The state of the state is still dire, as Gov. Arnold Schwarzenegger will no doubt remind Californians this morning in his final required address on the topic. A breathtaking 12.3% of residents who want to work are unemployed. Businesses are hurting, and too little revenue is flowing to public coffers to pay for the safety-net services that are needed more now than they have been in decades. Nor is there enough money for K-12 schools, higher education, the court-ordered relief of prison overcrowding and substandard inmate medical care, road and bridge maintenance, and everything else the state does.
Many cuts and other maneuvers tried last year either have been reversed in court, such as some furloughs of state workers, or are stuck there, such as the plan to sell part of the State Compensation Insurance Fund. In the budget plan he is to release Friday, the governor will have to propose new ways to resolve a shortfall that now exceeds $20 billion.
California's credit rating is the lowest among the states, in part because of the chronic revenue/spending gap and in part because the requirement of a supermajority vote on the budget almost always pushes it past its legal due date, leading the state to suspend payments to vendors and issue IOUs in lieu of paychecks. Some states are worse off, yet they mock California for its combination of misfortune and self-inflicted wounds.