According to Standard & Poor’s Ratings Service, California’s credit rating is at a “crossroads.”  The new fiscal year will begin one week from today and there’s still no budget in place.  “If a budget is not adopted in time for the state to issue its revenue anticipation notes (RANs) before its cash runs low,” warned S&P on Tuesday, “the state’s basic operating liquidity can become inadequate.”

If you are not familiar with California budget politics this may sound rather dire.  But here in the land of fruits and nuts this sort of thing happens all the time.  In fact, during the last budget meltdown in 2009, the state issued IOUs to government workers for several weeks so it could make cash payments to bond holders.  No kidding…they really did.

No one seemed to really care…except perhaps, those receiving the IOUs.  We didn’t notice any change at all.  The sun still rose each morning over the San Jacinto Mountains.  It still set each evening over San Pedro Bay.  The mortgage bill still came each month.  We still went to bed with a sore back after a hard day’s work.  We told jokes with our friends.  Took walks with our wife.  And tucked our young son into bed each night with a kiss on the forehead.

We can’t think of anything we would have done any different had Sacramento not nearly gone broke. Continue reading →