California Budget Shortfall May Hit 28 Billion; Expect More Gridlock and IOUs

Bloomberg writes California Deficit May Reach $28 Billion as IOUs Loom:

California’s budget gap may widen to $28.1 billion over 18 months, according to Governor-elect Jerry Brown, who takes charge of the most-populous U.S. state next month. A cash shortage may force the use of IOUs by July, Controller John Chiang said.

The deficit estimate takes into account a $2.7 billion drop in projected estate-tax receipts, and compares with the most recent forecast of a $25 billion gap for the period, Brown said today at a public meeting of state officials. The cash accounts may be short by $2.3 billion within eight months, Chiang said at the meeting in Sacramento.

“I don’t want to say it, but this could mean IOUs and more tax-refund deferrals,” Chiang said.

Every year it’s the same spiel in California. Political gridlock, delayed budgets, IOUs, and deferred tax refunds. It’s the political class trying to figure out how to screw the taxpayer in the most propitious and palatable manner.

When a system lacks logic and reasoning from first principle in its conceptualization, then chaos will always arise in the long run.

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