Word: budgeting
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Life in California has been rough enough these last three months as government all but ground to a halt while legislators haggled over the long-overdue budget. The state had to send out $3.3 billion in IOU notices to taxpayers and vendors; thousands of construction projects were stalled; and state offices were furloughed. Finally, after a record-breaking 45-hour Senate session, the elusive two-thirds majority vote was reached to pass a budget plan that includes $15 billion in service cuts and spending reductions, $12.8 billion in temporary tax hikes and $11.4 billion in borrowing...
...final budget plan, which Governor Arnold Schwarzenegger signed on Friday, is also dependent on federal stimulus money. California expects approximately $80 billion, although it is not yet clear exactly where this money will be funneled. For instance, if the state determines there is enough money from the federal stimulus package not earmarked for other areas, the personal income tax rate hike could be reduced by half...
There is an irony in passing such a draconian budget in the shadow of President Obama's recent incentives. "This budget plan has been really counter-intuitive from what people have been hearing about the federal stimulus package," Baldassare says. "We recognize that here's a circumstance where the federal government is moving in one direction, which is to encourage [funding] increases and tax cuts to stimulate, and the state is moving in a different direction." However, Baldassare says he is pleased the state budget is finally balanced: "Getting this budget issue behind us was the most important thing California...
...while the news that Schwarzenegger finally passed a budget - any budget - does come as a relief to politicians and economists who were gravely concerned about credit ratings and business reputation, a long haul is ahead for citizens and businesses already reeling from the foreclosure catastrophe and high unemployment rates. "This is the most serious budget crisis in my lifetime - and I have gray hair," says Jean Ross, executive director of the nonpartisan California Budget Project. "It will have a significant impact on Californians for the next 18 months and for years to come...
Some of the biggest spending cuts in the new budget - nearly $10 billion - will hit education and social services. Spending on kindergarten through 12th grade will be reduced by $8.4 billion over the next two years. This means teacher layoffs, fewer school days and more crowded classrooms. Higher education funding will also be cut by $888 million at state schools, where students will be expected to shoulder 10% higher fees. And, according to the new budget, $1.5 billion will be saved by eliminating senior citizens' annual cost of living increases and other health services (again, depending on where the federal...