Friday, December 05, 2008

California is Broke... and Hiring

I'm sure you've all seen this headline (unless you only read the Sacramento Bee):

California Eyes IOUs for Second Time Since Depression

California, the world's eighth-largest economy, may pay vendors with IOUs for only the second time since the Great Depression, State Finance Director Mike Genest said.

In a letter to legislative leaders Dec. 1, Genest said the state "will begin delaying payments or paying in registered warrants in March" unless an $11.2 billion deficit is closed or reduced. California, which approved its budget less than three months ago, may run out of cash by March, state officials say.
The Governator is also seeking a bailout from Washington (but don't call it a bailout):
Analysis: Schwarzenegger: Federal aid request no bailout

Gov. Arnold Schwarzenegger doesn't think you should call potential federal aid to California a bailout, handout or any other kind of out.

He prefers the term "investment."

The Republican governor emphasizes there is a distinction between the type of money he desires – public works money for California construction projects, as well as higher Medi-Cal reimbursements – and the type of direct budget aid that Assembly Speaker Karen Bass has suggested.

He sees his public works request as a $26 billion New Deal-type infusion into projects that create jobs and bolster the economy, not as a budget solution.
On a personal note, I've been stunned at the "business as usual" attitude that permeates the state agencies I'm aware of. Management teams are not being given any direct instructions, so they continue on like none of this is happening. Hiring continues unabated. State employees are in complete denial. Meanwhile, the money pile keeps shrinking.

Further updates when they come in.


Deflationary Jane said...

Not sure about other state depts but hiring here has been slammed shut and we're laying off folks as the fed flow through money dries up. This mostly effects scientific staff.

I looked at the CA job board and they still require passing the tests and since testing is at a complete stand still, those openings are moot.

As to the denial, oh boy do I hear you on that! No one thinks anything bad will happen to them. Even munis that are facing huge problems are in denial and they have the least amount shock absorbsion. Everyone thinks there will be some black swan event to save them. There are a heep o' CTJ moments piling up in the queue >; )

BTW, they sure do pay a lot better then UC for essentially the same job- like 35 to 40% better at least in my classification.

patient renter said...

$26 billion New Deal-type infusion into projects that create jobs and bolster the economy

As I mentioned the other day, debt based spending only appears to "bolster" things. It's temporary, like the bolstering of one's lifestyle via credit card.

Debt is not a solution, it's an expensive band-aid.

Max said...

Everyone thinks there will be some black swan event to save them.

Isn't it funny how the collective mind works? Everyone thinks it's preordained when they do well, and it's "bad luck" when they fail. They have it 100% backward. I had a guy tell me the other day that I was "lucky" I didn't buy a house three years ago! :) I didn't let that go by uncorrected

Rich said...

UCDavis only has 4 jobs open right now- and they're all management/senior professional.

They've been on a freeze since mid Feb. Everyone I work with feels fortunate to have a pretty secure job. I spent much of '02-'05 out of work or doing work I hated, so I'm not about to take anything for granted.

Did they ever fill your job DJ?

Deflationary Jane said...


Wow! Talk about some fast changes. About two weeks ago there were several pages of open reqs (around 80+). Normally we had 140 open at any time. We were told that hiring was frozen but they still posted for critical spots. It's like even they are now gone.

I am back at ucd.

Anonymous said...

Reading about the layoff bonuses from the "office of the chancellor" with several employees rehired at other UC's. ooops

From outside the system, we'all see it as one system, one employer.... no bonuses to transfer departments, etc.

Academics running a budget/a business is like leaving the FED in the hands of a PHD.... oops


Max said...

It's truly death by a thousand cuts. Everyone looks at their individual program and thinks "where could I possibly cut back?" The problem is, there's a million programs. And evry single one is life or death to somebody.

What we need is a leader who can play the bad guy. One who has nothing to lose by telling us how it is, and where the cuts should be made. Now where can we find someone like that...?

Max said...

Reading about the layoff bonuses from the "office of the chancellor" with several employees rehired at other UC's.

Just read the same article. This is exactly what I mean. $100k here, $100k there, it adds up to billions in waste.

The ledge and the gov are bickering over which cold medicine to use, and the patient is dying of a gunshot wound. Major surgery is required.

Anonymous said...

Max -

I work for a State Agency in Sacramento. We're rushing to fill vacant positions in anticipation of all vacant positions and associated funding being eliminated by the Governor.
We were expecting a 5% pay cut as of the Jan 1st but they have passed the deadline to implement it in the payroll system.

I would agree with you there is much denial on the part of most people (Employee's, Management, Leg, Governor). It's been some 30 years since there's been major cuts in the Calfornia State budget and it's like no one is considering what really has to happen (cut jobs). There's also the mentality that once you're in the state you have a job for life. The sad part is the folks who have the best ideas in IT (the younger ones) have the least seniority and could be eliminated first.

As of October 2008 we are running 7.8% behind last year in tax revenues. The deficit figures are increasing on a monthly basis so the longer they put off a decision to cut the worse off it is.

If they do go with layoffs of permanent staff the bumping process takes months before anyone actually gets laid off. So if they wait until February to make a decision the savings would not happen until next fiscal year.