Does saving for a rainy day and using fiscal discipline matter? Consider the self-inflicted budget nightmare California is facing. According to the LA Times, California's chronic overspending and failure to save during good times has the state facing a possible $10 billion budget deficit.
State officials have warned the governor that the likely deficit for next year has jumped from a few billion dollars to as much as $10 billion, threatening to wipe out the progress Schwarzenegger has claimed in getting the state's accounts in order.
In response, Schwarzenegger's finance department has ordered agency directors to formulate plans to cut budgets by 10% for the spending blueprint the governor will unveil in January, according to administration officials who spoke on condition of anonymity . . . The state is also being forced to confront the consequences of not saving money when times were better.
When the economy improved nationwide several years ago, most states erased chronic deficits and began building rainy day funds. California did not. It continued to spend more money than it brought in.
"We never fixed the problem," said Chris Thornberg, a principal with Beacon Economics. "It's been Scotch tape and glue and staples and just praying we will never have to face the reality that state government is on a path that is not sustainable."
We should know later this evening what Washington voters think about saving for a rainy day when the polls close on SJR 8206: Citizens Guide to SJR 8206, Constitutional Budget Reserve
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