California Nearing The Cliff

The unemployment statistics for October at the state level were released today, and as it turns out California lost the third-most jobs in the nation at 26,400. Only Washington and Florida lost more. This puts the unemployment rate in the state at 8.2%. This is a 2.5% increase from one year ago, the largest year-over-year increase since 1982, the last major recession. Worse, in regions of the Central Valley, that number is much higher. Unemployment in Fresno County is 11.2%. In San Joaquin County, 11.1%. In Merced County, 11.7%. In Tulare County, 11.8%. And in Stanislaus County, 11.8%. Those are desperate numbers.

The loss of income tax revenue along with the dip in property taxes thanks to cascading foreclosures is leading more cities to the brink of bankruptcy.

Now two more California cities – Rio Vista and Isleton – are considering bankruptcy protection as an option as they face large budget shortfalls and staggering debt.

While experts caution against ringing the alarm bells just yet, they do say tough economic times could push municipalities already on the brink over the edge.

"I think it's quite possible municipal bankruptcies could become somewhat more common but will still be very rare," said Jason Dickerson, budget and policy analyst at the state's Legislative Analyst's Office. "There are more municipalities that will look at what it means."

We need a massive fiscal stimulus as soon as humanly possible. And that needs to include aid to state and local governments, particularly here in California. We are right on the edge.