California Budget Getting Worse

From the Central Valley Business Times California could be $27.8 Billion in the red soon

California’s budget woes, which project the current budget is running more than $11 billion in the red, could be seen as the good old day if nothing changes, warns the nonpartisan Legislative Analyst’s Office on Tuesday.

California’s struggling economy signals a major reduction in expected revenues and when combined with rising state expenses, the state will need $27.8 billion in budget solutions over the next 20 months, says the LAO/

“The state’s revenue collapse is so dramatic and the underlying economic factors are so weak that we forecast huge budget shortfalls through 2013‑14 absent corrective action,” it says. “From 2010‑11 through 2013‑14, we project annual shortfalls that are consistently in the range of $22 billion.”

The LAO says it is imperative that the Legislature attack the budget problem aggressively, making permanent improvements to the state’s fiscal outlook.

“If the state has any hope of developing a fiscally responsible 2009‑10 budget, it must begin acting now,” it says.

The nonpartisan budget office calls for increased and new taxes, including a return to the old vehicle license fees, a surcharge to existing income taxes, eliminating income tax deductions taken by seniors and more.

It also suggests increasing student fees at California State University and the University of California, chopping research programs at UC schools. Cuts in social services, other education and even tightening requirements for a person to be convicted of a “third strike” and thus sent to prison for a lengthy period of time.

“The Legislature faces a monumental task in closing the projected $28 billion budget shortfall. The administration has put forth a credible plan that can serve as a starting point for deliberations,” the LAO report says.

“If the Legislature has any hope of developing a fiscally responsible 2009‑10 budget, it must begin laying the groundwork now. We believe it must take major ongoing actions—reducing base spending and increasing revenues—both to close as much of the current‑year gap as possible and to provide a head start on closing the 2009‑10 shortfall,” it says.