Rally

The deep cuts proposed in Gov. Pete Wilson’s new state budget surely would hurt Los Angeles and Orange counties. That’s because both the Republican governor and some legislative Democrats want to balance Sacramento’s budget by taking state funds from the counties. The outlook is especially grim for large counties. There must be a better way.

THE CUTS: Although L.A. County has only about a third of the state’s population, it would endure more than half of the total cuts in statewide county funding that Wilson is proposing, according to Chief Administrative Officer Sally R. Reed. Altogether, L.A. County would lose $362 million in health care funds and property taxes.

Under the proposed diversion of property taxes, Los Angeles and 11 other counties would lose $500 million; Los Angeles would be hit with a reduction of more than $100 million.

A Senate-Assembly conference committee is offering an alternative budget plan, but it does not offer much relief for the counties. In fact, the alternative plan adds a new headache for counties–a proposed cut of $32 million in annual subsidies to county probation camps. The result would be a Los Angeles cutback of as much as $19 million.

Until his latest budget revisions, Wilson largely had spared counties of any further cuts in state funds. This new round of proposed reductions in state funding could not come at a worst time. Los Angeles County–already reeling from budget problems caused in part by previous state cutbacks–has yet to agree on a new county budget. The proposed state cuts make this task a torture.

Orange County, too, would suffer from the Democratic proposal to end the annual subsidies to the county probation camps. But Orange County’s loss of funds due to the shift of local property tax revenues would, it is hoped, be partially offset by projected increases in interest earnings on county investments.

THE COUNTERATTACK: Assemblyman Richard Katz (D-Sylmar) has scheduled an emergency meeting Monday in Sacramento with Los Angeles County representatives, legislators, the Department of Finance and others to review the magnitude of the proposed reductions in state funding to counties. The participants will try to identify alternatives to the proposed county budget cuts or find ways to raise revenue to avoid the reductions.

The emergency meeting should put all plausible options on the table. There’s been some talk in Sacramento of even a temporary salary cut for all public employees, legislators included.

Los Angeles County is still grappling with the aftereffects of the defense downsizing, recession and the Northridge earthquake. With the recent defeat of state bonds to finance earthquake repair, residential rebuilding efforts have already suffered one major setback. Trying to balance Sacramento’s budget on the backs of counties exacts an unfair toll on Los Angeles and California’s other densely populated areas, and that cannot be good for the future economic life of this state. All Assembly and state Senate members who care about their communities must rally around the counties.

European stocks were mostly steady on Wednesday as investors weighed signals from Washington that a diplomatic breakthrough in the Iran war could be imminent.

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The pan-European Stoxx 600 had ticked down 0.1%, Germany’s Dax edged 0.11% higher and the FTSE 100 climbed 0.11%. The CAC 40 in France fell by a slightly greater margin, at 0.65%.

US President Donald Trump said fresh talks between Washington and Tehran “could be happening over the next two days” in Islamabad, signalling a possible diplomatic breakthrough, and added that the war was “very close to over” — despite continued uncertainty over key sticking points in negotiations.

Asian markets were broadly higher.

Japan’s Nikkei 225 gained 0.5%, South Korea’s Kospi jumped 3.0% and Hong Kong’s Hang Seng edged up 0.7%.

The Shanghai Composite added 0.2%, while Australia’s S&P/ASX 200 was little changed, up less than 0.1%.

On Wall Street, the S&P 500 added 1.2% to its gains from the previous day, and the index at the heart of many 401(k) accounts is now just 0.2% below its record set in January.

The Dow Jones Industrial Average rose 317 points, or 0.7%, while the Nasdaq Composite climbed 2%.

On Wednesday, benchmark US crude inched up by 1 cent to $91.29 a barrel.

Brent crude added 48 cents to $95.27, or less than 1%, after falling 4.6% the previous day. While that is still above its roughly $70 level from before the war began in late February, it remains well below the peak of $119.

Lower oil prices help reduce costs for businesses across the economy. However, some analysts noted that the war is still ongoing, warning that the optimism may prove unfounded.

“The counterintuitive decline in crude appears driven by growing hopes that a second round of peace talks between Washington and Tehran could soon materialise, after the first attempt fizzled out,” said Tim Waterer, chief market analyst at KCM Trade.

“Traders are clearly choosing to price in the possibility of de-escalation rather than the immediate reality of restricted flows,” he added.

Asian nations depend on access to the Strait of Hormuz, a narrow waterway that is the main route for crude oil produced in the Persian Gulf to reach customers worldwide. Disruptions there have kept oil off the global market, driving up prices.

Global inflation this year is expected to accelerate to 4.4% from 4.1% in 2025, according to the International Monetary Fund, which had previously forecast a slowdown to 3.8%.

The IMF also downgraded its forecast for global economic growth to 3.1% this year, from 3.3% projected in January.

Overall, the S&P 500 rose 81.14 points to 6,967.38. The Dow Jones Industrial Average gained 317.74 points to 48,535.99, while the Nasdaq Composite climbed 455.35 points to 23,639.08.

In the bond market, Treasury yields eased as falling oil prices reduced inflationary pressure. The yield on the 10-year Treasury fell to 4.25% from 4.30% late Monday.

In currency trading, the US dollar edged up to 159.03 Japanese yen from 158.79 yen. The euro stood at $1.1780, down from $1.1797.

US stocks climbed to the brink of a record high on Tuesday, while oil prices eased as hopes grew that Washington and Tehran may resume talks to end their war.

The S&P 500 rose 1.2%, leaving it just 0.2% below its January peak. The Dow Jones Industrial Average gained 0.7%, while the Nasdaq Composite jumped 2%, tracking broader global market gains.

Investors are betting that renewed diplomacy could prevent a prolonged surge in oil prices and inflation, allowing focus to return to corporate earnings.

Brent crude for June delivery fell 4.6% to $94.79, down from recent highs, though still above pre-war levels.

However, volatility remains high, with markets sensitive to developments around the Strait of Hormuz, a key route for global oil supply.