California: Budget or I.O.U.s? The clock is ticking…

CA Controller John Chiang is giving us a dire warning. Balance the budget in this next week or July 2, California pays its bills via I.O.U. See article link:

Are our legislators and Gov. Schwarzenegger listening? Can we get past the political posturing and make some tough budget compromises to save our state before it gets worse? It’s definitely not an easy task, but something has to be done… and quickly.

One of my graduate classes took the Next 10 California Budget Challenge: to illustrate in a class exercise how difficult it is really is. The Budget Challenge does simplify a lot of complex issues, but leaves in enough complexity to give a taste of the tradeoffs that need to be made. Clearly from an academic standpoint, a combination of strategic program cuts and revenue generation/taxation will bring the huge budget shortfall to a more managable level. But in the real world of California’s politics and public opinions, would such a plan ever be introduced or accepted? Yes, the cuts would hurt many. Yes, no one wants more taxes. But do any of us want what is coming without a budget solution?

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Managing budget is easy theoretically but it gets tricky with all the various interested parties and politics involved. It’ll be interesting to see how the week ends.