Progress(?) on the California budget

While waiting for the Federal Open Market Committee to provide their assessment on the health of the U.S. economy along with a few clues about the future course of monetary policy, a quick look at some recent developments in the never-ending California state budget crisis is in order.

That characterization - never-ending - appears to be more true than ever before as this report in today's LA Times notes that recently proposed budget moves will virtually guarantee that the Golden State's fiscal challenges will extend far into the future.

By far, my favorite part of the proposal is to push state employees' June 2010 paychecks into the month of July - issuing them at exactly 12:01 AM on July 1 - so as to have them included in the following fiscal year. This move is expected to save $1.2 billion in the 2010 budget due to there being only 11 months of paychecks issued.

In theory, this same move could be applied to the entire state budget, thus producing a savings of 11 percent across the board for the 2010 budget. Since the state is unlikely to ever catch up, they'll always be paying bills one month later than usual and, after everyone gets used to that idea, the next logical step would be to institute a two month delay when money gets tight again.

You can see how budget "savings" such as these could be extended to cover many future budget gaps years into the future - a good long-term plan...