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Jon Fleischman

LAO Report – “Iceberg, Dead Ahead!”

Posted by at 12:00 am on Nov 10, 2010

The Legislative Analyst has put out their report on the state’s finances.  Our government is $25.9 billion dollars out of whack.  The Sacramento Bee summarized it thusly (in part): 

"Gov.-elect Jerry Brown will face a massive $25.4 billion budget shortfall next year – twice as large as legislative leaders were anticipating – according to a new projection from the nonpartisan Legislative Analyst’s Office.

California faces another major budget problem because tax rates are slated to drop next year, the federal government will provide far less relief to states, and state leaders enacted a flimsy fiscal plan last month.

Of the $25.4 billion, $19.3 billion is projected for the 2011-12 fiscal year that begins in July. The remaining $6.1 billion is due to overly optimistic assumptions in the current 2010-11 budget plan."

You can see the report here.

This amount of deficit is staggering, and there is no doubt that the proverbial chickens have come to roost in terms of state government growing to unsustainable levels.  We are now in a game of high-stakes politics — because the ultra-liberals in the legislature will, with a religious fervor, fight to increase taxes and fees because they believe that shrinking the size of state spending to a level sustainable by existing revenues sources is immoral.  On the flip side, conservatives believe that the current level of state spending is not only unsustainable, but is rooted in setting a level of services that are beyond the size and scope that taxpayers can afford.

There will be a lot more to discuss about this budget challenge.  One thing is certain, Democrats will resist cuts to solve the current-year budget imbalance, and Republicans will not put up votes for taxes (or fees).  So where do we go from here?  We’ll have to see.  With a Democrat Governor, don’t look for him to have a lot of juice to get GOPers to vote for raising taxes…  In the short term — "Advantage Republicans" — since you can’t spend money you don’t have.

Here are some comments from State Republican Legislative Leaders…

Letter from Senate Republican Leader Bob Dutton to Governor Schwarzenegger in response to the LAO’s report…

November 10, 2010

Governor Arnold Schwarzenegger
State Capitol Building
Sacramento, CA 95814

Dear Governor Schwarzenegger,

I respectfully urge you to declare a fiscal emergency under Section 10(f), Article IV of the Constitution of the State of California (Proposition 58) and convene the California Legislature to meet in an extraordinary session after the new Legislature is sworn in on Dec. 6 to deal with a projected 2009-10 budget deficit of more than $6 billion.

The non-partisan Legislative Analyst’s Office determined that despite passage of the 2009-10 budget just last month, there is a deficit of $6 billion for the current fiscal year. Unless fixes are put in place, the deficit will grow to more than $19 billion for 2011-12.

Delaying action only makes the problem more difficult to solve.  As you know, it is imperative that we take immediate action to comprehensively fix the state’s budget problem.  Please use your executive authority to address the state’s deteriorating fiscal condition. 

Sincerely,

/s/ BOB DUTTON
Senate Republican Leader

Statement by Republican Leader-Elect Conway on
Legislative Analyst’s 2011-12 Fiscal Outlook
 
SACRAMENTO – Assembly Republican Leader-Elect Connie Conway, of Tulare, today issued the following statement in response to Legislative Analyst Mac Taylor’s Fiscal Outlook report projecting state revenue for the 2011-12 budget year and beyond:
 
“Today’s grim forecast of a $25.4 billion budget deficit is a powerful reminder that the Legislature needs to take immediate action to reduce spending and balance the budget.  Democrats and Republicans must work together to make the tough but realistic decisions on spending priorities required to close the deficit.  The people of California have repeatedly made it clear that they don’t want to pay higher taxes to fund Sacramento’s budget mistakes.  Republicans will fight any effort to raise taxes to fund more irresponsible overspending.  I stand ready to work with Governor-Elect Brown and our Democrat colleagues to find budget consensus, and take action without delay to get spending under control and pass the honest, no-tax budget Californians deserve."

This entry was posted on Wednesday, November 10th, 2010 at 12:00 am and is filed under Blog Posts.

2 Responses to “LAO Report – “Iceberg, Dead Ahead!””

  1. soldsoon@aol.com Says:
    November 10th, 2010 at 12:00 am

    Community college tuition is about $20.00 per credit…..the two year AA graduation rate is appalling….

    Tuition should be tripled to keep up with past inflation at a minimum. How bout if a student completes a two year bonafide AA degree, a portion of his or her tuition could be refunded in a credit towards the final two years of college.

    It is time for creative solutions and stop rewarding failure and career moochers….

  2. hannah.katz@prodigy.net Says:
    December 16th, 2010 at 12:00 am

    How are California voters unlike passengers on the Titanic? The Titanic passengers did not vote to hit the iceberg.