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