State budget deficit widens to $16 billion

The nonpartisan Legislative Analyst’s Office budget review is out, and the news is grim: “Primarily due to the continued deterioration of the state’s revenue outlook, we project that the state’s budget shortfall (prior to any corrective actions) has increased to about $16 billion.”

That’s up from about $14.5 million, and this increase essentially just ate up the corrective actions passed by the Legislature and signed by the governor last week. Read as: Back to square one.

Furthermore, the LAO says Gov. Arnold Schwarzeneggers’s “budget-balancing approach is fundamentally flawed.

“Its across-the-board reductions reflect little effort to prioritize and determine which state programs provide essential services or are most critical to California’s future. In the absence of a credible plan that prioritizes state spending and revenues, we offer an alternative approach for the Legislature’s consideration. By making more targeted reductions and adding ongoing revenue solutions, we believe this approach offers the Legislature a better foundation to begin crafting a 2008‑09 budget that focuses on essential services.”

In short, cuts alone aren’t the wise way to go; we must increase California’s revenues, too. The LAO suggests reducing, limiting or eliminating various tax credits, deductions and exemptions.

Assembly Speaker Fabian Nunez says the LAO report “makes it clear that a slash-and-harm, cuts-only approach of dismantling state government won’t fix our budget problem.

“The report backstops our commitment to taking a balanced approach that includes eliminating tax loopholes and raising revenues so we will not have to close parks, lay off teachers, and put our state’s most vulnerable citizens at risk,” Nunez said. “We’ve taken care of half the problem with tough cuts, and with this outline, will continue careful deliberations to enact a budget that reflects the values of Californians rather than anti-tax martyrs.”

Meanwhile, the Education Coalition — representing more than 1.7 million parents, teachers, school board members, school employees and administrators — has released a new radio ad featuring parents at a PTA meeting talking about the impact of the Governor’s proposed budget cuts to students and schools, and urging Californians to call the Governor and their Legislators to tell them “no more education funding cuts.” Listen to it here:

UPDATE @ 12:54 P.M. WEDNESDAY: “Now that the Legislative Analyst’s Office has released its analysis of my 2008-09 budget proposal, I am looking forward to discussing the analysis and our budget with all four legislative leaders,” Gov. Schwarzenegger says. “While I believe that we should begin negotiations with all ideas on the table, I have been very clear in my position against raising taxes to fix Sacramento’s spending problem and our budget.”

Josh Richman

Josh Richman covers state and national politics for the Bay Area News Group. A New York City native, he earned a bachelor’s degree in journalism from the University of Missouri and reported for the Express-Times of Easton, Pa. for five years before coming to the Oakland Tribune and ANG Newspapers in 1997. He is a frequent guest on KQED Channel 9’s “This Week in Northern California;” a proud father; an Eagle Scout; a somewhat skilled player of low-stakes poker; a rather good cook; a firm believer in the use of semicolons; and an unabashed political junkie who will never, EVER seek elected office.