California budget faces new $8-billion shortfall

[one...two...tree 2,762]

Plunging revenue has already put the new budget plan out of balance, the state legislative analyst says. The news may complicate the bid to have voters OK special-election measures in May.

By Jordan Rau and Evan Halper, LA Times

Reporting from Sacramento -- The plan that Gov. Arnold Schwarzenegger and lawmakers approved last month to fill California's giant budget hole has already fallen out of balance with a projected $8-billion shortfall, the Legislature's nonpartisan budget analyst said Friday.

After analyzing recent data showing rapidly rising unemployment and lower-than-expected economic growth, Legislative Analyst Mac Taylor said the state is on track to have even less money than lawmakers anticipated in February. State leaders said then that they had ended the fiscal crisis through $42 billion in lowered spending, increased taxes, borrowing and accounting shifts.

California's economy in is such bad shape that Taylor's office anticipates that residents' combined personal income will be lower this year than it was last year, leading to fewer tax dollars for state coffers.

"I went as far back as 1950, and I could not find a situation in which personal income had actually declined in the state, so that's a rather unusual event," Taylor said at a news conference Friday.

The dour projection is likely to complicate Schwarzenegger's effort to win voter approval for a package of budget-related ballot measures scheduled for a special election May 19. The governor and legislative leaders have said the propositions -- which include controversial bids to extend the recent tax increases, borrow against future lottery proceeds and siphon money from popular programs for children and the mentally ill -- are necessary to restore the state's fiscal balance.

For opponents, the new forecast is "going to give them a tremendous argument," said Larry Gerston, professor of political science at San Jose State.

He noted that since last fall, Schwarzenegger and lawmakers have repeatedly announced that they have resolved the state's financial troubles, only to see deficits rapidly reemerge.

"Their campaign was based on a shaky foundation as far as credibility goes . . . and this isn't going to make it any better," said Jon Coupal, president of the Howard Jarvis Taxpayers Assn., which opposes the special election measures

H.D. Palmer, a spokesman for the state Department of Finance, noted that Taylor's estimate was based on more recent data than lawmakers had in February when they crafted their rescue plan.

"We are continuing to work our way through a recession that has hit California's economy extraordinarily hard," Palmer said. "That means there is clearly a potential for the state's revenue picture to get worse."

The governor is scheduled to release a revised financial forecast in May, when the Capitol traditionally focuses on the state budget. Lawmakers tried to head off a summer budget fight this year by tackling the deficit early and writing a spending plan that would last through the middle of next year, but Taylor's analysis suggests they will be forced to make major revisions this spring.

Assembly Speaker Karen Bass (D-Los Angeles) said the new estimate made it more imperative that voters approve the May ballot measures. If the package of propositions --particularly the lottery borrowing -- is rejected, the budget gap would increase by $6 billion, she said.

"We must keep a careful watch on revenues during these volatile times," Bass said. "All of us, Democrats and Republicans alike, must be prepared to continue to make tough decisions."

Assembly GOP leader Mike Villines, who supported the taxes and cuts passed in February, said the new budget hole would have to be plugged with further cuts if the economy does not recover.

Senate minority leader Dennis Hollingsworth (R-Murrieta) said he did not believe the three Republicans in his caucus who voted for tax increases would do so again.

"We're going to have to find efficiencies and reduce spending on a lot of programs," he said. "It's very painful, but it's going to have to be a very necessary step."

Even though they are in the minority, Republicans can block any spending plan they don't like, because of California's requirement that budgets be supported by two-thirds of the Legislature.

Taylor said the new $8-billion budget hole should not be as difficult to grapple with as was the $42-billion gap. He said the state may be able to tap $3 billion in federal money intended to increase schools spending as part of the federal economic stimulus package passed by Congress.

"We're not that far away if we can use those federal dollars," he said in an interview.

That idea may not fly with California's school leaders. Kevin Gordon, a lobbyist for school districts in Los Angeles, San Bernardino, Riverside, Orange and other counties, said Taylor was proposing to "hijack federal dollars that the president and Congress intended to use to offset cuts that have already been made."

Beyond the short-term problems, Taylor also projected a grim long-term fiscal outlook for the state, with a $12.6-billion shortfall emerging by mid-2011 and growing to $26 billion three years later.

"Given these budgetary pressures, the state could experience recurring cash flow pressures in the coming months and years," Taylor wrote.

http://www.latimes.com/news/local/la-me-bu...story?track=rss

[AnaAndDaniel 0]

yeppers. not good. but then again, many families are operating in the red right now too.

freaking a bushie got us into this mess.

Daniel

[MrsCat 6]

Simple solution. Allow the illegals to perform government jobs. They work for pennies on the dollar and without benefits. Cali will be back in the black in no time. Everyone whose out of a job can just sell their extra Hummers and 4th homes.

