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California’s Fiscal Crisis Continues its Dire Evolution

October 10th, 2009

The fiscal crisis in California continues. Despite a last-minute bipartisan budget agreement last summer, which supposedly resolved the state’s acute budgetary deficit-temporarily, largely through accounting gimmicks and major program cuts in essential areas, such as education and prisons-the state’s Controller, John Chiang, is now projecting that California’s tax revenues are already $1 billion below what they were forecasted at for this point in the fiscal year.

With America’s most populous state continuing to shed jobs at a rapid pace, it is no surprise that the state’s coffers are taking in significantly less tax revenue. There are already doomsday forecasts for another massive deficit for next year’s budget.

What is significant about California’s plight is that it is a harbinger for what lies ahead for America as a whole. With the U.S. national debt and annual deficits skyrocketing, it seems inevitable that at some point in the future Washington will be left in the place that Sacramento currently finds itself; down a fiscal rat hole, desperately trying to pay its bills with IOUs.

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