Governor Schwarzenegger has once again furloughed workers, declaring California is in a fiscal emergency. Excuse me for asking but when has California ever not been in a state of fiscal emergency?



Bloomberg reports Schwarzenegger Orders Furloughs Amid California Budget Impasse

California Governor Arnold Schwarzenegger ordered more than 150,000 state workers to take three days of mandatory unpaid time off to conserve cash.



The executive order, effective Aug. 1, stipulates that the furloughs will end when a budget for the fiscal year that began July 1 is enacted, the governor’s press secretary, Aaron McLear, said in an e-mail. It comes after government workers endured furloughs over almost 12 months that ended June 30.



California began its fiscal year without a spending plan after Schwarzenegger and Democrats remained deadlocked over how to fill a $19.1 billion deficit. Controller John Chiang has warned he may again need to issue IOUs to pay bills if the impasse continues into September.



“Every day of delay brings California closer to a fiscal meltdown,” Schwarzenegger said in a statement today. “Our cash situation leaves me no choice but to once again furlough state workers until the Legislature produces a budget I can sign.”

Fiscal Emergency California Style

California Governor Arnold Schwarzenegger declared a state of emergency over the state's finances yesterday, raising pressure on lawmakers to negotiate a state budget that is more than a month overdue and will need to close a $US19 billion ($A21.3 billion) shortfall.



The deficit is 22 per cent of the $US85 billion general fund budget the governor signed last July for the fiscal year that ended in June, highlighting how the steep drop in California's revenue due to recession, the housing slump, financial market turmoil and high unemployment have slashed its all-important personal income tax collection.



In the declaration, Schwarzenegger ordered three days off without pay per month beginning in August for tens of thousands of state employees to preserve the state's cash to pay its debt, and for essential services.



California's budget is five weeks overdue, joining New York among big states with spending plans yet to be approved, and Schwarzenegger and top lawmakers are at an impasse over how to balance the state's books.



Analysts say it could be several more weeks before the Republican governor and leaders of the Democrat-led legislature reach an agreement, a delay that threatens to lower the state's already weak credit rating, now hovering just a few notches above "junk" status.



Schwarzenegger's new furlough order was instantly condemned by labor officials as a political ploy.



"To once again force state employees to take unpaid furloughs is just another punitive measure by Governor Schwarzenegger because he couldn't impose minimum wage," said Patty Velez, president of the California Association of Professional Scientists.

Political Ploy or Act of Sanity?

Common Sense in Fort Worth

City Council members are considering doing away with a guaranteed pension for newer employees as the council struggles to bring Fort Worth's spending in line with the drop in taxes.



No decisions have been made. And Assistant City Manager Karen Montgomery said the city would still have to deal with a big backlog in pension costs even if the council decides to cut benefits. But pensions have been a sacred cow among state and local governments, and few others have even discussed cutting them.



By law, the city can't change the benefits that it's already paying retirees or those that it has promised to employees who have worked long enough to be vested in the pension system. Also, police and firefighter pensions are guaranteed under labor contracts.



The city could be forced to pour tens of millions of dollars into the pension system over the next few years, and pension costs are a major contributor to Fort Worth's projected $73 million budget gap.



"This is the elephant in the room for not only this budget but all future budgets," Mayor Mike Moncrief said.



Montgomery suggested moving new employees and perhaps even unvested employees to a "defined contribution" plan. The specifics of the plan haven't been determined, but Montgomery suggested a range of options, including annuities or accounts similar to a private-sector 401(k).

That would be a game-changer for municipal employees, who often stay in their jobs because of the pension and other benefits.



"In our current pension, employees cannot outlive their benefit," Montgomery said. "In a defined contribution, that risk is on the employee to manage their money until they die."



Employees, including the police and firefighters associations, have argued to keep the pension system as it is. A committee made up mostly of employees recommended that the city contribute an additional 6 percent of payroll to the pension, which would fix the shortfall in a few years.

Finally!