With all indications that Californians have rejected a tax increase is it possible that California will ask for a bailout? I would say that it is almost certain and government officials indicated as much prior to the votes failure:
Republican Gov. Arnold Schwarzenegger floated that idea months ago, as did Assembly Speaker Karen Bass, a Democrat. Schwarzenegger's visit to the White House on Tuesday surely didn't harm its prospects.Now, here are just a few reasons why California doesn't deserve a bailout. First of all, this action would certainly push the U.S. towards losing their Triple-A bond rating. This means it will be harder for the federal government, neck deep in red ink, to function. Another, more monumental problem, is it sends a message to the other 49 states, most of which are slashing budgets, that to ask for a bailout would be better than cutting goods and services and raising taxers rather than face the wrath of voters. The fact is that California has engaged in reckless state spending far predating the current economic crisis and the taxpayers of the other 49 states do not deserve to get hosed for it. This is just federalism at work, blame a few guys named Jefferson & Madison.
California does have enough cash to survive through June 30, but the state controller estimated in March that another $10.6 billion would be necessary to last the summer.
