California to suspend welfare checks, tax refunds and student grants

[Enishi]

Damn. I'm glad I don't live there....

http://www.latimes.com/news/local/la-me-bu...0,4472460.story

California controller to suspend tax refunds, welfare checks, student grants

John Chiang announces that his office will suspend $3.7 billion in payments owed to Californians starting Feb. 1, because with no budget in place the state lacks sufficient cash to pay its bills.

By Evan Halper and Patrick McGreevy

January 17, 2009

Reporting from Sacramento -- The state will suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1, Controller John Chiang announced Friday.

Chiang said he had no choice but to stop making some $3.7 billion in payments in the absence of action by the governor and lawmakers to close the state's nearly $42-billion budget deficit. More than half of those payments are tax refunds.

The controller said the suspended payments could be rolled into IOUs if California still lacks sufficient cash to pay its bills come March or April.

"It pains me to pull this trigger," Chiang said at a news conference in his office. "But it is an action that is critically necessary."

The payments to be frozen include nearly $2 billion in tax refunds; $300 million in cash grants for needy families and the elderly, blind and disabled; and $13 million in grants for college students.

Even if a budget agreement is reached by the end of this month, tax refunds and other payments could remain temporarily frozen. Chiang said a budget deal may not generate cash quickly enough to resume them immediately.

Not all payments will stop Feb. 1. Most school and healthcare programs will be paid, as required by state and federal law. The state will continue to pay more than $6.6 billion in such bills.

And Los Angeles County officials said they would cover welfare payments to more than 500,000 local recipients -- for now.

But California is projected to be $346 million short of the funds it needs to pay all its bills in February. By March, the state would be so far in the red that even continuing to suspend payments would not cover the shortfall. California would be insolvent, making the issuance of IOUs likely.

State officials have already designed an IOU template, Chiang said, and have been negotiating with banks over whether taxpayers could cash or deposit them if they are issued. The state could be forced to pay as much as 5% interest on delayed tax refunds if they are not paid by the end of May, Chiang said.

The last time the state issued such IOUs -- the only time since the Great Depression -- was in 1992.

The suspension of payments is the latest radical move by officials to help keep the state from running out of cash as Gov. Arnold Schwarzenegger and the Legislature battle over how to avoid insolvency.

Schwarzenegger, who hopes to speed up public-works projects to stimulate the economy, wants tax increases, spending cuts and legislation to relax some environmental rules and allow private companies to do some government construction.

Democrats are seeking tax increases as well, but fewer spending cuts. Republican lawmakers would only pare spending and have been blocking any tax hikes.

Meanwhile, Schwarzenegger has ordered that most state workers take two days off per month without pay -- equivalent to about a 10% pay cut. The governor also ordered most state offices -- including all DMV field offices -- to close on those two days. The order is being challenged in court by labor unions.

The state has also halted payments of bond money for more than 5,300 public-works projects.

On Friday, the state Department of Finance temporarily exempted 276 of the projects from the freeze, reasoning that because they are nearly complete, it could cost the state more to shut them down than to finish them.

The exemption, through Feb. 1, will allow the continuation of school construction by the Inglewood Unified School District and the construction of a new Court of Appeal facility in Santa Ana. Work on new rail tracks at L.A.'s Union Station and road projects involving Irwindale Avenue, Martin Luther King Boulevard and Imperial Highway in Los Angeles County will also be able to continue.

Some projects were exempted because the state is under court order to do the jobs. Others would threaten public safety if left uncompleted, according to Mike Genest, Schwarzenegger's finance director.

"We're going to take the risk of allowing them to continue a little longer because we are very hopeful will have a budget by Feb. 1," Genest said.

Contractors lined up at a meeting of state finance officials to warn of the consequences of stopping the bulk of the public-works money. They said shutting down projects already underway would ultimately cost the state significantly. According to Caltrans Director Will Kempton, the state would have to pay $350 million in legal costs, claims for contract breaches and expenses for securing sites that go dormant.

"The bulk of those dollars are lost . . . to the taxpayers," Kempton said. "You can't just walk away from a construction project. You have to make sure it is buttoned up."

