As cash-poor states across the US struggle to pay their bills, two cities within especially distressed states—California and Pennsylvania—are illustrative of just how tough closing budget gaps can be.
This week, at the start of their fiscal year, the governors of both states issued dire warnings.
Gov. Arnold Schwarzeneggerordered that 200,000 California state workers be paid at slightly more than minimum wagein an effort to break a stalemate between state legislators over its $19 billion shortfall, reported the AP.
Pennsylvania’s governor, Ed Rendell, told his constituents Wednesday, when discussing the $1 billion that had to be slashed from budget, “There’s no way to do this without inflicting pain,” according to the Harrisburg Patriot-News. The reduced budget, awaiting Rendell's signature, is now at $28 billion.
“Most cities in this state, and the state itself, are in the same place that we’re in, they just don’t know it,” Osby Davis, mayor of Vallejo, population 120,000, told CNBC this week. (Watch more of his comments and a video report from Vallejo in the clip here.)