California facing HUGE CRISIS!!!!!
We know that the slow down to revenues to New York is worse than post 9-11. However, that pales in comparison to the crisis California faces right NOW!!!!
California's deficit estimates approach $20 Billion dollars for this fiscal year. If you reduced all 200K of CA full time workers to federal minimum wage and fired 70K of the part time and contract workers.....that would only save about $1 Billion per month....not enought to cover the deficit.
Unlike the Federal Government, states simply can't print money and must balance their budgets or float debt that investors would want to fund.
The only way CA can raise more money is to raise taxes....right now it is one of the highest taxed states.
In San Diego, the Class A office space vacancy is over 25%. The inland area is littered with half finished housing developments. Foreclosure sales are approaching the majority of sales in the state.
Now retailers are shutting down everywhere. Starbucks is closing stores. HomeDepot is closing stores. And CA retailer Mervyns is is HUGE trouble:
Squeezed by high-end department stores and large discounters such as Wal-Mart Stores, Mervyns has been closing stores and leaving states since 2005. Now the possibility that the Hayward-based company will have to file for bankruptcy protection – a Mervyns spokesman said the company will not comment on “rumor” – looms large.
With 175 stores in seven states, primarily in California, a bankruptcy also means the potential for a glut of surplus real estate, experts say. In May, Mervyns announced it had hired a firm to try to sell five to 10 underperforming store locations that have high real estate value, hoping to generate up to $50 million to fund operations.
Earlier this year, Borders, the second-largest book store chain, said it was looking for a buyer for its business, and shuttering or attempting to sublease some of its sites, including the 33,000-square-foot Borders in downtown San Diego that opened in 2002.
Last month, discount fashion retailer Steve & Barry's filed for Chapter 11 bankruptcy protection, and it is uncertain what will happen to the company's stores, including one in downtown's Horton Plaza and one in Carlsbad's Plaza Camino Real.
Steve & Barry's joins home furnishing chain Linens N Things and specialty retailer Sharper Image in filing for bankruptcy protection this year. Other retailers, such as Starbucks and Gap, have announced plans to close underperforming stores.
With lots of retail stores closing....that will mean a lot less sales tax and income tax to the state. That will mean even further slowdown in revenues ahead.
The question now is if CA current budget deficit is so high that it can't make ends meet under current estimates, and the outlook is for even further deterioration....what can the state do to balance its budget short of completely shutting down or declaring bankruptcy and refinancing its debt??????