Keepingitreal

California issues I.O.U's in Latest Budget Woes

As California's fiscal crisis careened out of control with Thursday's issuance of IOUs, Democrats and Republicans remained deadlocked, largely over one of the state's biggest responsibilities: providing a safety net for poor and sick residents.At the center of the dispute is a question over how deeply the state should cut spending on health care for poor children, welfare payments to single mothers and in-home services for the elderly and the disabled.Gov. Arnold Schwarzenegger initially wanted to eliminate such programs. But in the past week, the governor softened his stand, instead demanding deep cuts, the rooting out of fraud in the system and changes to some welfare programs to save money, such as requiring recipients to sign up online instead at a government office."We are all committed to getting this done," Schwarzenegger said Thursday at a news conference in Los Angeles. "I'm more than (willing) to compromise."But Democratic lawmakers say Schwarzenegger's proposals are still draconian, would unravel the state's safety net and hurt the ailing economy."The remaining key issues that we've identified ... (are) issues relating to the California safety net: how we preserve it and how we might do some common-sense policy changes ... to be able to do a better job of keeping costs under control over time," Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Thursday.The challenge is to find savings without destroying programs that so many Californians depend on, he said."I came to public life for one reason. I was taught if you were given something in life ... you give something back, and stand for people who do not have a voice," he said.Schwarzenegger continued to criticize state lawmakers Thursday for their inability to approve a plan to fix the state's budget deficit that grew by $2 billion to $26.3 billion when the state's 2008-09 fiscal year ended Tuesday night.The governor's reform ideas include restricting eligibility requirements on health care so that fewer children will qualify, shortening the eligibility duration in a welfare-to-work program for single mothers, and requiring recipients of in-home health services to be fingerprinted to make sure they are not double-dipping.Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), said she supports finding ways to reform government and to streamline programs, but that's a discussion that will take time and shouldn't be part of urgent budget negotiations."I think you can find savings in every area of government, but if you think we can do that in the next week, we can't," she said. "Slashing programs is not a way to finding additional savings. You need to evaluate the programs, you need to look where there's duplication or look where a program is not working. Slashing and burning is not a way to deal with what might be waste." SOURCE:SFGATE.COM

Cheating on your taxes isn’t worth the gamble

Washington —- Hard economic times can bring out the worst in people. As the April 15 tax deadline approaches, you may be thinking of not filing a return if you owe additional money to the Internal Revenue Service. Or you may be tempted to file a fraudulent return to boost your refund by taking deductions you know you aren’t entitled to claim. It seems so obvious to say that if required, you should file your tax return every year and not cheat. Except there are people who do take the chance, betting that the IRS won’t catch up to them. But when and if the IRS discovers what you are doing, the result is not very pretty. Aside from the penalties, do you want that mental anguish of wondering whether you’re going to be caught? OK, maybe you don’t have a conscience. So let me lay out the financial consequences of failing to file and failure to pay what you owe, and see if this doesn’t put a little scare in you: > The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty typically stops accruing after five months. But you can incur additional penalties if fraud is involved, IRS spokesman Eric Smith said. If you cannot pay any or part of the taxes you owe, at least file your return. You can work out a payment plan with the IRS. You can apply online by going to www.irs.gov. Use the pull-down menu under “I need to … ” on the right side of the IRS home page. Select “Set Up a Payment Plan.” > You will have to pay a failure-to-pay penalty of one-half of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. You can cut this penalty in half by setting up a payment plan, Smith said. > The failure-to-pay penalty rate increases to a full 1 percent per month for any tax that remains unpaid the day after a demand for immediate payment is issued, or 10 days after you get notice that the IRS intends to levy certain assets. > The two most common accuracy-related penalties are the “substantial understatement” penalty and the “negligence or disregard of rules or regulations” penalty. If you are guilty of either one of these, you pay a flat 20 percent based on the related tax due.

Which Banks Will Fail? And Is Your Bank Safe?

