国际英语新闻：California budget crisis expected to bring lasting economic harm

LOS ANGELES, May 23 (Xinhua) -- The deepening California budget crisis would not only cause short-term pain but could also bring lasting harm to the state's 1.8-trillion-U.S.-dollar economy, a newspaper report said on Saturday.

    "The short-term pain of budget cuts could pale next to a long-term loss of companies and academic talent," the Los Angeles Times noted.

    Corporate leaders and Wall Street investors, watching the daily festival of seeming incompetence, political partisanship and governmental dysfunction, could be persuaded to limit or eliminate their investments here, the paper said.

    "We lose competitive advantage by being the state that can't solve its problems," economist Stephen Levy said in remarks published by the paper. "Regardless of what we think the solution is, the fact is we can't find a solution."

    The budget crisis threatens to further weaken the state's job market, which lost 63,700 more jobs last month, said the paper, quoting figures released Friday.

    The paper said that although the state's overall unemployment rate actually fell slightly, to 11 percent from 11.2 percent, new job losses could prolong the vicious cycle in which the California economy is now trapped, with rising joblessness reducing consumer spending and delaying a housing rebound, thus leading to more layoffs.

    The long-term effects of California's financial woes, meanwhile, could far outweigh the near-term effects, the paper said, citing the expected deep cuts in education spending which could thin the state's human capital, potentially forcing California companies to look elsewhere for skilled workers as well as new plants or even headquarters.

    It's the equivalent of "eating the seed corn," said Levy, chief economist at the Center for the Continuing study of the California Economy in Palo Alto near San Francisco.

    Distressed car dealers could see sales to state agencies shrink, printing shops may lose business as courts and other government operations shorten their workweek, and office-equipment suppliers would lose sales as cash-strapped agencies make do with aging copiers, said the paper.

    The state would pay dearly for slashing state spending on education by three billion dollars, canceling classes, firing instructors, cutting class days and shortening the school year, experts were quoted as saying.

    California companies would then find it harder to attract high-value employees who might be dubious about moving to a state with sub-par schools, said the paper.

    California's deficit may already have ballooned from 15.3 billion dollars to 24 billion dollar after Tuesday's voter rejection of nearly 6 billion dollars in funding measures proposed by Governor Arnold Schwarzenegger to close the budget gap, state officials said.

    The state runs short of the cash it needs to pay bills in July.

    To balance the books, Schwarzenegger is eyeing the dismantling of the state's CalWorks program, which serves more than 500,000 poor families with children, as well as the elimination of healthy families, which provides medical coverage to 928,000 children and teens, the paper said in a previous report.

    Also potentially on the chopping block is CalGrants, a financial assistance program that offers cash grants to lower- and middle-income college students each year.

    The governor's proposal would eliminate the 77,000 new grants awarded each year at a cost of 180 million dollars, but that saving would eventually grow to more than 900 million dollars as students graduated and the program was phased out.

    Schwarzenegger is also considering big cuts to other programs and departments as he struggles to downsize state government. Among the possibilities is a 10-percent reduction in court funding as well as slashing 600 million dollars from state universities and 750 million dollars from the state prisons, mostly from programs designed to rehabilitate inmates.