"California, the world’s eighth largest
economy, may pay vendors with IOUs for only the second time
since
the Great Depression, State Finance Director Mike Genest said.
"In a letter to legislative leaders Dec. 2, Genest said the
state 'will begin delaying payments or paying in registered
warrants in March' unless an $11.2 billion deficit is closed or
reduced. California, which approved its budget less
than three
months ago, may run out of cash by March, state officials
say.
"The warrants would be given to landscapers, carpet
cleaners,
construction firms, food services companies and other
state
vendors. They would pay an interest rate of as much
as 5 percent,
based on state law. California last issued the IOUs
in 1992 when
lawmakers and then-Governor Pete Wilson deadlocked on a budget
for 61 days past the start of the fiscal year.
"Investors are souring on the state. California 10-year bonds
yield 0.73 percentage point more than top-rated municipal bonds,
according to Bloomberg indexes, the highest since the
depths of
the last budget crisis in Jan. 2004. By comparison, the
difference for New York is 0.27 percentage point."
Meanwhile, the country's unemployment figures continue to rise. AP reports, "Skittish employers slashed 533,000 jobs in November, the most in 34
years, catapulting the unemployment rate to 6.7 percent, dramatic proof
the country is careening deeper into recession.
"The new figures, released by the Labor Department Friday,
showed the
crucial employment market deteriorating at an alarmingly
rapid clip,
and handed Americans some more grim news right before
the holidays."
And as proof that nobody is immune from this struggling
economy, the U-T's Jim Sweeney reports one of the state's largest gaming tribes is backing out of a new deal
with the state.
"Blaming a punishing economy, the Sycuan band of El
Cajon on Thursday
walked away from a multibillion-dollar gambling agreement that it had
pursued for years and spent $6 million to defend.
"The deal authorized an expansion from 2,000 slots the tribe now
operates to as many as 5,000 machines plus an option for a second,
off-reservation casino on newly acquired lands that include
the former
Singing Hills Country Club.
"The decision ultimately could cost both the tribe and
the state billions of dollars."
Meanwhile, the state's redevelopment agencies have filed suit in an effort
to try to block the state from it's taking of $350 million to 'balance' this year's budget.
"Faced with the
prospect of a combined $350 million loss, California's redevelopment
agencies on Thursday sued the state to prevent what
they call an
unconstitutional money grab.
"In a spending
plan approved by lawmakers and the governor in September,
the state
will take the $350 million away from redevelopment agencies and shift
the money to K-12 education and community colleges in the current
fiscal year.
Redevelopment agencies receive property-tax revenue and use it to
pay bonds for improvements such as new roads, parks
and sidewalks.
"'It is not right that local governments can be fiscally
responsible,
yet we're forced to pay for the state's failure to budget responsibly,'
Moreno Valley Mayor Bill Batey said in a statement."
Hmmm, sounds familiar...
The Bee's Kevin Yamamura reports on more defections from the governor's inner circle. "Gov. Arnold Schwarzenegger's legislative secretary, Chris Kahn,
plans to leave at the end of the year, according to several sources.
"Kahn, 42, joined Schwarzenegger's office after the governor won
re-election in 2006. Kahn serves in his current role as
Schwarzenegger's main liaison to the Legislature, a crucial role as
budget stalemates have become commonplace in recent
years.
Speaking of getting out of jail, the AP's Don Thompson reports on the federal courts' pending decision on a forced prisoner release program.
"Would California face a public safety nightmare if
judges allowed
nearly a third of its inmates to be released from state
prisons early
to help ease the overcrowded conditions there?
"It's a question three federal judges are weighing.
"After seven days of testimony, the special panel hearing
the case
brought on behalf of sick and mentally ill inmates
seems persuaded that
the overcrowding in California prisons is so bad it
leads to
unconstitutional conditions. Now the judges must decide
what to do about it, after listening to
several more weeks of testimony this month about whether
releasing
inmates early will increase crime.
"In the long run, does it make any difference to public
safety if
we release them 60 days earlier?" than their original sentence, U.S.
District Judge Lawrence Karlton of Sacramento wondered
as the judges
debated one hypothetical release order this week.
"Gov. Arnold Schwarzenegger's administration flouted a six-year-old
state law by failing to enact a program intended to provide
medical
care to impoverished Californians with HIV, a Los Angeles
County
Superior Court judge ruled in a decision made public
Thursday," Jordan Rau reports.
And finally, from our Paris bureau, "Armed robbers — some dressed in drag — made off with $100 million in loot from a lightning-fast jewelry store theft in
central Paris, in what police Friday called one of
France's costliest jewel heists.
"Three or four thieves swiped rings, necklaces and luxury
watches from display cases at the Harry Winston store
near the Champs-Elysees, a police official said. They brandished
handguns and threatened about 15 employees, hitting some on the head
with guns, the official said.
"At least two of the bandits were men wearing wigs and
dressed as women,
at times spoke a foreign language, and knew employees' names, the
official said. After the theft, the robbers fled."
In related news, nobody's seen Rudy Giuliani for three days...
