California has no money. They are sending out IOUs as tax refunds.¹

Problems:

1. No money and powerful groups that fight for no cuts
2. Lazy state constitution that is too easy to amend
3. gerrymandered districts that ensure little change in the state congress from election to election
4. huge population and, probably, the largest number of special-interest groups over the broadest range of the political spectrum in the country
5. a budget process that requires a 2/3 majority when neither party can muster that so the budget has been late, months and months late, every year for the past eon (slight hyperbole, but close)
6. visible and vocal, but castrated governor’s position (see gerrymandered congressional districts)
7. a large economy that spans the economic spectrum from illegal immigrants picking strawberries for dollars a day (why do you think they’re only $2/lb. ?!) to multi-billionaires – at one time the fifth largest economy in the world (even if you subtracted them from the US economy) and probably still close to that position
8. one of the larger state populations

California is too big to fail, unlike most of the banks. If Citibank failed it would effect millions of people, but most of them marginally – some loss of funds here and there – only a few catastrophically (relatively speaking). If California fails you have tens of millions of people, many of which don’t like any of the others, who suddenly have no government. There’s no money for police an fire services, no money to buy water for L.A., no money to pay millions of state employees.

The Federal government will never let that happen, but what will be their requirements for a bailout?² I, naturally, have a few ideas:

Split the state – It’s been proposed before. California is too diverse to govern easily and has too many conflicting interests. As a bonus, the more powerful special interest groups will then be less powerful as they are based in different states. Either Central Valley East and the Coast (as one morbid proposition put it, “along the fault-line”) or North/South or, ideally for breaking up different areas: The Coast, Northern CA (the area N of San Francisco Bay and going over, in a horseshoe, the central valley to where the state bends at Nevada), the Central Valley, and Southern California – a straight horizontal cut S. of Bakersfield.

So. Cal. would be extremely poor, but would make their money by selling water and generated electricity on to the southern Coast. The Central Valley has all the farming and guaranteed income. The Coast has the obvious amenities, including Silicon Valley, and I suggest a tribute to be paid to the other states for ten years of so. Northern CA, or “Sequoia” has the woods and relative isolation from the rest of the state so we saddle them with Sacramento – one of America’s many, many armpits.

This proposal is unlikely to fly, but it might get wings if we also let Texas split into five states as per its entry-treaty with the US government.

Require a new State Constitution – Easy to require and most likely the easiest to implement (which in itself says a lot about CA and its issues). The old one is hundreds of pages long, too easy to amend and fundamentally broken. Budgets should require a simple majority, it should take more the 10,000 signatures (hand-wave, or whatever the small number is) to propose a Constitutional amendment and get it on the ballot for a popular vote, and Congressional districts could only be redrawn after the National census and without gerrymandering.

Note: This idea has already been floated by both GOB and Democrats on the national level…

Require repayment with interest, by a given and unchangeable date, in the reasonable future – They’ll have to raise taxes to repay, but it wouldn’t have to be a lot for individuals. Close obvious loopholes for the extremely wealthy and corporations and nickel-and-dime your way to economic freedom. I hope this is a given.

Enjoy the gorgeous weather and swim in the ocean Californians – it’s likely to be a long and strange haul before your state is entirely its own master once again. Hopefully something will work out and you’ll be a better state on the inside, instead of the bizarre (and strangely stuck-up) prom queen-Carrie siamese twin you are now.

¹ Said IOUs will be accepted by banks until July 10th. It’s likely few individuals will have received their “checks” by that point. Those that miss the window will have to wait until October at the earliest and then will only receive a check if the California government is solvent (unlikely given their budgetary shortfall). The banks will receive 3.75% interest on these IOUs so their unwillingness to be stuck with many of them is their vote of confidence in the California government to resolve its monetary problems.

² If they give no requirements for a federal bailout then all the states will ask for one. The consequences have to be extreme and painful and they have to be upfront with them, before California agrees to them, so that the state still has a chance to do it on their own. It’s unlikely they’ll find a way, but too lenient and the begging begins (I’m shuddering at the mental image of a YouTube video of Palin on her knees simpering for funds for poor, beleaguered Alaska) and too harsh and California will see mass-exodus (reverse Dustbowl style – Bentleys with 42” plasmas tied to the roof rolling east into Oklahoma).