LAO: $28 Billion Gap, $22 Billion A Year After That

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No, you didn't read that headline incorrectly.

This morning's report by Legislative Analyst Mac Taylor finds a state budget meltdown that certainly would rank among the very worst ever seen, if the numbers hold up: an almost $28 billion shortfall in revenues over the next 18 months, and... perhaps even more stunning... annual shortfalls in the range of $22 billion after that.

Granted, these are only projections and they do not account for the implementation of solutions. Still, the estimates are almost certainly going to cause a dramatic increase in tensions inside the Capitol, both during the lame duck special session and once the new Legislature convenes next month.

This is the first official report produced under new analyst Taylor, and it's a doozy.

"The state's revenue collapse is so dramatic and the underlying economic factors are so weak that we forecast huge budget shortfalls," says the opening summary of the report.

The LAO agrees for the most part with the recent analysis of Governor Schwarzenegger's finance team (though they feel the immediate gap is slightly larger), and finds his proposals for both tax increases and spending cuts "balanced."

The report also finds a worsening situation on the spending side of the state budget ledger. Chief among these is a loss of approximtely $1.5 billion in property tax revenues over the course of three fiscal years -- thus increasing state government's responsibility to funding public education. Tacked on to that are unexpectedly high caseloads in social services programs; the still lingering cost of fighting recent wildfires across California; and... not surprising to nonpartisan budget watchers... a lack of actual savings from so-called "unallocated" spending reductions penciled in to make previous budgets balance.

There's much more in the report, which will be discussed by Taylor at an afternoon news conference. And it will no doubt be the shot heard 'round the Capitol this morning... an affirmation that the challenge that lies ahead is unlike any other legislators or the governor have faced.

In the immortal words of Bette Davis: "Fasten your seatbelts. It's going to be a bumpy night."

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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