Poor State Finances Deepen Recessionary Hole

In the summer of 2009, California paid vendors with registered warrants rather than cash. The warrants, a kind of IOU, were used as lawmakers struggled to close a gap between expenditures and revenues approaching 25 percent of the California budget - a nearly unprecedented shortfall. As the situation deteriorated further in 2010, the governor ordered the wages of more than 150,000 state workers temporarily reduced to the statutory federal minimum of $7.25 per hour and directed the employees to take three unpaid furlough days each month until California's underlying budget problems could be addressed.

Provided by: Federal Reserve Bank of Dallas Topic: CXO Date Added: Dec 2010 Format: PDF

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