It is not just the state that would take a hit. Some school districts relying on state funds do not have the reserves in place to cover the payments they will owe builders if work stops.

Counties are also feeling the pinch. They process the welfare payments scheduled to be halted by the controller's office Feb. 1. The state is freezing those payments, along with millions of dollars in salaries to county workers who run the programs.

Some county officials say they don't have reserves in place to cover the state until the budget crisis is resolved.

"We simply don't have the cash," said Pat Leary, assistant administrator for Yolo County. "We are in critically bad times."

About a third of all state welfare payments go to Los Angeles County, where officials said they can shift money around to keep the payments flowing in the short term.

"The million-dollar question is how long this will last," said L.A. County Chief Executive William T Fujioka. "We cannot sustain a huge and very long hit."

evan.halper@latimes.com

patrick.mcgreevy@

latimes.com

Times staff writer Molly Hennessy-Fiske contributed to this report from Los Angeles.

[candyman]

In my book Cali has one more strike before I deem it the official human hunting grounds. That next strike will be their multi-billion dollar toll system that will install hundreds of toll points all over the state to both raise money and prevent people from driving.

Dumb fucking state...yeah your air is bad...its gonna always be worse than the rest of the country. The fact that Cali has spent more on "green" technology and its research probably has a big part in their money problems. Their faming communtiy is hurting and it would take a long explination but to make it short...goverment demands products, famers switch to those product and stop making others, price of products drops like a tank, money made by famers drops like a tank, more land to produce products needed, overused land starts to yield poor products, multiple treatments purchased to "enhance" soil, treatmets fail and cost farmers money, irrigation price triples, poor farmers with bad soil skimp on irrigation, poor products drops price of produce even lower, famers get paid even less...it all goes to shit.

If any state deserves to die its Cali. They are quickly digging themselves a very deep grave and they need to just jump in and get it over with. Or maybe the rest of the country could take on the mentality that hasn't existed since the late 60's and early 70's.

[Nightgaunt]

This is only the beginning. Unfortunately, we're going to see this all over the country soon, thanks to our wonderful fractional reserve banking system. I encourage everyone to learn how our banking system and economy really work. The more of us who are in the know, the better our chances to turn this crisis around. At the very least, check out this website. For more, watch the late Aaron Russo's film America: Freedom to Fascism and read G. Edward Griffin's classic The Creature from Jekyll Island.

It's a scary topic to research, but in the times ahead, ignorance will definitely not be bliss. As much as the government, banking community, and the media would rather have us keep our heads in the sand, we can no longer afford to do so. This is an issue that affects each and every citizen of the United States of America, and the Powers That Be are working extremely hard to keep us in the dark.

Please, please, please, educate yourself.

**Edited for formatting.

[candyman]

This is only the beginning. Unfortunately, we're going to see this all over the country soon, thanks to our wonderful fractional reserve banking system. I encourage everyone to learn how our banking system and economy really work. The more of us who are in the know, the better our chances to turn this crisis around. At the very least, check out this website. For more, watch the late Aaron Russo's film America: Freedom to Fascism[/i] and read G. Edward Griffin's classic The Creature from Jekyll Island.

It's a scary topic to research, but in the times ahead, ignorance will definitely not be bliss. As much as the government, banking community, and the media would rather have us keep our heads in the sand, we can no longer afford to do so. This is an issue that affects each and every citizen of the United States of America, and the Powers That Be are working extremely hard to keep us in the dark.

Please, please, please, educate yourself.

I studied before this all happened...nothing invested where it can be touched. Granted, most of my money is not as "clean" as it should be. But thankfully this money crisis will draw whatever heat may or may not have been on my funds. Thank (insert all-knowing being) that there are people out there that run their own system and will help you out for a small fee...

[pomba gira]

Whenever this sort of thing happens (like it did here last year) my first thought is how much money they could save by not paying the legislators until they come up with a solution. Not just withholding it until then, but they would lose a certain amount of pay & benefits for each day they dick around and it could not be earned back. I'm sure that sounds simplistic but... I bet it would work wonders.

