State budget shortfall getting worse -- a lot worse

 Gov. Arnold Schwarzenegger told legislative leaders Monday the state's annual income tax collections are expected to fall this year for the first time since 1938, punctuating a budget shortfall that he said will reach $21.3 billion if voters reject a slate of ballot measures next week.

With passage of the measures appearing unlikely, Schwarzenegger announced that he would release plans Thursday -- five days before the May 19 special election -- to show Californians the devastating consequences for government if the propositions fail.

State finance officials have been drafting plans for cuts in fire services, prisons, schools and other areas in the event that Propositions 1A through 1E, which plug a $6-billion budget hole, cannot overcome strong voter opposition reflected in recent polls.

The second scenario, if the measures pass, will still be devastating: The state budget will still be $15.4 billion out of balance since Schwarzenegger and lawmakers approved it in February, administration officials said Monday. That is nearly double recent projections.

In a letter to legislative leaders, Schwarzenegger explained why state finances have plunged so quickly since February, when he signed a spending plan intended to keep the state solvent through June of next year. Collections from personal income -- which the state relies upon heavily -- are expected to be lower this year than last, something that has not happened in more than 70 years, the governor wrote.

Schwarzenegger had postponed the unveiling of his revised budget from May 14, when it normally would have been released, until May 28, nine days after the special election. But in a visit to a senior center in Culver City on Monday, Schwarzenegger said he would release a summary for the two alternatives on the original date "so that people see what the difference is."

"The way it is right now, severe cuts will happen," he said. "And it's important also for people to know this is not a scare tactic. This is just to let you know what could happen. "

Some of the harsh contingency plans have already leaked out and been the focus of media reports in recent days.

Jon Coupal, president of the Howard Jarvis Taxpayers Assn., which is leading the opposition to the ballot measures, said it appeared that the governor was trying to politicize the budget process.

"It strikes me that the timing certainly raises the appearance of being wholly politically driven," Coupal said, predicting the strategy would backfire. "They're clearly trying to persuade voters to vote in a certain manner."

Schwarzenegger used the phrase "severe cuts" nine times to describe what could happen.

He spoke of closing fire stations and reducing engine crews, releasing nearly 40,000 prison inmates, slashing $3.6 billion from education and laying off tens of thousands of school employees, borrowing billions from local governments and making further cuts to healthcare programs.

"None of those options are pleasant, that is the important thing for people to know," he said.

The May 19 propositions are intended to have a direct impact on this year's budget by changing the lottery and redirecting voter-allocated funds for early childhood education and mental health programs. They also would affect the state's finances over the next several years, by extending recently enacted tax increases for an additional period.

The only measure that appears likely to pass is Proposition 1F, which would prevent elected state officials from receiving salary hikes in deficit years.

 

--Michael Rothfeld in Sacramento

 

Times interactive California unemployment map.

Comments

[matthew]

Funny how the Howard Jarvis Taxpayers Association takes no responsibility for the mess they brought to our state since 1976. State and local services have to be funded some way and nobody want THEIR taxes raised.

The unfortunate consequence of Proposition 13 was that business property owners enjoy 30-year old tax rates while recent homeowners pay far more. Even Berkshire Hathaway owner Warren Buffet believes that property taxes are out of whack. He pays about $200 a year on his million-dollar Laguna Hills home while ordinary homeowners pay over $4,000. It's time to fix this unfair discrepancy.

[Frank Courser]

I have no problem with the release of non- violent offenders that were sentenced under California’s Three Strikes Law. Most of these people have already served 10-15 years of the 25 years to life they received for petty crimes such as 690 for simple drug possession, 353 for shoplifting or 181 for receiving stolen property. Most of them are 40, 50, and 60 years old now and are the least likely to be recidivist. Unfortunately unless the legislature fixes our complex maze of sentencing laws we will be back to square one in a few years. It is this lack of political will to tackle these tough issues that has brought us to the brink of fiscal abyss. It is fiscally irresponsible to continue down this path.

[nedra]

I don't have a problem with the release of inmates either as long as it's the ones that have been rehabilitated. If you release the ones with no plan and purpose we will be back to square one the next day. There is a population of prison inmates who have been sentenced to indeterminate sentences, served beyond the max of their MEPD and are still being held because of the sheer politics of the prison system. These individuals have done things during their incarceration that have prepared them for eventual release. Some have even been granted parole but the Gov. decided to go against everything the Board which he nominated and employed decides and reverses their decisions, continuing to incarcerate and clog up a failing system. Petty offenders need plans for a successful life and most aren't given that opportunity in prison. Lifers are expected to have a plan. Where they will work, live and what they will do with their life IF they get it back. Many have such plans laid out. Release those and help the others with a guarantee of release formulate workable plans, then maybe we can take the fire out of the scare tactics the Gov. is using. Its really not rocket science. It just takes a legislature that really wants to do the right thing. Plain and simple. There is a way this could work. I know that there is money in incarceration and that is the motivating factor for them not doing what is right.