Skip to comments.State Legislative Analyst Says Budget News Will Get Worse Before Its Gets Better (My Title)
Posted on 11/15/2003 12:50:41 AM PST by goldstategop
California's economy has turned a corner but the billions in extra tax revenue will be dwarfed by a deficit that could reach $14 billion next year, Legislative Analyst Elizabeth Hill reported Friday.
In issuing the first cautiously optimistic economic assessment in more than two years, Hill stressed that spending still will outstrip revenues next year and urged lawmakers not to rely on borrowing to close the gap.
The state's fiscal problems could be increased by $4 billion a year if Gov.-elect Arnold Schwarzenegger repeals an increase in the vehicle license fee, as he has pledged to do when he is sworn in Monday.
Money from that increase is distributed to counties and cities to finance public safety services; if those grants are to continue, the state would have to find another source for the $4 billion.
When the budget was passed in late summer, the projected deficit in the 2004-2005 budget was $8 billion. Hill said Friday that the state would collect about $2 billion more in taxes next year than had been expected, but that the deficit would still grow to $10 billion because other sources of revenue have not materialized and spending on prisons and Medical is higher than anticipated. Repealing the car-tax increase would bring the total deficit to $14 billion in the fiscal year that begins July 1.
The analyst was most optimistic about the long-term picture for the state, citing job growth that is expected to continue. Already, she said, the state expects to collect $2.2 billion more in taxes this fiscal year than it anticipated when the budget was passed in late summer. Income tax receipts the state's largest source of revenue are running ahead of projections, in part because stock market gains have prompted some employees to cash in options. For the first time since the second half of 2001, personal income tax withholding has increased. Sales tax and corporate tax revenues are also up.
(Excerpt) Read more at latimes.com ...