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State Legislative Analyst Says Budget News Will Get Worse Before Its Gets Better (My Title)
Los Angeles Times ^ | 11/15/03 | Evan Halper And Jeffrey L. Rabin

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 ...


TOPICS: Business/Economy; Crime/Corruption; Front Page News; Government; News/Current Events; US: California
KEYWORDS: as; catrans; deficit; economy; elizabethhill; spendingcuts; statebudget; taxes; transition
The state will eventually get back in the black. But for the moment the news will get worse before it gets better. I prefer spending cuts over tax increases and would like a constitutional spending limit on the model of the Colorado Taxpayers Bill Of Rights to be added to our State Constitution to force the government to live within it means. As for the state's fiscal problems being worsened by a repeal of the car tax, the first lesson Sacramento needs to learn is that the state's problems shouldn't be solved on the backs of car owners. Its really time to tackle the Government Beast here. Arnold needs all the help he can get to shrink it down to its proper size and keep it there.
1 posted on 11/15/2003 12:50:42 AM PST by goldstategop
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To: goldstategop
All coming out when Arnold is about to become governor. Hmmmmmmmm. Arnold is going to have a mess on his hands when he takes office on Monday. He better be prepared to handle this monster 5 years of liberalism did to this state.
2 posted on 11/15/2003 12:57:55 AM PST by Simmy2.5
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To: goldstategop
This post has been added to the… California In Transition- Must read Threads!

Want on our daily or major news ping lists? Freepmail DoctorZin


3 posted on 11/15/2003 3:11:30 PM PST by DoctorZIn
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