Tom McCintock, one of the few Sacramento pols who has been accurate in truly predicting the financial shortfall that is facing California, says this is just the beginning:
The newspapers are reporting that the fiscal gap is $10 billion. It is actually far more serious than that. The actual figure – according to the LAO – is that the state will spend $14 billion more than it takes in between now and the end of the next fiscal year. The difference is that we will first blow through the $4 billion reserve that the state began the year with. (That reserve, by the way, is already gone.) But the LAO is still predicting that the state’s general fund revenues will grow about 3.5 percent this year. I doubt it. Revenue growth last year was only 2.3 percent; the LAO admits that the economy will deteriorate in the fourth quarter of the fiscal year; and most ominously, our revenue receipts in the first four months of this fiscal year grew only 0.6 percent compared to the first four months of last year, according to the latest data from the state controller’s office. Even the Department of Finance reports only 1.7 percent growth through October 31st. If revenues continue to come within this range, the deficit will be in the $18 to $20 billion range by June.
Also, I was listening to Senator McClintock earlier on the John & Ken Show and he shared some startling numbers, that really explain the problem succinctly:
SINCE the recall of Gray Davis:
There has been a 20% increase of population and inflation.
There has been a 29% increase in state revenues.
And there has been a staggering 33% increase in spending.
Oh, and here is another sobering figure.
Our annual debt service (to make our "minimum payment on bonds) before the recall: $2 billion.
The debt service today? $7 billion.
Our problems are getting bigger every day because state revenues are now shrinking due to the home loan crisis and other issues — so revenues are going down, but spending is not… But it needs to…