Impact on Calif. huge if Wash. doesn't avert 'fiscal cliff'

9:51 PM, Dec 10, 2012   |    comments
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SACRAMENTO, CA - As the deadline nears for Washington to come up with a deficit-reduction agreement by the end of the year, it's becoming clear California has a lot at stake if the fiscal cliff isn't averted.

More than 200,000 jobs could disappear.

The state could lose as much as $4.5 billion in federal funds.

And the Legislative Analyst Office (LAO) estimates the state budget may shrink by $11 billion over two years.

"Most people think the economy would be drawn into a recession and just like in any recession, that would effect the state's economy and revenues and result in billions of dollars of less tax revenue for the state," said Jason Sisney, spokesman for the LAO.

Southern California, home to most high-value contracts, would be hit especially hard by cuts to defense spending -- a loss of 135,000 jobs next year, according to George Mason University.

Another recession is the last thing activists from the Alliance of Californians for Community Empowerment want.

They're urging leaders to come to an agreement.

"The economy, if it continues to slow as much as it is now, it'll be hard for me to find a job, if I find one at all," said Jimell Moore, who is unemployed.

Because California voters approved Proposition 30 last month, the statewide sales tax will go up one-quarter of a percent ... and high wage earners will have to pay more in state income taxes.

And if the Bush tax cuts are allowed to expire, a typical family of four's federal income tax liability will also go up another $2,200 a year.

Denise Davis, who describes herself as a struggling worker, says she won't be able to afford the double whammy.

"Eating, paying the rent, the bills and stuff. It's hard," she said.

No deal on avoiding the fiscal cliff also means about 400,000 Californians are set to abruptly lose their unemployment benefits extension.

And thousands of low-income families whose programs rely on federal funding, such as Head Start, Women Infant and Children and domestic violence shelters, could see their services cut.

Jessica Bartholow with the Western Center on Law and Poverty said, "It's incredible to think what we'll have to do in California: Connect the dots for the families that would lose federal benefits."

Nannette Miranda
ABC7

ABC7

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