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California fiscal picture looks grim

By Lisa Vorderbrueggen
Wednesday, November 14th, 2007 at 11:18 am in California budget.

The California Legislative Analyst’s Office just released its outlook on the state’s financial picture through 2013 and the skies are not sunny.

“To balance the 2008–09 budget, the state will have to adopt nearly $10 billion in solutions,” according to the LAO’s press release.

“Solutions” is one of those cute government euphemisms, kind of like substituting “challenges” for “problems.”

“Addressing the state’s current budget problem is even more urgent because we forecast a continuing gap between revenues and expenditures,” the release said. “A plan to permanently address the state’s fiscal troubles must involve a substantial portion of ongoing solutions.”

To read the full report, click on one of the following:

Summary:
http://www.lao.ca.gov/laoapp/PubDetails.aspx?id=1681

HTML:
http://www.lao.ca.gov/2007/fiscal_outlook/fiscal_outlook_07.aspx

Adobe Acrobat:
http://www.lao.ca.gov/2007/fiscal_outlook/fiscal_outlook_07.pdf

View this webcast using the following link:
http://www.lao.ca.gov/2007/webcasts/fiscal_outlook/EH_fiscoutlook07.aspx

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  • Ernest Hampson

    Arnold Schwarzenegger was swept into the governor’s office to replace embattled Governor Gray Davis in October 2003 with the promise that he’d reduce debt and “tear up the state’s credit card”. In 2007, however, falling tax revenues have forced the state to borrow $7 billion just to pay its recent bills. In the three months ended Sept. 30, the state has spent $10.2 billion more than it received in taxes and fees. The annual shortfall is expected to be between $6 billion and $9 billion.

    During the first week of November, the sale of the so-called “revenue-anticipation notes” (bonds) is the largest since the state issued $6 billion in similar securities in 2003 to close the budget gap that signaled the end of the Davis administration.

    Despite this growing fiscal crisis, Schwarzenegger seems thus far immune from the backlash that drove Davis from office. He is riding a favorable approval rating based upon his, supposed, centrist views and the strong media showing during the southern California fires of last week.

    How long will that positive picture last once the full depth of the state’s budget morass is revealed?

    The governor’s new $145 billion budget proposal is weighed down with items such as his health care reform plan. This plan appears to provide coverage to some six million uninsured Californians, at an estimated cost of more than $14 billion!

    Republican State Sen. Tom McClintock has been quoted as saying that the governor’s “budget runs the very real risk of plunging California into insolvency within the next two years.” Additionally, McClintock stated that the Schwartzenegger administration: “employed accounting gimmickry that would make an Enron accountant blush.”

    Examples of such “gimmickry” include ”Schwarzenegger’s unrealistically rosy projections for revenue increases that ignore California’s sinking housing market, rising unemployment and brittle economy,” says McClintock.

    California’s constitution requires that the state budget be balanced. In order to accomplish this, State Treasurer Lockyer predicts higher taxes and a cutoff of taxpayer funding for the University of California.

    Although the governor promised to tear up the credit cards being used by Democrats to borrow, he has shown his willingness to compromise on liberal spending. And, why not? A current listing of the most influential liberals in the U.S. has Schwarzenegger at number 6. Surprised that a liberal “B” Hollywood actor signed on to play the role of a fiscally conservative governor? No wonder the state’s in trouble!

  • Ernest Hampson

    Arnold Schwarzenegger was swept into the governor’s office to replace embattled Governor Gray Davis in October 2003 with the promise that he’d reduce debt and “tear up the state’s credit card”. In 2007, however, falling tax revenues have forced the state to borrow $7 billion just to pay its recent bills. In the three months ended Sept. 30, the state has spent $10.2 billion more than it received in taxes and fees. The annual shortfall is expected to be between $6 billion and $9 billion.

    During the first week of November, the sale of the so-called “revenue-anticipation notes” (bonds) is the largest since the state issued $6 billion in similar securities in 2003 to close the budget gap that signaled the end of the Davis administration.

    Despite this growing fiscal crisis, Schwarzenegger seems thus far immune from the backlash that drove Davis from office. He is riding a favorable approval rating based upon his, supposed, centrist views and the strong media showing during the southern California fires of last week.

    How long will that positive picture last once the full depth of the state’s budget morass is revealed?

    The governor’s new $145 billion budget proposal is weighed down with items such as his health care reform plan. This plan appears to provide coverage to some six million uninsured Californians, at an estimated cost of more than $14 billion!

    Republican State Sen. Tom McClintock has been quoted as saying that the governor’s “budget runs the very real risk of plunging California into insolvency within the next two years.” Additionally, McClintock stated that the Schwartzenegger administration: “employed accounting gimmickry that would make an Enron accountant blush.”

    Examples of such “gimmickry” include ”Schwarzenegger’s unrealistically rosy projections for revenue increases that ignore California’s sinking housing market, rising unemployment and brittle economy,” says McClintock.

    California’s constitution requires that the state budget be balanced. In order to accomplish this, State Treasurer Lockyer predicts higher taxes and a cutoff of taxpayer funding for the University of California.

    Although the governor promised to tear up the credit cards being used by Democrats to borrow, he has shown his willingness to compromise on liberal spending. And, why not? A current listing of the most influential liberals in the U.S. has Schwarzenegger at number 6. Surprised that a liberal “B” Hollywood actor signed on to play the role of a fiscally conservative governor? No wonder the state’s in trouble!