ABSTRACT
The state of California, long seen as a land of opportunity and boundless wealth, hit hard times in the early 2000s. The collapse of the booming economies linked to, first, the Cold War with its massive defense contracts and, later, hit hard by the collapse of the Silicon Valley boom in high tech, was made all the harder to absorb by the impasse over spending cuts favored by Republicans and higher taxes offered as the solution to declining revenues by the Democrats. At the height of the boom times Governor Davis initially declined to support “on-going commitments,” legislation encumbering large sums of money for annual expenditures over many years, opting instead for one-time costs for such items as bridges and irrigation upgrades. Ultimately, the governor backed down and massive new and on-going spending was built into the budget. With the eventual and major decrease of tax revenues in the early 2000s, deficits mounted to unprecedented levels. Borrowing to meet committed expenses became the order of the day. The times ahead looked dark indeed as larger and larger percentages of the budget had to be devoted to paying off loans and long term bonds.
