Friday, January 8, 2010

Tough times ahead

Another tough day for California, and hardly the final budget Arnold
Schwarzenegger would have chosen to present to the State. The governor
who was elected on the promise that he would fix the state's economy,
has proposed another round of deep spending cuts. In an austere budget
plan, Schwarznegger says spending will be cut on health and human
services, welfare, transport and environmental programmes. It takes
California back to its spending levels of six years ago.  In the past
12 months the state, which has a $20b deficit, has seen a big drop in
income from tax revenue. Unemployment stands at 12.3 per cent - the
third highest in the United States.  the governor said California was
slowly beginning to emerge from the worst economic downturn in decades
but that it would be three to four years before tax revenues
recovered. He said, "tough times still lie ahead." He acknowledged the
budget would be painful - but he said California was resilient.