expends nearly three times more per resident than other states. There’s a good reason for this rich budget. California’s legislature has only reluctantly embraced federal welfare reform, and for years the state has had one of the worst records in moving people from welfare to work because state law limits the ability of welfare administrators to sanction those who refuse to participate in work programs.

The rich program of social service benefits is also burdensome because of the state’s large low-wage immigrant population. As Milton Friedman observed in the mid-1990s, you can’t have porous borders and a welfare state. The incentives are all wrong. California has become a case-study in that notion. A report by economists working for the National Academy of Sciences in the mid-1990s concluded that the average native-born California household paid about $1,100 in additional taxes because of government services used by immigrants whose own taxes don’t come close to covering their cost to society. It would be very interesting to see what the numbers are today.

…

California politicians have been expert at avoiding dealing with these problems. In 2003, enraged citizens recalled Gov. Gray Davis after he announced an impending $38 billion budget deficit. Arnold Schwarzenegger promised reform but delivered only a year of it. When tax revenues spiked in the national economic recovery that started in 2004, California politicians went on another spending spree, increasing expenditures by $34 billion, or 32 percent, in just four years before revenues slumped again.

Then the California legislature wrangled for eight months over the current budget mess, forcing the government to shut down road projects and delay tax refunds because the state needed the extra cash to service its debt. While California technically can’t file for bankruptcy, a default on its debt would have shut down financing options for Sacramento and its municipalities until the state agreed to lenders’ demands that it get its fiscal house in order. At least one of the state’s municipalities, Vallejo, has already filed for bankruptcy and other cities and towns were on the brink before the budget compromise.

California’s budget problems aren’t going away this time. There is no housing boom (or bubble) about to inflate, as it did in 2004, to help burnish the state’s economy, where the unemployment rate is now 9.3 percent, or two full percentage points above the national average. The current budget is only precariously balanced with revenue projections that the state probably won’t meet, and with fiscal gimmicks. And much of the federal stimulus money is geared to spending that increases the size of programs rather than fills in current deficits.

In other words, expect the Golden State to be in desperate need of a bailout soon, one that will certainly gain a receptive ear in the White House because Washington can’t conceive of our largest state defaulting on its debt, even though the prospect has now sunk California’s bond rating lower even than Louisiana’s.

Unfortunately this is only part of the picture. California ranks(based on the latest statistics) 49th in per capita spending on students. I think in reality and most definitely after the cuts we'll be ranked 50th. We've totally misprioritized and we are suffering greatly for it. The politicians are still fighting a proxy battle in the media instead of engaging in good faith negotiations and we are supporting the poor greater than another else, but education is suffering because the money is lacking students. Do not mistake this with thinking that everyone who works in education gets a good ride. I am packing up my bags shortly and heading for greener pastures. As screwed up as it looks it will only get worse. With the deep cuts the reality for many in education is of a system where you get paid very little and deal with a clusterfuck. In the last two weeks everyday we've had at least one person yelling in our office. People are upset and mad and I think very few people understand the reality that has already filtered down and this is pre second cut. More people will leave the state further eroding the tax base and the downward spiral will continue. Latinos are going to make an increasing larger percent of the population, but their participation and graduation rates in higher education are abysmal. You're going to find a severe shortage of people educated to man our high tech industries. We are in a perfect storm and this is just the beginning.

And with little fanfaire the CSU system one of the largest public school systems has made a major shift in policy. It's gone from an open system to a much more inclusive system. I highly doubt it will go back even after the recovery, which means there will be less graduates coming out of California. I sure hope we can lure out of state talent, because that will be the key to our continued survival.

[Isgrimnur]

Say goodbye to Colonial Bank.

Troubled Colonial BancGroup will be bought by rival BB&T Friday, the government said after state regulators closed the bank whose assets had been frozen by a federal judge.

The Montgomery, Ala., bank, which has 346 branches spread across Florida, Alabama, Georgia, Nevada, and Texas, is the sixth largest bank failure in U.S. history and by far the largest failure of 2009.

With $25 billion in assets and $20 billion in deposits, Colonial is 100 times larger than the typical bank to have failed this year. BB&T (BBT, Fortune 500) will buy $22 billion of Colonial's assets, as well as its deposits and branches, leaving the remaining assets in the hands of the Federal Deposit Insurance Corp.

Did I mention that my work project for the last 18 months has been working with them??

[LawBeefaroni]

Colonial, get in line.