governor-arnold-schwarzenegger

California has been suffering for a long time. It has now run up a fiscal deficit touching $26 billion. On Monday (21st July 2009) it took measures to solve this problem. The governor of California, Arnold Schwarzenegger hammered out a provisional understanding with the state government to bridge this staggering gap. Schwarzenegger said that the agreement would be inclusive of fresh borrowing and cuts in spending totaling to $15 billion. He assured that there would be no new increases in taxes.

Feeling upbeat the governor said, “We accomplished a lot. In this budget we make government more efficient and also we are cutting the waste, fraud and abuse in some of the programmes.”

The deal will bring to a close the stalemate situation that has gripped the state for many months much to the consternation of White House.

California is the most populous state in USA. It has been compelled to write IOU’s running into thousands. The credit ratings of the state have been slashed to just a few notches above the ‘junk’ status. This has resulted in California being marked with the worst rating in the nation.

The preliminary deal should bring about some relief at least for a short time to the economic woes of California. But the cuts in services are bound to have intense repercussions on the social front – adding to the mayhem on its economic scenario.

As per the deal about $6 billion will be cut from grants given to schools and colleges. The university system will be clipped by another $3 billion. Schwarzenegger however said that these cuts in education would be totally “refunded”. An extra $1.3 billion would be sliced off Medi-Cal – it being a health programme being operated for those with low incomes as well as the poor.

California’s welfare programme CalWorks will suffer a cut of $528 million. Healthy Families – another programme that deals with health insurance for children coming from low income families will suffer a slash of $124 million. About 930,000 children benefit from this programme.

California’s in-home supportive measures for those who are frail and handicapped will also have to endure fund cutting. Schwarzenegger contends that this programme has been a nest of fraudulent activities. Steps will now be taken to finger print the care givers and takers of the assistance.

Another issue that is generating much heat is that the deal will clear the way for drilling oil off Santa Barbara coast.

The situation in California is grim leading to an exodus to other states like Colorado and Texas.

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