The Sacramento Bee trumpeted it as good news that the rating agency Standard and Poor’s chose not to downgrade California’s long term credit rating, but in the same article Standard and Poor’s says the state’s structural deficit is still $15 billion per year. Also in the same article, the Schwarzenegger administration admits the structural deficit is at least $7.4 billion. But wait, just a month ago Schwarzenegger and legislative leaders claimed they had successfully dealt with the entire $26 billion deficit.  And the press must have been as tired as the Legislature and Governor when it swallowed this claim.
 
In another story last week, the LA Times reports as good news that Controller Chiang is suspending IOU payments earlier than planned. This seems like good news, but not so fast. The reason the Controller can stop issuing IOUs is not because the state is doing better financially, but because JPMorganChase has agreed to lend the state $1.5 billion dollars.
 
The only good news about state finances is no news at all. Look for more cuts, more layoffs, and more pain in the future.

This entry was posted on Monday, August 24th, 2009 at 12:00 am and is filed under Blog Posts.