California Budget Offers Path Out of Fiscal Apocalypse

California lawmakers have agreed on a budget to close the state's $26 billion deficit, ending a long, embarrassing road marked by failed initiatives, downgraded credit ratings and government IOUs. What does the budget solution look like? At a glance:


--$15.6 billion in spending cuts
--$2.1 billion in borrowing
--$3.9 billion in "new revenues"
--$2.7 billion in borrowing from CA localities

The $15.6 billion figure, which is about one billion more in cuts than was included in the budget that was shot down earlier this year by CA voters, will primarily impact health care programs for children and the poor and state schools, which will face more than $11 billion in cuts in total, according to the New York Times.

Early reports are a little sketchy about how much exactly the government is prepared to borrow from local governments -- numbers range from $2 to $4 billion. The state says that it is prepared to pay back the money within three years, as the recession eases. But it's clear that borrowing billions from similarly strapped localities will pass along the need for service cuts throughout the state.

California will also offer a state "Garage Sale" to sell state cars and "office items." On his Twitter feed, Gov. Arnold Schwarzenegger promised to sign some of the fire sale items to "bring in more $ at the auction."

Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

The Blacksmith: A Short Film About Art Forged From Metal

"I'm exploiting the maximum of what you can ask a piece of metal to do."

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Riding Unicycles in a Cave

"If you fall down and break your leg, there's no way out."

Video

Carrot: A Pitch-Perfect Satire of Tech

"It's not just a vegetable. It's what a vegetable should be."

Video

An Ingenious 360-Degree Time-Lapse

Watch the world become a cartoonishly small playground

Video

The Benefits of Living Alone on a Mountain

"You really have to love solitary time by yourself."

Video

The Rise of the Cat Tattoo

How a Brooklyn tattoo artist popularized the "cattoo"

More in Business

Just In