ACP Pubs

Loren Faulkner

California’s Budget $Deficit Grows
April 22, 2008

Like a bad case of the flu, California’s budget problems keep coming back. The State’s fiscal money pit keeps getting deeper each year, with politicians apparently not willing to stop the digging that seems to be on auto-pilot.

Dan Walters, Sacramento Bee columnist, writes of California’s on-going fiscal problems in his editorial today:

When asked about the deficit, (Governor Schwarzenegger last week) replied that “we're talking here about $17.5, $18 billion of deficit.”

Aides said later that Schwarzenegger misspoke and that at the moment, the $16 billion figure remains intact – reduced to about $9 billion by the midyear corrections – pending new calculations for the ‘May revise’ of the budget.

$9 billion? That’s bad enough, but Walters goes on to explain:

No one really knows how serious the looming recession will be, and the state's convoluted tax system is inordinately sensitive to even a mild economic downturn.

Two-thirds of the revenue shortfall so far this year has been in corporate income taxes, which may be a harbinger of worse times to come. Another ominous omen is Friday's news that the state's unemployment rate has spiked to 6.2 percent, third highest of any state.

So, he explains, it’s entirely possible that when the Governor “misspoke” about an $18 billion shortfall, he may not have been far off the mark. Read Walter’s entire column at www.sacbee.com

Posted by Loren Faulkner on April 22, 2008 | Comments (0)