The 45 Day, and $2 Billion, Budget Gamble

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[update 4:03 pm - Sigh. Welcome to another example of how the budget process is about as clear as mud. The original version of this posting reported that lack of legislative action on the current fiscal year's deficit could add another $2 billion to the already assumed $11.2 billion gap. That was based on the Q&A in today's weekly briefing with the governor's staff. But after seeing a copy of the document the Schwarzenegger administration sent to legislative leaders yesterday, it now appears that the $2 billion is the amount of extra solutions that would need to be found absent legislative action by mid-January. In other words, the governor's $9 billion in solutions proposed last month... would only be worth $7 billion by January. It doesn't mean that the budget hole will be deeper, just that much more tough from which to crawl. Thanks, too, to an eagle-eyed expert legislative staffer who confirmed the error of my ways in an email this afternoon. The posting below has been modified to reflect the proper understanding. --JM]

That well-reported $11.2 billion gap between state government's revenues and expenditures is expected to be even harder to resolve without legislative action over the next seven weeks.

That's the message from aides to Governor Schwarzenegger, who say that the governor's November 6 proposed savings will be worth $2 billion less if the Legislature fails to act before the end of 45-day period covered by the new fiscal emergency declaration.

Of course, that's assuming the sour economy doesn't shrink revenues even more than it already has... thus making the problem even worse; remember that the 18-month deficit figure now stands at $28 billion.

Schwarzenegger's press secretary Aaron McLear told reporters today that the governor believes the November proposal, which includes everything from a $4 billion cut in K-12 spending to an increase in the state sales tax, is still the right way to go.

But budget spokesman H.D. Palmer said today that if the Legislature fails to act, money-saving proposals start evaporating as soon as next week.

Schwarzenegger and Obama, Photo: AFP

Schwarzenegger was in Philadelphia this morning (above) talking about the states' need for a federal economic stimulus package and, we're told, chatting with President-elect Barack Obama about how Californians were convinced to authorize massive infrastructure borrowing in 2006. (Doubtful the governor renewed his, ummm, October concerns about the President-elect's physique.)

So when will the guv be back in Sacramento to personally chat up the new legislators about the need for action? That remains unclear, even though Assembly Speaker Karen Bass said yesterday that Schwarzenegger needs to do more heavy lifting in forging a relationship with newly elected GOP legislators.

All the newbies got a welcome gift from the guv this week: a ceramic replica of the state Capitol with Schwarzenegger's famous signature on the bottom. We're told it opens up like a little pill box.

While no doubt unintentional, it's hard to miss the symbolism that the little Capitols are... empty. Anybody have any ideas on how to fill them up with cash?

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About John Myers

John Myers is Sacramento Bureau Chief for KQED Public Radio and "The California Report," heard daily on 23 public radio stations across the Golden State.

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