New billion-dollar hole in California's budget
State revenue has already fallen more than $1 billion short of assumptions in the budget lawmakers passed less than three months ago, according to a new report from the state controller.
Disappointing income tax receipts are the main culprit, falling 11% below what lawmakers and Gov. Arnold Schwarzenegger expected when they agreed on a patchwork budget during the summer, halting the state’s issuance of IOUs. Sales and corporate taxes have also slid below projections.
"While there are encouraging signs that California's economy is preparing for a comeback, the recession continues to drag state revenues down,” said Controller John Chiang in a statement. He called the new figures “a major blow to a budget that is barely 10 weeks old.”
Even before the bad fiscal news, policymakers were bracing for a big budget deficit next year. The Department of Finance anticipates a $7.4-billion deficit in 2010-11. That’s a conservative estimate, because lawsuits have tied up or reversed some planned budget cuts.
“I urge lawmakers and the governor to prepare for more difficult decisions ahead," Chiang said.
--Shane Goldmacher in Sacramento








We will continue to have shortfalls as they raise taxes. People are not going to spend money, create jobs or doing anything in a heavily taxed state!
Posted by: Pat | October 09, 2009 at 03:35 PM
I suggest the L.A. Times staff keep this headline handy. You will likely be running it once a month for the foreseeable future.
Posted by: Dave | October 09, 2009 at 03:40 PM
It's time for another budget revision - and perhaps a new strategy.
Posted by: Marsha Keeffer | October 09, 2009 at 03:46 PM
What did Albert Einstein purportedly say about doing the same thing over and over again and expecting different results? Our state government with its two-thirds rules and safe districts is perfectly designed to keep us in perpetual budgetary crisis. We are insane to settle for more of the same; we need a functioning government; we must adopt a new constitution.
Posted by: lsm | October 09, 2009 at 03:47 PM
Tell the Los Angeles City Counsel and City Attorney to regulate medicinal marijuana dispensaries instead of trying to shut them all down. The taxation of medical marijuana sales city (and state wide) would shut the $1b tax gap.
How silly is it that all the City Counsel and City Attorney did today was to weaken our state. Go spend the taxpayer's money on the real criminals like big tobacco and the firearms dealers. Let sick people have safe access to their medicine.
Posted by: Marc Blitstein | October 09, 2009 at 03:58 PM
Good luck on "[preparing] for more difficult decisions ahead"!
Our Legislature can only be described as "HAPPY-GO-LUCKY", because they always assume they can spend anything they want and will be lucky enough to be out of office when future years' budgets fail to pay for what they spent.
The Legislature doesn't care about consequences; it includes mostly members who want to rake in their excessive salaries and take cushy jobs in industry as they are termed out. Most of them are rich or millionaires already. They have little or no dedication to principle and almost no sense of responsibility to serve their State well.
Look at the worthless budget they passed this year! Tell me that it wasn't happy-go-lucky, with the emphasis on happy Legislators and lucky economics.
Now we have 700 completely useless bills suddenly submitted for the Governor to sign, and STILL work as yet undone on the budget. There should be a Constitutional Amendment forbidding any bill to be submitted to the Governor until a complete and balanced budget has been approved for the current and the following years.
Posted by: jwillx | October 09, 2009 at 03:59 PM
What did they THINK would happen when they raised the Sales Tax AGAIN. I cant afford to pay over 9% and Im not going too. I just stopped making so many purchases.
Why oh WHY do we keep reelecting the same clueless people?
Posted by: phillip | October 09, 2009 at 04:07 PM
The state seems to have plenty of money to investigate, arrest, prosecute and incarcerate non-violent people for the victimless marijuana "crimes". If they still have money to spend on that, then they must have more than enough.
Posted by: Don of Cali | October 09, 2009 at 04:19 PM
The Governor of Iowa just cut the budget in expectation that this economic revival being touted is nonsense. He said they could add back in the money if the economy actually improved. Never common sense in California.
Posted by: Sara | October 09, 2009 at 04:19 PM
OH MY GOD!! CAN WE EVER GET IT RIGHT!!! The budget is only 10 weeks old and now we are another 1 BILLION in the hole!
CAN YOU SAY OUR ELECTED OFFICIALS ARE FAILURES! Good Lord, a Blind Penguin, lost in LA could do better then this.
While we suffer Antonion Villarigosa is making $200K+ and each of the LA Council man is making $170K. Hell Benard Parks is making $40K a month in Pension and Council Member Pay? What are these people doing!! AARRGGHH.