[candyman]

Whenever this sort of thing happens (like it did here last year) my first thought is how much money they could save by not paying the legislators until they come up with a solution. Not just withholding it until then, but they would lose a certain amount of pay & benefits for each day they dick around and it could not be earned back. I'm sure that sounds simplistic but... I bet it would work wonders.

My friends dad quit working for the state of Wisconsin because he was mortified at the waster of money. They gave him a set amount of cash to travel with...and they didn't ask for the extra back. The whole family got cell phones, insurance (all of it), lawyers, housing, part of college, and other shit paid for. Yeah he said it helped but at what cost?

Now, the majority of my money will never be touched by the hands of any government. I can earn it, increase it by means of interest, and spend it as I please. However, no matter where you put your money there are always people putting their hands on it. It cannot be avoided and in every system there is always someone with his/her own ideas. I didn't put my money into the real banking system because even though it is a democracy in this country...we still have no idea how to use it. This crisis is partly out fault and partly the fault of the government and banking systems. People need to man up and get their shit set straight.

[StormKnight (1)]

One of the problems that I saw in 2001 when I was in northern CA/San Fran area was that they import most of their utility infrastructure (water, electricity, gas,) from other states, making the cost rather high. What little was done in state represented a few percentage points of what the state actually consumed. The mindset was NIMB (Not In My Backyard,) where the residents wanted the infrastructure, but no one wanted the power plants/water production plants near their community, where the state could bring it to them cheaper. At the time, the only reason they were green is that the surrounding states had the "dirty" parts of the infrastructure. Thought it was rather centrist.

Now I hope that has changed a bit in the past 8 years since I have been their, but I doubt that it is significant, especially water, since most of the area is desert otherwise. It would be interesting to see what the budget breakdown for the state is in regards to this. It would certainly be interesting to see where their budget is allocated.

[Nightgaunt]

Whenever this sort of thing happens (like it did here last year) my first thought is how much money they could save by not paying the legislators until they come up with a solution. Not just withholding it until then, but they would lose a certain amount of pay & benefits for each day they dick around and it could not be earned back. I'm sure that sounds simplistic but... I bet it would work wonders.

The problem is that so many Senators and Representatives are getting their pockets lined by those with a vested interest (no pun intended) in seeing the current system continue until this country and its people are drained completely dry. Ron Paul and others have come up with a solution, but it will never be implemented because the majority of those in Congress are either clueless or have sold their souls.

What happens when the money supply gets turned off? Civil unrest? Riots? We, the People will be demanding troops on the streets and martial law. This is the Hegelian Dialectic in action. In other words, by engineering a crisis (depression), those in control (banking cartels), get us to demand a solution. They (the government, controlled by the banking cartel) then step in as the savior with a solution that would otherwise be utterly unacceptable to a free society (martial law and Fascist dictatorship), but is essential for their ultimate goal (total domination and control). It's been happening step by step for a long time now.

And for anyone that would dismiss the assertion that the banks are in control of the government, I would strongly suggest that they carefully read the text of the "bailout bill".

[candyman]

Its not all the government though...

"the state's already struggling K-12 education system spends approximately $7.7 billion a year to school the children of illegal aliens who now constitute 15 percent of the student body. Another $1.4 billion of the taxpayers' money goes toward providing health care to illegal aliens and their families, the same amount that is spent incarcerating illegal aliens criminals."

"the average native-born family in California gets handed a nearly $1,200 a year bill."

Diejenigen, die stehlen, wird wieder in vollem Umfang!

[Nightgaunt]

it is a democracy in this country...

Except it's not! It was never intended to be so. The Founding Fathers abhorred Democracy as "rule by the rabble", which it is. In a democracy, the majority rules without the restraint of a fixed body of law (i.e. a Constitution). Private and public morality are considered to be inextricably tied. What is legal to do in the privacy of your own home today may be a crime tomorrow at the whim of the government. It is rule by emotion rather than reason and rights emanate from the mass will.

