Government Finances

As toxic cleanup crews ripped out her lovely garden and demolished her Westminster home of 34 years on orders of the federal EPA in 1995, Rosa Garcia grieved. "They said they had to clean up under my house and they knocked my house down," Garcia, a widow who gets a Social Security pension, recalled recently. "I did not want to move. I had invested a lot in my garden. I had pride in my yard. All that went." Another shock was soon to follow.

Egyptian Finance Minister Hazem Beblawi resigned Tuesday in protest of the military-led government's crackdown on Coptic Christian protesters this week that deepened sectarian tension and left 25 people dead and more than 300 injured. "Despite the fact that there might not be direct responsibility on the government's part, the responsibility lies, ultimately, on its shoulders," the state news agency MENA quoted Beblawi as saying. "The current circumstances are very difficult and require a new and different way of thinking and working.

Tension over California's unresolved budget came to a boil Tuesday when a top state official confronted another and delivered a public lambasting, saying extremist politicians are bringing state government to the brink of financial disaster. As a stunned capital press corps looked on, state Finance Director Steve Peace confronted Assembly GOP budget chief John Campbell in a crowded Capitol hallway, accusing him of partisanship that could damage the state for years.

Kristen Hammond didn't have to think too long about a suitable investment to give her three young children to mark their birthdays this year. Bypassing such traditional ideas as a U.S. Savings Bond or a share of blue-chip stock, she decided to give each child a 1-ounce coin of pure silver. Whether they know it or not, the Hammond offspring are participants in a modern-day silver rush. Stoked in part by voracious demand from small investors, the gray metal has rocketed 46% since the end of December, the biggest gain of any major commodity.

Gov. Phil Bredesen, a multimillionaire businessman, is turning down his $85,000 salary, saying he can't accept it when he's contemplating the layoff of state employees to deal with a budget shortfall. "I have always seen this job as one about public service, not salary," Bredesen said in a statement. Bredesen, who took office Jan. 18, says the state faces a $322-million deficit this year and a budget shortfall of about $500 million for the next fiscal year.

Securities and Exchange Commission offices in Los Angeles and around the country were largely unable to maintain full policing of the nation's securities markets for a second day on Tuesday as the agency's funding was held up in the Senate. SEC Chairman Arthur Levitt Jr. was forced to suspend all the agency's nonessential services Monday, causing a cut in travel expenses and subsequently delaying examinations of mutual funds, brokerages and investment advisers.

Sematech to Forgo Government Funding: The 7-year-old computer chip research consortium is expected to formally announce today that it will give up the $90 million a year it now gets from the Defense Department by late 1996. The consortium will continue its work using corporate funds, which currently account for half the consortium's budget. Sematech and its backers--most of the major U.S. chip makers--indicated earlier this year that they will soon give up government funding.

In the face of stiff opposition from local government, Assembly Speaker Willie Brown said he is dropping his regional government bill this year. The San Francisco Democrat said he will reintroduce a modified bill when the new legislative session convenes in January. "The greatest challenge facing California is to forge the will and consensus to meet the demands of our growing population," Brown said. "Local government is a necessary place to start."

The Department of Housing and Urban Development announced Wednesday that it will end its controversial co-insurance program for multifamily housing, a Reagan-era attempt at privatization that accumulated $1 billion in defaulted mortgages during the six years of its existence.

The nation's mayors warned Sunday that more cities could follow Bridgeport, Conn., into bankruptcy without an infusion of $12 billion in new federal aid to address urban problems. The aid request from big-city Democratic mayors cleared a key procedural hurdle at the U. S. Conference of Mayors' annual meeting despite warnings from Republicans and some other mayors that Congress and the Bush Administration were in no mood for an urban bailout.

In choosing Orange County Supervisor Chris Norby for a vacant state Assembly seat, voters got a homegrown leader whose views on limiting government play well in the Republican stronghold. As expected, the former teacher, who grew up in Fullerton and served on its City Council before his 2002 upset election to the county Board of Supervisors, coasted to an easy victory in Tuesday's special runoff election, capturing 63% of the vote. Democrat John MacMurray won 31% and Jane Rands of the Green Party garnered 6%. "I have deep roots in the district," Norby said.

Troubled mortgage financing giant Freddie Mac and its employees were dealt another blow Wednesday when one of the company's top executives was found dead in his Virginia home, an apparent suicide. The death of David Kellermann, 41, the acting chief financial officer, adds more turmoil at Freddie Mac.

Tension over California's unresolved budget came to a boil Tuesday when a top state official confronted another and delivered a public lambasting, saying extremist politicians are bringing state government to the brink of financial disaster. As a stunned capital press corps looked on, state Finance Director Steve Peace confronted Assembly GOP budget chief John Campbell in a crowded Capitol hallway, accusing him of partisanship that could damage the state for years.

The commission that distributes money collected under the Proposition 10 cigarette tax agreed Tuesday to use $100 million to begin providing preschool programs for the state's estimated 3.5 million children under age 5. As the unanimous vote of the eight-member First 5 California Commission was announced, a crowd of preschool operators, children's activists, educators and other advocates broke into applause and whoops of approval.

Gov. Phil Bredesen, a multimillionaire businessman, is turning down his $85,000 salary, saying he can't accept it when he's contemplating the layoff of state employees to deal with a budget shortfall. "I have always seen this job as one about public service, not salary," Bredesen said in a statement. Bredesen, who took office Jan. 18, says the state faces a $322-million deficit this year and a budget shortfall of about $500 million for the next fiscal year.

State lawmakers could change the way California funds public schools, and that has some districts perking up their ears. A measure under consideration in Sacramento would make basic per-student funding more uniform among the state's nearly 1,000 school districts by adding $406 million into the equation next year. It's called "equalization," and many districts have been clamoring for it for decades.

Among the unseen casualties of the Sept. 11 terrorist attacks are California cities, which are bracing for cuts in services because sales and hotel bed-tax revenues are declining as shopping and travel spending craters. And beyond short-term worries over tourism, there is the specter of further trouble because the state of California's budget is going into deficit--and that will spell cutbacks for all cities and counties.

In the midst of recent discussions about balancing Los Angeles' $3.9-billion budget, City Councilwoman Joy Picus suggested that badly needed funds could be raised by selling the city's bustling airport to a private company. The idea of privatizing Los Angeles International Airport did not fly. In fact, the proposal, which backers say would yield the city more than $1.5 billion immediately, had been unsuccessfully grounded before. Still, the revival of the privatization issue in the midst of L.A.'

Among the unseen casualties of the Sept. 11 terrorist attacks are California cities, which are bracing for cuts in services because sales and hotel bed-tax revenues are declining as shopping and travel spending craters. And beyond short-term worries over tourism, there is the specter of further trouble because the state of California's budget is going into deficit--and that will spell cutbacks for all cities and counties.

Cheap wine in Argentina and tortillas and tuition in Mexico, free land in Brazil, discounted gasoline in Venezuela, subsidized electricity everywhere: Such lavish government programs are gradually being dismantled across Latin America. But it should come as no surprise that it's politically unpopular to do so. Nor is it a coincidence that tiny Ecuador, a place where subsidies to consumers continue to hold sway, was in the news last week as the continent's latest economic disaster area.