Explaining Southern California's economy

For California, a budget surplus won't translate into a reserve

Schwarzenegger Holds Press Conference On Passing Of California Budget

Justin Sullivan/Getty Images

A view of the California State Capitol. The budget outlook is improving for the Golden State, but that doesn't mean there will soon be a lot of money on the bank.

California may declare a surplus for its fiscal year 2014 budget. Unfortunately, the state won’t be able to put money in the bank for a rainy day.

That doesn't mean its outlook isn't looking up. The credit rating agency Moody’s likes what it sees in the Golden State's improved fiscal situation. In particular, the passage of Prop 30 last November — raising incomes taxes on wealthy Californians and sales taxes on everybody — bodes well for future revenues.

But getting the budget out of deficit and into surplus doesn’t mean the state will be prepared for the next inevitable economic bust. 

Moody’s analyst Emily Raimes blames a history of underfunding education.

“As revenues increase in the state in the next few years, additional revenues will have to be dedicated to bringing that education funding back to the baseline where it would have been if the state had not been doing that underfunding," she said.

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Invest with James: It's barter time!

Invest with James-Halloween-MDB

Matthew DeBord

After Halloween, James (left) has discovered the value of a barter economy. Lucia (right) looks on in awe.

Welcome to the second installment of "Invest with James," in which we learn about money, personal finance, and investing through the budding example of my almost-six-year-old son, James, who loves money and all that is associated with it.

Yesterday was Halloween, a day that is like Christmas, the Fourth of July, Thanksgiving, and Rio Carnival all rolled into one for my children. My daughter, Lucia, plans for Halloween in an elaborate, multi-phased way, months in advance, that culminates in the Big Night. 

James had been more of a bystander. But this year, he discovered that there's something of value in Halloween. And that something is called "candy."

Of course, he knew about the candy. But this year, rather than just eat it, he recognized it for the first time as a medium of exchange and an opportunity to create a market. Yes, this was the first year that he sat down with his sister to trade the sugary haul.

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