Shedding its borrowing ways a tough task for state

[realFedUp]

(this extensive debt has conservatives calling for
a spending cap...yeah, like that would solve CA's problems
and not hurt most of the poor and middle classes.)

http://www.sacbee.com/content/politics/story/13294616p-14136907c.html

Shedding its borrowing ways a tough task for state

By Alexa H. Bluth -- Bee Capitol Bureau
Published 2:15 am PDT Monday, July 25, 2005

Although Gov. Arnold Schwarzenegger's new spending plan contains less borrowing than he initially proposed, California still is strapped with more than $25 billion in debt from a variety of loans and bond sales used to help cover budget shortfalls during the last five fiscally dismal years.

Faced with double-digit deficits that have climbed past $30 billion and unable to win support for tax increases or deep permanent spending cuts, the Legislature, former Gov. Gray Davis and Schwarzenegger repeatedly have turned to borrowing for help.

The $117.5 billion 2005-06 budget signed by the Republican governor earlier this month includes about $1 billion in borrowing to help bring it into balance - far less than in recent years but still enough to raise red flags with the national agencies that grade the state's fiscal health.

"California still is the highest state in terms of its overall use of external borrowing," both in total dollars and as a percentage of the budget, said Tim Blake, an analyst for Moody's Investors Service. "It's good that it's coming down, but the fact that they continue to use borrowing for so long is the reason that their rating is so low."

The borrowing of the past half-decade and damage to the state's credit rating have cost California in mounting interest payments, and ultimately will push the burden into the future, critics said.

continued

[JDPriestly]

1. The rich upper class in California is leading the way

back to the gilded age in the early stages of the industrial revolution when the "free market" wreaked economic havoc on the poor and lower middle class.