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As the economic slow down gets worse what will be the impact on state and local government tax revenues?
that help pay for vital services? and what will happen ?...how will they survive????
Is it true California could go bankrupt in the next couple of months???
- eskie loverLv 71 decade agoFavorite Answer
It is already hitting my CA town, they have cut city employees pay by 5%, are not filling vacated positions and not even staffing or equipping a newly built fire station. An article in the local San Diego newspaper today quotes the governator that the state of CA will be bankrupt in 70 days unless they agree upon a budget. The governator's plan is to increase sales tax 1.5% and a 5% personal income tax increase across the board. Unfortunately, the sales tax increase could have the unintended consequence of bringing retail sales to a screeching halt in a state which has an 8% unemployment rate. Further, a personal income tax increase would really be a blow to the middle class which is already struggling to pay property taxes, mortgages, health care and ever increasing water, electricity and natural gas bills. If the legislature and governator don't come to an agreement in those 70 days, yes the state will fall off the proverbial financial cliff into bankruptcy. Our light bills will be paid with IOUs, state employees won't be paid and neither will our unemployed because the fund will be insolvent.
- 1 decade ago
Snowball effect. Less jobs means less taxes are collected which essentially compounds the problem even further. Local governments are in a real conundrum since they can't raise property taxes without further impacting and damaging their current tax revenues.
Most likely these municipalities will go deep into debt or attempt to issue govt. back bonds in order to make up for their deficits.
Unfortunately, it's going to get a LOT worse before it gets any better! Good luck
- 1 decade ago
Hiring freeze. No non-essential purchases. No spending without prior authorization. Towns and cities are waiting for State money, State is waiting for federal money. It is a ripple effect. Yes, California is between a rock and a hard place.