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Emily’s list: California drowning in red ink debt edition

Emily Crone

We’re used to California being declared in a state of emergency for wildfires, but on Wednesday, Governor Arnold declared a state of emergency over California’s finances, according to Reuters. It’s no surprise that the state has experienced financial turmoil in the past few years, but things have reached a dire point now that there is a $19 billion budget shortfall.

The budget is five weeks overdue, and it might take a few more weeks until the Democrat-heavy legislature and Schwarzenegger, a Republican, can get their act together and agree.

The deficit is 22 percent of the $85 billion general fund budget the governor signed last July for the fiscal year that ended in June,” Reuters said. The article blames the recession, the housing slump, high unemployment and financial market turmoil as the main causes in California’s drop in revenue.

In the declaration of emergency, Schwarzenegger ordered that tens of thousands of state employees take three days of unpaid leave so the state will have enough funds to pay for essential debts. He estimated that the government will run out of money by October if no progress is made, and that the state comptroller may have to start issuing IOUs next month.

For a healthy dose of personal finance tips, advice and ideas, read on for my roundup of the week’s best blog posts.

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