In other words, in a democracy, 51% of the people in a town could vote that everyone's living room should be painted red, and if you didn't paint your living room accordingly, you'd be in violation of the law. This is a simplistic example, but it gets the point across.

Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy that did not commit suicide.

-John Adams

Between a balanced republic and a democracy, the difference is like that between order and chaos.

-John Marshall, Chief Justice of the Supreme Court, 1801-1835

Even Plato, in his work Republic, warned that democracy always begets tyranny.

A republic, which is the legal form of government in the United States, is rule by law. This is natural, scientific, or common law. Law is discovered, not made. Government acts as a shield, punishing the abuses of freedoms, not the freedoms themselves. Individual freedom and responsibility are maximized. Each idividual is sovereign and his or her rights are absolutely sacrosanct. The government is decentralized, with checks and balances. In a republic, people are served, but not regulated, and represented, rather than ruled.

These are simplistic definitions and leave a lot out, but I think they serve to compare and contrast the two systems. Obviously, the United States is no longer a functioning republic and more like the democracy the Founders feared. In fact, as I've stated before, it's starting to look more like a fascist state. With fascism, you have strict social and economic control, a strong central government, and a policy of belligerent nationalism. Sound like any country you know?

[Nightgaunt]

Its not all the government though...

"the state's already struggling K-12 education system spends approximately $7.7 billion a year to school the children of illegal aliens who now constitute 15 percent of the student body. Another $1.4 billion of the taxpayers' money goes toward providing health care to illegal aliens and their families, the same amount that is spent incarcerating illegal aliens criminals."

"the average native-born family in California gets handed a nearly $1,200 a year bill."

But it is the government. Government, according to republican principles (and I'm not talking about the Republican Party here), has absolutely no business getting involved in education or health care. We have to attack the root of the problem - that the Constitution isn't being followed - rather than get caught in the morass of an artificially limited debate.

[candyman]

But it is the government. Government, according to republican principles (and I'm not talking about the Republican Party here), has absolutely no business getting involved in education or health care. We have to attack the root of the problem - that the Constitution isn't being followed - rather than get caught in the morass of an artificially limited debate.

True...we need to find the balance. We do need the government...just not that much. They can help out in these areas when needed but they have begun to help out just a little too much. I belive that both parties need revamping as much as possible. What I see happening here is the government enabling people and the people biting down on the bait. Hell, the main reason that I don't want Obama in office is that even if he isn't pushing for socialism there are those that will use his position to make it happen. The age of working hard for the proper reward are gone...but they can come back. The media, government, and various corporations have led us to believe that we are the worst nation out there. They have told us that we are killing the planet and that we are the only ones that can help. The funny part is that most of the people that believe this are the same people that "hate" corportations...yet they are now working with them. I see the smoking ban as part of this too. Its based purely on what people think or "should be thinking" and not on facts. So, through corporation, government, and mindless fanatics there is one more freedom that we are close to losing.

Now, my friends and I may have a wild and stupid plan but, we have one. Our money does not lie in the bank vaults, as I said before, and out jobs and income do not depend much on anything that happens in this country. But we have declared that if martial law goes into effect that we will stand up to it. I am not all for violence but damn my guns will be put to use if anything should happen. I like to think for myself and make my own way in life. I choose what I do and deal with the results, good or bad, when they come. If something goes right in my life its because I worked for it. If I make money its because I made it, and no not with a printing press. If something goes wrong I am partly responsible and will take full blame. Small business is king and when it comes to Wisconsin we are pushing that idea hard. Our local governments don't like it but through the law we are keeping our heads above the water. Our farms are small as our the local markets, bars, restaurants, stores, etc. and we intend to keep it that way. This crisis is still evolving but as it does I hope that Wisconsin follows along. Despite taxes we are doing quite well. If everything goes to shit we will still have our small, close knit communities that focus on supporting the people living in them. I don't know much about Michigan besides the fact that it isn't doing that well but I hope for the best. People keep telling me that an armed response is stupid and childing but the way its looking I may not make it through college because of this and I will be damned if the governemnt dares to offer me a hand covered in a glove made by my money. They are gonna be missing a few fingers if they do that.