California Demands A Bailout

California has been beset by extravagant spending for years, and it's a problem common to many states that simply cannot afford the social programs and basic services they provide to residents.

Now, the bill is coming due, and the state is concerned that it cannot make upcoming payments because the state is finding it more difficult to obtain credit. So, Gov. Schwarzenegger has called for a $7 billion bailout.

California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

The state of California is the biggest of several governments nationwide that are being locked out of the bond market by the global credit crunch. If the state is unable to access the cash, administration officials say, payments to schools and other government entities could quickly be suspended and state employees could be laid off.

The state clearly needs to get payments to schools and ensure that law enforcement and other critical state services are covered, but it is not a blank slate to pay for every program. The bill has come due, and California must reckon how to reduce spending considerably.

No where do I read that the state will reduce spending immediately or take drastic steps to bring spending in line with actual revenues. Instead, it hopes to get someone else to pay the bill. That would be the federal government.

California has refused to prioritize its spending and cut extraneous programs. It pays state officials handsomely, even as the state can ill afford those positions. So, I endorse the idea proffered by Don Surber that any such bailout of California require that the state impose strict controls on salaries and item by item examinations of every state program to ensure that the federal government is repaid in full. Cap salaries (including overtime) at no more than $100,000. That would save $1.3 million just by reducing the salaries of Russell Read and Christopher Ailman, whose combined salary is more than $1.5 million. Those two men have the distinction of being the highest paid workers on the state payroll.

You can run up and down the list of the top 100 salaries (including overtime) and find significant savings. If the state needs the money that badly, they're going to have to start at the top.