Sunday, June 17, 2012 – 10:30 a.m.
It’s interesting to see the reaction from local politicians when it comes to the state cutting away local funding.
The newly-approved smoke and mirrors California budget is actually $5 billion higher than last year.
Yes, the state is still spending more money than it takes in.
Did anyone actually expect the dysfunctional state legislature to really make cuts?
The only difference now? Instead of having republicans and democrats arguing over a balanced budget, it’s now democrats arguing amongst themselves over social services cuts.
What’s totally laughable is the local government response.
We’re going to court, they can’t do this, this is terrible…. blah…blah…blah……
The United States of America is comprised of fifty sovereign states.
The key word here being sovereign.
It’s the state’s and their respective legislatures that call the shots at the end of the day.
Any state can default on it’s obligations. But a state cannot file bankruptcy.
Only state political subdivision’s can file under chapter 9 of the U.S. Bankruptcy Code.
Remember Orange County?
It’s no wonder organized labor wants to make it harder for local governments to file.
It’s really the only way contracts, the hallmark of American business, can be voided.
Remember civics class?
Essentially the way it works is the state government, in order to balance its budget, will pull more and more revenue from counties, cities and special districts in order to pay expenses and service debt.
At the end of the day, just as with redevelopment, local governments will have no choice but to take it on the chin.
Expect more municipal bankruptcies and bond defaults.
That’s just the way it is.
The term fiscal emergency does comes to mind.
By the way, wasn’t civics class in eighth grade?