The BBC has this to say....
In summary the State of California, one of the worlds largest economies and one of the most successful ,despite the current economic crisis, will soon be bankrupt. Despite a diversified economy, across many industries including both basic needs (food, fuels, clothing), hi tech (silicon valley, solar panels, biotech, google), tourism (multiple major airports, numerous extremely popular tourist destinations, skiing etc), finance(multiple major business centres with the headquarters of large banks and finance houses) and leisure (movies, media) somehow the state has still managed to be on the verge of going broke unless urgent action is taken.
How has it come to this and what is to be done? While tax revenues have been falling shouldn't Californias massively diverse economy have sheltered it from the worst of the problems? Perhaps the cost of wildfires and natural disasters are to blame? Is public spending too high, or are taxes too low? Could our crazy constitution be to blame, or do we have too many fatcat public sector employees. Will the Obama middle class tax cut help us, California does have one of the highest costs of living in the US, and so a large fraction of this tax cut will go onto compulsory spending on food and necessities here compared to in other states.
The Democrats control the California senate, but require cooperation from the republicans to reach a 2/3 majority required to pass fiscal measures. The Democrats want to raise taxes and cut spending, the republicans say any tax rise is unacceptable.
Surely if California can't fix it's problems, then the rest of the world is going to hell in a handbasket (other than China I guess, go indentured servitude!) Personally I think that the Obama cut will help us, but only if it also stimulates the rest of the US economy. However we also need to take direct action ourselves.
I think that an increased state tax on gas might be an appropriate measure to help meet costs. With gas prices falling people might accept a 30c gas tax now (which given California consumes 16 billion gallons of oil a year would raise 5 billion dollars a year and still leave gas prices $1.80 below where they were at their peak), and have forgotten about it by the time prices go back up again. Gas purchases are also relatively price inelastic, and so a tax rise should not cost california many jobs, and the gas tax hike might actually cause further falls in wholesale oil prices due to fears of decreased consumption. This tax hike might also be popular with environmentalists, as it would be a direct tax on a major pollution source, who are a major lobby in California and might help persuade wary republicans to get on board in order to help secure the green vote in the next election.
However even this 30c tax wont meet our shortfall. Where will the rest of the money be found?
edit : I should have spell checked Schwarzenegger in the title, now my idiocy is plain for all to see. Forgive me my transgressions please PA forum