EE_
11th January 2013, 05:47 PM
It's all good now.
California balances its books
California has completed a dramatic recovery, with its governor claiming that the world’s ninth-largest economy has balanced its budget through a combination of severe spending cuts and tax rises that could be a model for America.
REUTERS By Nick Allen, Los Angeles
9:49AM GMT 11 Jan 2013
Governor Jerry Brown, a Democrat, took over from Republican Arnold Schwarzenegger in 2010 as the state faced a fiscal abyss, with a forecast budget deficit of $26 billion and projected further annual losses of about $18 billion until 2015.
Mr Brown has now announced that, following his austerity programme, there will be a budget surplus of $851 million in the 2013-14 financial year.
Standing in front of an array of charts at the state Capitol, Mr Brown, 74, said: “The deficit is gone. California today is poised to achieve something that has eluded us for more than a decade, a budget that lives within its means, now and for many years to come.
“I would like to do something that would make California a leader and an example of what America has to do.”
During the recession America’s most populous state had come to symbolise fiscal mismanagement. As the property and stock markets plummeted, California’s tax revenue dried up and Mr Schwarzenegger resorted to issuing IOUs to those the state owed money as he tried to pass a budget in the state legislature.
A two thirds majority is required to pass a state budget and efforts at a bipartisan approach failed. Democrats refused to back spending cuts while Republicans would not accept tax rises. Mr Schwarzenegger famously called his opponents in the struggle “girlie men”.
As the state’ economy continued to deteriorate, the newly elected Mr Brown proposed billions of dollars in controversial cuts to education and welfare, including health care for children of low-income families, and secured money from scrapping redevelopment agencies and taxing out-of-state corporations.
Then, in a referendum in November, the people of California approved his plan to give the state a 7.5 per cent sales tax, the highest in the US.
Voters also approved increased taxes on Californians earning over $250,000, with the rich having to pay 13.3 per cent on annual income over $1 million, again the highest state tax in the country.
Unemployment has dropped below 10 per cent for the first time in four years, and is projected to be 8.7 per cent in 2014. Mr Brown said those who had “written off California as a failed state” had been proved wrong.
The $97.7 billion budget for 2013-14 will see spending actually rise by $5 billion while still allowing a surplus. Previous cuts will be slightly rolled back with an extra $3 billion spent on schools and $1 billion on health care.
http://www.telegraph.co.uk/news/worldnews/us-politics/9795103/California-balances-its-books.html
California balances its books
California has completed a dramatic recovery, with its governor claiming that the world’s ninth-largest economy has balanced its budget through a combination of severe spending cuts and tax rises that could be a model for America.
REUTERS By Nick Allen, Los Angeles
9:49AM GMT 11 Jan 2013
Governor Jerry Brown, a Democrat, took over from Republican Arnold Schwarzenegger in 2010 as the state faced a fiscal abyss, with a forecast budget deficit of $26 billion and projected further annual losses of about $18 billion until 2015.
Mr Brown has now announced that, following his austerity programme, there will be a budget surplus of $851 million in the 2013-14 financial year.
Standing in front of an array of charts at the state Capitol, Mr Brown, 74, said: “The deficit is gone. California today is poised to achieve something that has eluded us for more than a decade, a budget that lives within its means, now and for many years to come.
“I would like to do something that would make California a leader and an example of what America has to do.”
During the recession America’s most populous state had come to symbolise fiscal mismanagement. As the property and stock markets plummeted, California’s tax revenue dried up and Mr Schwarzenegger resorted to issuing IOUs to those the state owed money as he tried to pass a budget in the state legislature.
A two thirds majority is required to pass a state budget and efforts at a bipartisan approach failed. Democrats refused to back spending cuts while Republicans would not accept tax rises. Mr Schwarzenegger famously called his opponents in the struggle “girlie men”.
As the state’ economy continued to deteriorate, the newly elected Mr Brown proposed billions of dollars in controversial cuts to education and welfare, including health care for children of low-income families, and secured money from scrapping redevelopment agencies and taxing out-of-state corporations.
Then, in a referendum in November, the people of California approved his plan to give the state a 7.5 per cent sales tax, the highest in the US.
Voters also approved increased taxes on Californians earning over $250,000, with the rich having to pay 13.3 per cent on annual income over $1 million, again the highest state tax in the country.
Unemployment has dropped below 10 per cent for the first time in four years, and is projected to be 8.7 per cent in 2014. Mr Brown said those who had “written off California as a failed state” had been proved wrong.
The $97.7 billion budget for 2013-14 will see spending actually rise by $5 billion while still allowing a surplus. Previous cuts will be slightly rolled back with an extra $3 billion spent on schools and $1 billion on health care.
http://www.telegraph.co.uk/news/worldnews/us-politics/9795103/California-balances-its-books.html