What Can Be Learnt From the Past California’s Budget Crisis

Abstract

Being renowned with big global trademarks such as Google, Intel, Ebay and Hollywood in Silicon valley, the world people may imagine the enormous potential power of California State, United States. Thanks to this enormous power, this valley has speeded up the Californian economy to a continuous hike. By 2012, California's GDP exceeded 2 trillion US dollars and GDP per capita reached 43 thousand dollars, ranking first in the United State and 12th globally if compared as an independent economy. However, world's cycles of economic and finance’s crises’ troughs have worsened the Californian budget deficit and made it persistent. The 2008-2009's fiscal deficit was 40 billion dollars when the tax revenues reached 90 billions while the state’s spending was 130 billions. Lacking suitable execution measures, the state’s budget has been dragging down behind other states. This paper will examine the historical context and propose some policy measures to tackle the bottle-lock of the state’s dilemma.