01-04-2011 13:41 BJT
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It may be home to Hollywood and Silicon Valley, but California has gone from being the Golden State to a place of unemployment, deficit and economic pessimism. California has been living beyond its means since the go-go days of the dot-com boom pushed state revenues to unsustainable levels.
California is already blessed with sunny weather, a laid-back lifestyle and stunning natural beauty. Add to that a legendary film industry and booming I.T. and manufacturing sectors, and it's no wonder the state was once both an economic engine of U.S. prosperity and the ultimate symbol of the American Dream.
But today, it's a starkly different picture. Like a down-on-his-luck Hollywood actor, California is out of work and desperately broke. Its 1.7 trillion dollar economy is clawing its way out of a recession that crippled its housing market, sent unemployment hurtling into double digits and depleted its coffers.
The state also faces a budget shortfall over the next 18 months, of more than 25 billion dollars.
Californians' faith in their government is down in the dumps, and even insiders see the state's future as murky and unstable.
More so than ever before, California faces an identity crisis. If the world's eighth largest economy has any chance of restoring its former glory, it will have to reverse course drastically and quickly.
As the new governor takes office, many expect to see a slimmed-down state government, with further cuts to education and social services and less generous pensions.
In addition, an unloading of many responsibilities onto local governments is on the horizon.
Businesses, meanwhile, are wondering whether a better future is worth the wait.
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