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The Gloomy California Budget Picture

| December 10, 2010
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On the heels of Jerry Brown’s budget summit in Sacramento, on Forum this morning Dave Iverson talked with Kevin Yamamura of the Sacramento Bee and Evan Halper of the LA Times about the state’s gloomy fiscal outlook. Check here for the show archive, which should be up later in the day.

Also, listen to KQED Sacramento bureau chief John Myers’ latest podcast, which features extended excerpts from Jerry Brown’s recent budget summit.

And if you want to depress yourself, read Myers’ blog post about the confab. It’s called “Jerry, Meet Gridlock; Gridlock, Jerry.” The outlook, Myers explains, is rather gloomy, as is the reality and implications of recent short-term fixes:

…the data, even for a Capitol reporter who’s watched the budgets in question get cobbled together, was pretty amazing.

First, off, a higher deficit projection. Brown’s team, along with help from the the state Department of Finance, say California now faces (absent solutions) a $28.1 billion deficit between now and July 2012. The increase from the much reported $25.4 billion gap is due to a projected loss of $2.7 billion in estate tax revenues, a trickle-down from the federal tax deal struck just this week in Washington, D.C. and mentioned by the Legislative Analyst’s Office in its November budget report.

And while the road ahead looks bad, the past is no walk down memory lane.

“We went into the recession in very poor fiscal shape,” Legislative Analyst Mac Taylor told the governor-elect and the audience of elected officials and staffers (the public nor interest group representatives were invited). In fact, one of the most telling charts presented showed just how deep into the ‘one-time & gimmick fixes’ barrel state lawmakers have reached these last few years.

Department of Finance data estimates that in the last three budgets (2008-09 through 2010-11), 75%-85% of each year’s deficit solution has been either a short-term fix or one that never materialized.

In fact, a separate chart estimates $66.1 billion in budget solutions over the last decade fall into one of three categories: temporary solutions, ones that can’t be repeated, or ones that made future deficits even worse. The largest of those three? The latter. And, if you’re still with me, the single largest “solution that made future deficits worse”: the $14.6 billion in deficit bonds pushed by Governor Arnold Schwarzenegger and a bipartisan group of elected officials in 2004.

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Category: State Budget

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  • Kurt Hahn

    The $28 billion defecit neglects the unfunded liability from the State’s obligation to pay retirees under the 90/80% formula health benefits as well as increased employer CalPERS contributions just announced.