[_Simpson_ 250]

Thats what happens when you give democrats control of a state.

[dalegg 143]

Simple solution. Allow the illegals to perform government jobs. They work for pennies on the dollar and without benefits. Cali will be back in the black in no time. Everyone whose out of a job can just sell their extra Hummers and 4th homes.

yeah but then we just have a bunch of unemployed ex-government workers with no other skills holding signs saying "will create headaches, unnecassary paperwork, and endless waiting for food".

[spookyturtle 9,466]

Thats what happens when you give democrats control of a state.

What does the Republican governor do?

[sj5 4]

Simple solution. Allow the illegals to perform government jobs. They work for pennies on the dollar and without benefits. Cali will be back in the black in no time. Everyone whose out of a job can just sell their extra Hummers and 4th homes.

I want to you.

[MrsCat 6]

Simple solution. Allow the illegals to perform government jobs. They work for pennies on the dollar and without benefits. Cali will be back in the black in no time. Everyone whose out of a job can just sell their extra Hummers and 4th homes.

I want to you.

Sorry only my husband is allowed to me.

[NickD 203]

Only unions we have in our state are the teachers, state, and city workers. When did that change? Heard that one out of every ten delegates at either the republican or democratic convention are these union members. Just about the only ones that can take the time I guess. 75% of my property tax bill is for education, but yet the USA ranks about 35th place when compared to other nations. This and Medicaid for USCs' born of illegal parents.

According to our school superintendent, his teachers are working 36 hours a day, and will be plenty of help for my step daughter with her English. Was no help there, to avoid that massive traffic jam, tried to drop her off 15 minutes earlier and pick her up that much later. The teachers parking lot is empty at those time, last ones to show up, first to leave. While I live on as far to the west side of town as possible, and the school is located as far east as possible, we do not get bus service because we live in town. There was no help for her after school hours, had to do that myself.

I wanted a second driveway on my property, but the city only pays for one, so hired a guy to install a culvert, just two came out and were done in less than a couple of hours, moving so traffic could pass. City installs a similar culvert in an empty lot next door, had about twenty guys standing around, blocked off my road, and took over two days to install that culvert.

And we wonder why our taxes are so high.

[Ban Hammer 13,355]

I wanted a second driveway on my property, but the city only pays for one, so hired a guy to install a culvert, just two came out and were done in less than a couple of hours, moving so traffic could pass. City installs a similar culvert in an empty lot next door, had about twenty guys standing around, blocked off my road, and took over two days to install that culvert.

And we wonder why our taxes are so high.

[one...two...tree 2,762]

Simple solution. Allow the illegals to perform government jobs. They work for pennies on the dollar and without benefits. Cali will be back in the black in no time. Everyone whose out of a job can just sell their extra Hummers and 4th homes.

I want to you.

Sorry only my husband is allowed to me.

[_Simpson_ 250]

Thats what happens when you give democrats control of a state.

What does the Republican governor do?

be honest now you know its democrats that control that state regardless to Arnie. It was the same nonsense when Gray Davis was in office.

[one...two...tree 2,762]

Thats what happens when you give democrats control of a state.

What does the Republican governor do?

be honest now you know its democrats that control that state regardless to Arnie. It was the same nonsense when Gray Davis was in office.

Shelby, I'm not sure if you live here in the Golden State, but when it comes to raising taxes, there has to be a 2/3 majority...that's why the budget stalled for so long. All that was needed was for one Republican from the Senate to vote for the budget. That delay has now cost the state billions in dollars.

[spookyturtle 9,466]

Thats what happens when you give democrats control of a state.

What does the Republican governor do?

be honest now you know its democrats that control that state regardless to Arnie. It was the same nonsense when Gray Davis was in office.

You guys use the same excuse for everything. Face it, the Republicans made a series of errors that have helped fuel this cirisis. It is going to take a combined effort to solve it. The sooner the morons figure that out, the better it will be for all of us.

[_Simpson_ 250]

Thats what happens when you give democrats control of a state.

What does the Republican governor do?

be honest now you know its democrats that control that state regardless to Arnie. It was the same nonsense when Gray Davis was in office.

Shelby, I'm not sure if you live here in the Golden State, but when it comes to raising taxes, there has to be a 2/3 majority...that's why the budget stalled for so long. All that was needed was for one Republican from the Senate to vote for the budget. That delay has now cost the state billions in dollars.

I am not living there now but have spent a good amount of time in the Golden State, I used to live in Milpitas,Antioch and Rocklin. I do not know the local politics of now. I did know about the 2/3 though. What about the 42 billion dollar gap. Do you really think that democrats do not run that state. Democrats have a good strangle hold on California, complete control, no but you know what im saying.