Continuing Foreclosure Worsen Economy of California

October 23rd, 2008

Foreclosure in California

Continuing foreclosures have worsened the economy of California. Only a month after passing a state budget, Governor Schwarzenegger called back the lawmakers to Sacramento to come to grips with the falling economy. The revenue is already $3 billion less than what was expected.

The special session of the legislative assembly will focus on two issues – how to tackle the shortfall in the budget of this year and how to revive the foreclosure-ridden economy of California. Although no date has been fixed for the reconvening of the lawmakers the aides of the governor said that the budget problem is so acute that a session has to be squeezed in before the swearing in of the new Legislature on 1st December. Weekly meetings will be held with the leaders regarding the updating of the fiscal condition of the state so that there is no dichotomy and all can “march in the same direction.”

In September the lawmaking bodyhad sanctioned a budget that made up for the $15.2 billion shortfall by resorting to cuts in spending and accounting skills. Republicans had refused various suggestions that came from the Democrats and Schwarzenegger regarding increase in taxes. Since that refusal the revenue collection had gone down. As yet it is unsure how the budget will do the balancing trick for 2009/2010.Democrats are in the majority in the state legislature.

Darrell Steinberg (D- Sacramento) said, “I think we should go in only when there’s an ironclad agreement between not only the legislative branch and the governor but between the two parties. It just wouldn’t make sense for us to go in without the parameters of an agreement.”

Speaking at news conference Schwarzenegger opined that the state government should assist the foreclosure victims and see that they do not have to suffer eviction. For this purpose the plan is to put billions of dollars worth of bonds with the approval of the voters. He said, “This is the best thing we can do because we don’t want to wait until the New Year to fix some of the problems.”

The governor has judiciously timed the special session for gaining political mileage. The lawmakers whose term expires this year could easily vote for temporary tax increases without facing the music. The senate minority leader Dave Cogdill (R-Modesto) continued to object to levying of higher taxes. He said, “California’s economy cannot handle a tax increase.”