Angry California voters rejected five proposals yesterday to keep feeding the states’ out of control spending frenzy and may have set off a new tax revolt that will spread to other states and reduce public construction funds for several years. The consequences could be similar to 1978’s proposition 13 that rolled back property taxes resulting in an extended pullback in public construction. California now faces a $21 billion deficit for FY 10, beginning in six weeks. The easy budget adjustments were done this fiscal year. The tax increase option is now gone. Enough borrowing may not be possible with the states’ junk bond rating. That leaves only massive spending cuts or a gift from Washington. Otherwise, the state will run out of cash during the summer.

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