Gov. Arnold Schwarzenegger is planning to cut the pay of about 200,000 state workers to the federal minimum wage of $6.55 an hour until a budget is signed, according to a draft of the governor's order obtained by The Times.
Administration officials said Schwarzenegger is expected to sign the order early next week as part of an effort to avert a cash crisis. The controversial move, likely to be challenged in court by public-employee unions, would save the state about $1 billion a month, the officials said.
California's budget deficit is currently estimated at $17-20 Billion. Not too long ago the estimate was only $4 Billion. My guess as the year goes on and revenues slow even further, the deficit will likely exceed $30 billion.
If cutting wages to minimum only saves $1 Billion per month, than it is not possible to balance CA's budget even if it fired all 200K workers.
Unlike the Federal Government, CA does not own a printing press. Under current financials it will be very difficult for CA to borrow money. The state is basically insolvent and has few places to turn without taking very draconian measures.
It will be interesting to see what happens. Expect what is happening in CA to happen in many other states.....my guess is that most states will be insolvent by the next fiscal year.
America is breaking hard. Construction is shutting down accross the country. Here is some evidence from Georgia:
Just 198,450 square feet of industrial space is currently under construction in the northeast Atlanta market, which includes Gwinnett, according to CoStar Group, a real estate tracking firm.
That area hasn't seen anything less than 2 million square feet under construction at any one time in the last two years, said Richard Poland, a CoStar analyst.
"It's just a screeching halt on construction," he said.
A similar story was published for Orange County a few days ago.
If there is no building, there is no jobs and no taxes being paid. Nothing is being purchased. Nothing is being designed. Nothing is being insured.
The beat goes on as it gets slower and slower. Round and round she goes, when it completely stops nobody knows......