Posted by: NarNar | October 09, 2009 at 04:28 PM
Anyone with a brain could have predicted this before the last budget was even signed. Looks like they didn't cut deep enough the first time around... paper-pushing state-workers are going to kill this state if it's the last thing they ever do!
Posted by: Jason Evans | October 09, 2009 at 04:35 PM
Good Job Governor and senates of california
Posted by: Andre Walker | October 09, 2009 at 04:35 PM
State and local government cutbacks and layoffs have a ripple effect. I know that my income has dropped significantly, meaning that the taxes I pay have dropped significantly. It is unfortunate that Prop 1A did not pass.
Posted by: Doug | October 09, 2009 at 04:47 PM
Just think the federal govt is in the same boat "BROKE" the only thing is they can print more dollars.
Posted by: Korean vet | October 09, 2009 at 04:49 PM
We need a California Constitution Amendment regarding the budget process NOW. No more late budgets every year due to political holdouts, compromise and bring a budget on time!
The only silver lining from this black hole budget deficit is that it will force politicians and various interest groups to compromise and unveil PORK and other misuses of public funds that should have been deleted a long ago.
Posted by: kooo | October 09, 2009 at 04:56 PM
Mr. McGreevy,
Thank you for the eye-opening article regarding retirees that are fleecing the California taxpayers by retiring to obtain their pension, only to return to work in order to obtain a substantial boost in their take-home pay. I wish there were a place to comment just below that article, but for some reason there is not, thus my comment placed here.
While this practice may not be technically illegal, I certainly do not believe it fits within the spirit of the law. Shame on the 5,600 former/current "public servants" (con artists may be the more appropriate term) and shame on our legislators that are responsible for drafting laws with such burdening loopholes. It's no wonder why California is broke; recession or not. We are one of the most mismanaged states that I am aware of. It's almost embarrassing to know these are the people I consider "leaders".
Absolutely ridiculous and shameful. Our laws regarding public worker compensation need immediate restructuring.
Posted by: Joseph Freeman | October 09, 2009 at 05:08 PM
Starve the Beast!
Posted by: socalinvestor | October 09, 2009 at 05:13 PM
A billion dollar hole was a forecasted by lawmakers assumptions, this lack of foresight does reflect an unfair negative ambience onto the states very own Mr Motivator Governor Schwarzenegger.
The Governor has had to deal with exceptional circumstances ranging from unprecedented bushfires ravaging the state to a severe financial drought brought on by the unruly fat cats on Wall St, who created the global financial meltdown.
I do believe we need to stop the back stabbing ridicule and start showing genuine support for a genuine hero with a big heart who genuinely cares for the people of California.So go and bake the big guy a pie.
Regards
Ian Robinson
Posted by: Ian Robinson | October 09, 2009 at 06:15 PM
yo bro y''all deserve it vote for more of same
Posted by: bobby | October 09, 2009 at 06:30 PM
Our State Government is inept! If they aren't having cigars outside the captital they are having sex talk on the taxpayers dime.
I am so ready to vote them all out!
Posted by: Pepper from CA | October 09, 2009 at 06:39 PM
"While there are encouraging signs that California's economy is preparing for a comeback...” said Controller John Chiang in a statement
What encouraging signs is he talking about?
Posted by: Peter | October 09, 2009 at 06:44 PM
A budget shouldn't be made from assumptions. If sales and corporate taxes are also below projections, maybe the state should reconsider its fiscal policiy in order to enocurage investments and have more companies moving in, rather than out of the state.
Posted by: Gala | October 09, 2009 at 07:06 PM
Amazing? How could these brain-scientists have been so wrong? Just raising taxes should raise more revenue, you would think. Of course a lot of those scally-wags just moved their business elsewhere to get away from California's high taxes and onerous regulations. Lets see if it happens again. Raise the sales tax again and watch the revenue...dwindle. Lets leave all those work-rules and regulations in place so no one will want to start or move a business to California. Keep sending the same kind of liberal spending politicians to Sacramento and help California fail. Don't stop the spending, don't trim the payrolls, don't worry about the looming pension crisis. If Obama keeps bailing California out we will be just fine...you think?
Posted by: Kent | October 09, 2009 at 07:14 PM
You shouldn't blame Schwarzenegger if this thing blows and you people are all running around suing over budget cuts because the state doesn't have the money. Maybe you need to give up life as usual for a little awhile.
Posted by: Bob | October 09, 2009 at 07:16 PM
You have to many Unions and Illegals out there that you have to take care of!
Posted by: ColoradoRob | October 09, 2009 at 07:17 PM