California facing $16 billion budget shortfall

**pwaldo** · 05-14-2012, 03:46 PM

http://news.yahoo.com/california-fac...--finance.html

California's budget deficit has swelled to a projected $16 billion — much larger than had been predicted just months ago — and will force severe cuts to schools and public safety if voters fail to approve tax increases in November, Gov. Jerry Brown said Saturday.

The Democratic governor said the shortfall grew from $9.2 billion in January in part because tax collections have not come in as high as expected and the economy isn't growing as fast as hoped for. The deficit has also risen because lawsuits and federal requirements have blocked billions of dollars in state cuts.

Brown did not release details of the newly calculated deficit Saturday, but he is expected to lay out a revised spending plan Monday. The new plan for the fiscal year that starts July 1 hinges in large part on voters approving higher taxes.

The governor has said those tax increases are needed to help pull the state out of a crippling decade shaped by the collapse of the housing market and recession. Without them, he warned, public schools and colleges, and public safety, will suffer deeper cuts.

Democrats, who control the Legislature, have resisted Brown's proposed cuts so far this year. Republican lawmakers criticized the majority party for building in overly optimistic tax revenues.

"Today's news underscores how we must rein in spending and let our economy grow by leaving overburdened taxpayers alone," said Assembly Republican leader Connie Conway in a statement.

The governor pursued a ballot initiative because Republican lawmakers would not provide the votes needed to reach the two-thirds legislative majority required to raise taxes.

Assembly Speaker John Perez, D-Los Angeles, acknowledged that lawmakers have "limited and difficult choices left to solve the deficit." Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he wasn't surprised by the deficit spike given that state tax revenue have fallen $3.5 billion below projections in the current year.

"We will deal with it," Steinberg said Saturday. "And we know that more cuts are inevitable but we will do our very, very best to save more than we lose, especially for those in need."

Under Brown's tax plan, California would temporarily raise the state's sales tax by a quarter-cent and increase the income tax on people who make $250,000 or more. Brown is projecting his tax initiative would raise as much as $9 billion, but a review by the nonpartisan analyst's office estimates revenue of $6.8 billion in fiscal year 2012-13.

**pghin08** · 05-14-2012, 03:55 PM

California has been in big trouble for a long time now. It's like our own personal Greece.

**INTIMADATOR2007** · 05-14-2012, 04:13 PM

Kinda what happens when you run off the rich folks , your state tanks .

**AUTaxMan** · 05-14-2012, 05:12 PM

Originally Posted by pghin08 View Post

California has been in big trouble for a long time now. It's like our own personal Greece.

Hopefully the federal government won't try to bail them out.

**AUTaxMan** · 05-14-2012, 05:14 PM

Originally Posted by INTIMADATOR2007 View Post

Kinda what happens when you run off the rich folks , your state tanks .

It was obvious that raising taxes on corporations would run them off. How legislators cannot see this is beyond me. It all goes back to how governments score tax legislation on a static basis instead of on a dynamic basis, assuming that tax policy does not affect taxpayer behavior.

**duwal** · 05-14-2012, 06:07 PM

so many chicken little's

**AUTaxMan** · 05-14-2012, 06:52 PM

Originally Posted by duwal View Post

so many chicken little's

So you think it's not a big deal?

**Lynco Cards** · 05-15-2012, 02:20 AM

Let the Liberals FAIL. Just goes to show SOCIALISM does not work. You can only take so much $ from people before the $ runs out or the Businesses leave. They are coming to Texas so fast its crazy and we love it here in the Lone Star State.