california+budget+crisis

 California budget crisis By Tim Thiel on 02-19-09 ** -What caused it ** ? An unprecedented revenue crisis resulting from Wall Street's meltdown, rising unemployment, a sharp pullback in consumer spending and the long housing downturn. -California lawmakers approved a state budget package on Thursday (02-19-09) to **close a $42 billion deficit**. Bill took over one hundred days to write, During this time California’s state economy weakened quickly. __-WHAT IS IN BILL?__ The package provides for **$15 billion** in spending cuts, **$12.8 billion** in tax increases and **$11.4 billion** in borrowing. It also creates a **$ 1 billion  ** reserve for fiscal 2009 to 2010. This trims Ca current fiscal year spending by nearly 13$ billion from 103$ Billion down to 90.7$ Billion for the 09-10 booking keeping year which begins on July 1st. This sets a spending plan of 96.3$ Billion To help with the housing market legislative leaders included an amendment that provides a $10,000 tax credit for those who buy new homes. The credit, supported by home builders, would be available starting in March and run through 2010. It would be capped at $100 million __ Will The bill bring solvency? __  Former eBay CEO Meg Whitman, who is running for the Republican nomination to succeed Schwarzenegger, predicted the package would worsen future state budget deficits. "The budget that was passed by the state legislature is not the solution," she said in a statement.  Bill Whalen, a Hoover Institution fellow and former aide to former California Gov. Pete Wilson, noted the package's plan for selling debt backed by state lottery revenues relies on voter approval, requiring Democrats and Republicans to campaign together. "The question will be how much bipartisanship will be on display for the voters," Whalen said. "No economist argues increasing taxes especially during weak economic times is going to result in people adding payroll, in people getting back to work ... The opposite will happen." Says Assemblyman Chuck DeVore of Irvine the tax increase will further harm the depressed economy