Which banks are failing? Which banks are safe? The questions have become so common that Google's search box will finish typing them for you before you're done. Per Cale says one way to be confident that your bank is safe is if it has opted out of government plans to 'save' the banking system. A list of those that have opted out is here. But the FDIC keeps another list--of troubled banks--and it's a secret list, says Daily Finance: "The number of banks currently in trouble jumped to 252 from 171 the previous quarter," DF says. "Even so, that represents just 3% of the 8,300 banks that make up the banking system in the U.S, so don't panic." So which bank is next to fail or be taken over? Citigroup is a good place to start. "Despite the efforts of the feds, the bank whose motto is "the Citi never sleeps" may soon be sleeping with the fishes," says AlterNet. "Three bailouts later, and Citigroup is still a $1 stock. Hence the government is already engaged in "contingency planning," says Business Insider. Continue Reading Story »

Few in Bay Area qualify in housing rescue plan

(02-22) 17:57 PST -- More than 90 percent of Bay Area mortgage holders cannot qualify for the low-cost refinances included in President Obama's housing rescue package, according to an analysis of loan data from real estate service Zillow.com. That is the smallest percentage of people eligible for the refinances anywhere in the country, Zillow said."The Bay Area is being hit by the fact that it's high-priced, and therefore the loans that were made around the peak years were not conforming (meaning they were above $417,000), and secondly, that (the housing market) has gone into such sharp decline that many homes are underwater by more than 5 percent," said Stan Humphries, vice president of data and analytics for Zillow in Seattle. key component of the White House plan calls for assisting homeowners whose home equity has dwindled by letting them refinance into lower-cost mortgages, potentially saving them hundreds of dollars a month and reducing the risk that they may one day lose their homes to foreclosure.

5 percent underwater

But that initiative is only available to people who took out so-called conforming loans of less than $417,000 and whose homes are not more than 5 percent underwater - meaning what they owe is not more than 5 percent greater than their home's value. For instance, someone with a home now worth $300,000 who owes $315,000 could qualify for the refinance - but would be barred if the home's value dropped further. n the San Francisco metropolitan region - comprising San Francisco, Alameda, Contra Costa, Marin and San Mateo counties - just 8.4 percent of all mortgaged homes meet those criteria, according to Zillow. In the San Jose metropolitan area (Santa Clara County), only 6.9 percent of mortgaged homes would qualify. In Napa County, 8.8 percent of mortgage holders would qualify. y contrast, more than one-quarter of all U.S. mortgaged homes meet the two basic qualifications for the refinances in terms of mortgage size and the loan-to-value ratio, Zillow said. In some lower-cost areas of the country, such as Memphis, Dayton, Ohio, Fort Collins, Colo., and New Orleans, more than 44 percent of mortgaged homes would qualify, Zillow said. The Bay Area numbers were higher in two outlying - but much less populated - areas, but still far below the national average. In the Santa Rosa-Petaluma area (Sonoma County) 12 percent of mortgage holders would qualify, according to Zillow, and in Vallejo-Fairfield (Solano County), the number was 17.6 percent. Both areas, especially Vallejo, have suffered a significant foreclosure crisis and seen home values plunge, but they are sufficiently low-cost that presumably more people bought homes with mortgages less than $417,000.SOURCE:SFGATE.COM

Nearly 5 million are getting unemployment benefits

The number of laid-off workers receiving unemployment benefits has jumped to an all-time high near 5 million while new jobless claims remain well above 600,000. Both figures were worse than expected and new projections from the Federal Reserve show unemployment rising for the rest of this year. The Labor Department reported Thursday that the number of people receiving regular unemployment benefits rose 170,000 to 4.99 million for the week ending Feb. 7, marking the fourth straight week those receiving benefits have been at a record level on data going back to 1967. The continuing claims figure also was significantly above the year-ago level of 2.77 million and underscored the difficulty people are having in this recession finding another job once they are laid off. An additional 1.5 million people are receiving benefits under an extended unemployment compensation program approved by Congress last year, bringing the total number of people receiving unemployment benefits to 6.54 million for the week ending Feb. 7. In other economic news, wholesale inflation surged unexpectedly in January, according to the Labor Department. Wholesale prices jumped 0.8 percent last month, the biggest gain since July and well above the 0.2 percent increase that economists expected. The acceleration was led by a 3.7 percent surge in energy prices with gasoline prices jumping 15 percent, the biggest gain in 14 months. Even outside the volatile food and energy sectors, wholesale prices showed a bigger-than-expected increase, rising by 0.4 percent. New applications for unemployment benefits totaled 627,000 last week, the same as the previous week, according to the department. But that was still more than the 620,000 claims economists expected. It also remained near the 631,000 claims filed three weeks ago, which was the highest tally since October 1982, when the economy was emerging from a steep recession, though the labor force has grown by about half since then. A year ago, initial claims stood at 342,000. SOURCE:SFGATE.COM