Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.
The Golden State is seriously tarnished due to the lingering effects of the housing bubble. It will prove increasingly unable to meet its fiscal obligations, including interest on its muni bonds. The article above mentions the state's inability to sell all of the G.O. bonds it needed, and I suspect we'll see more partial bond sale failures in the months ahead. Why any investor would want to buy debt from this state is beyond my ability to understand. I will not take a position in Cal munis until I am convinced the state is NOT a bankruptcy risk.
