No Sunshine For California’s State Budget

Posted By on November 10, 2010

This is unbelievable….beyond belief……..California’s deficit over the next year and half has gone vertical soaring to $25.4 billion.

California faces a far-larger budget shortfall than state officials were projecting only weeks ago. The deficit over the next year and half has soared to $25.4 billion, the state’s chief budget analyst said on Wednesday.

The startling figure means the state faces an even tougher budget challenge than it did leading up to the passage of the current spending plan, which was historically late, as lawmakers wrangled over how to close the gap for 100 days into the new fiscal year. The projected deficit alone is the equivalent of about 29% of this year’s general fund budget. It projects California continuing to struggle to raise enough revenues to fund basic services.  The main reason the deficit remains so large is that the spending plan  approved by legislators 33 days ago relied on billions in accounting gimmicks, rosy assumptions and unlikely handouts from Washington, according to the report from the nonpartisan Legislative Analyst’s Office.

The state discloses a $25.4 billion budget “problem” which consists of a $6 billion deficit for the remainder of 2010-2011, and a $19 billion budget deficit forecasted for 2011-2012, thanks to a $8 billion plunge in revenues for the general fund, as temporary tax increases adopted in 2009 expire. Furthermore, as the state admits: “One major reason to stop passing the state’s problems to future Californians is that the state’s long-term fiscal liabilities—for infrastructure, retirement, and budgetary borrowing—are already huge”.

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