Thursday morning headlines

Break out those anti-depressants. It’s a glum news day.

Deep cuts in state budget: That includes closing 48 state parks, releasing a bunch of prison inmates, and increasing car fees for the second straight year. But wait, there's more: Under the governor’s budget plan school spending would be rolled back by $3 billion, welfare payments for thousands of kids would be eliminated, and a cost-of-living increase for the elderly, blind and disabled receiving state assistance would be canceled. Well, what do you expect with a budget deficit of $14 billion and tax hikes still not being considered? From the LAT:

Bolsa Chica, Will Rogers, San Clemente, Carlsbad and San Onofre state beaches would all be closed to visitors. Topanga and Mt. San Jacinto state parks would be shut down. Lifeguards and other seasonal staff would be laid off. "They're trying to raise that as the bloody red shirt that will pave the way for a tax increase," said one high-ranking Republican, who spoke on condition of anonymity for fear of angering the governor.

[CUT]

Protest had begun even before the budget was released. School groups were already mobilizing a campaign to fight the cuts, including the governor's plan to ask lawmakers to suspend voter-approved spending formulas that guarantee schools about 40% of state revenue. The organizations are planning to begin televising advertisements this month calling on the public to resist such a suspension.

Weak December sales: A bunch of the major retailers - Nordstrom, Macy’s, Abercrombie & Fitch, among them - reported sales declines from a year earlier. And some of the declines were big: 11.4 percent at Kohl’s, 7.5 percent at J.C. Penney and 6 percent at Gap. Sales actually rose 2.7 percent at Wal-Mart, but that might have reflected budget-minded shoppers looking to save money. Be careful jumping to too many conclusions; November had more post- Thanksgiving sales than in 2006. But even when looking at average sales for November and December combined, overall retail sales rose 1.7 percent, the weakest performance since 2002, according to Retail Metrics. (NYT)

The mess at Axium: That's the Hollywood payroll services company forced into bankruptcy liquidation this week and leaving a bunch of show biz workers in a lurch. The problem is that the money deposited with Axium by movie producers and others is now frozen, pending the bankruptcy proceedings. The company, which apparently defaulted on a $140-million loan, had said that its payroll accounts would be moved over to other services, but that doesn't seem to have happened. (LAT)

Countrywide too big to fail?: Shares of the mortgage giant are down yet again this morning – at last check it's trading at a shade over $5 a share - but there are still folks who believe the death knell may be premature (and they're not related to CEO Angelo Mozilo either). “It is very unlikely that Countrywide files for bankruptcy," Steven Persky, chief executive of Dalton Investments, an L.A. fund-management firm, told Dow Jones. Such a move, he said, could "create enormous concern about the viability of financial institutions."

ICM invokes force majeure clauses: Several agents will be suspended, THR says, though all will receive special "strike pay" and benefits for the duration of the writers walkout. Also, there will be salary cuts in the 20 percent neighborhood for folks lucky enough to stay on at the agency. (Keep in mind that the actions come after the entire staff got big bonuses late last year, so it’s unlikely anyone will be rushing over to the unemployment office.) UTA has already cut salaries by 20 percent.

Air travel to get worse: Some big airlines plan to reduce domestic capacity in 2008 in order to drive fares higher and offset rising fuel costs. That sets the stage for more crowded - and delayed - flights. This is one of those unusual cases where we might actually hope for a recession because that would mean reduced demand. Last year planes were as packed as they've ever been. From the NYT:

Airlines are eager to raise fares because of higher fuel costs. Each $10 increase in a barrel of oil requires the airlines to raise round-trip fares an average of $18, Mr. Baker estimated. About a year ago, oil was as low as $52 a barrel; on Wednesday, it traded at almost $96. Airlines have been busy raising fares since Jan. 1 and are expected to continue doing so. But it will not be clear until the first quarter is over how successful that effort has been, since the mix of seats sold — how many for $100, how many for $400 — is more important than the price of any one fare.

Health care law can proceed: A 9th U.S. Circuit Court of Appeals panel will allow the city of SF to enforce its new employer-funded health care program. The stay means that SF companies with 50 or more employees must spend a minimum amount on private or city-provided health care coverage. (The Recorder)

Warner executive leaves: Ousted is probably a better word. Dawn Taubin, the head of domestic marketing, has "agreed to relinquish her role," the studio said in a statement. Taubin had strong rapport from Warner COO Alan Horn, but didn't get along with Jeff Robinov, the studio’s longtime production chief who was recently promoted to president of the newly created Warner Brothers Pictures Group. Taubin rose through the ranks after starting out as a film publicist. (NYT).

Newhall plan approved: It's a tentative tract map for the first of four villages in the 20,855-home Newhall Ranch development. The county regional planning commission signed off on the Landmark Village tract - consisting of 1,444 single-family homes, apartments and condominiums - but the board of supes must still give their okay before construction can begin. If that happens, they might break ground late next year. (Daily News)