Posted on 07/13/2007 8:38:44 PM PDT by NormsRevenge
The longer state legislators wait, the worse the state's budget picture seems to get.
With lawmakers nearing a stalemate on the state's overdue budget, revenue estimates released Friday show California has collected $800 million less in tax money than expected in recent months.
Analysts say the size of the drop raises questions about whether the budget that lawmakers are already having trouble balancing is based on overly rosy revenue projections.
Republicans - already holding out on the $140 billion spending plan supported by Democrats - seized on the data, saying it proves the Legislature must do more to cut spending and balance the budget.
"It makes our arguments stronger," said Senate Republican leader Dick Ackerman, R-Tustin. "You can't spend $800 million more than you take in and sustain a state."
Democrats characterized the revenue slump as simply the latest downturn in the state's notorious revenue roller coaster. They said it should have little bearing on the remaining budget negotiations.
Technically, the state does not have to adjust its revenue estimates until next year, when the numbers are finalized.
"The stock market is soaring, and retail sales are on the upswing. It's almost like the Republicans are desperate to find something to hang on to because they have no exit strategy for their budget blockade," said Steve Maviglio, a spokesman for Assembly Speaker Fabian Nunez, D-Los Angeles.
The state's nonpartisan legislative analyst's office, however, said the revenue drop was disturbing, especially since it announced so soon after Gov. Arnold Schwarzenegger issued his most up-to-date revenue projections in May.
"We haven't seen this level of discrepancy with the forecast this decade," said Michael Cohen, director of state administration for the analyst.
H.D. Palmer, spokesman for Schwarzenegger's Department of Finance, cautioned that it's too early to determine how much of the revenue drop is real.
"It's not clear at this point how much of this is simply a matter of timing and cash flow, and how much of it is a real drop off in revenues," Palmer said, explaining that some of the drop could be from the state paying out tax refunds more quickly than expected.
Nonetheless, he said the weak revenue numbers must be considered in budget negotiations.
"The governor and legislative leaders are very much aware of these numbers, and very much aware that this is precisely why we need to have a sizable reserve in whatever budget agreement is struck," he said.
A legislative budget committee approved a $140 billion budget last month that would use $4.1 billion left over from a tax windfall from previous years to help balance the spending plan.
Still, spending in the 2007-08 budget year would exceed revenue by about $1.5 billion.
Democrats say their budget plan has a bigger reserve and smaller operating deficit than the one Schwarzenegger unveiled in May.
But Republicans want another $2 billion in cuts.
If the revenue estimates released Friday hold true, the state would have only about $3.3 billion, not $4.1 billion, to carry forward into the new budget year, which started July 1.
The revenue drop could also exacerbate next year's deficit, which is already forecast to exceed $5 billion.
Aside from the revenue projections, there were other disturbing signs for California in the economic data released Friday.
The state added just 10,800 new non-farm jobs in May, and for the first five months of the year averaged 9,160 new jobs. That's off the 15,440-average for new jobs for the first five months of 2006.
Overall, unemployment in the state nudged up to 5.2 percent.
The real estate downturn also appeared to affecting the state's economy.
After picking up slightly in the first quarter of 2007, new home construction slowed in April and May. The pace of permits issued for new homes in May was the slowest since 2001.
At the same time, inventory of existing homes for sale rose, and sales of single-family homes slowed 25 percent from a year ago.
pubbie or commie,
caleefornya gov’s
just put in more india slots
to get extra $.
as in indian slots.
tribal gaming is on the warpath.
I think it’s something like 7000 little new banditos to a few of the major tribes
The sonic boom you are hearing is industry and business exceeding the speed of sound on the way out of the state.
Example: Nissan’s USA HQ used to be in SoCal, believe it was Torrance. Now they’ve moved almost everything out of state to Nashville, TN.
yes, gardena.
that building is for rent on the 405,
the last time i drove by.
The local NUMMI plant here in the South bay may be scaling back production as well. not sure it means jobs moving yet, but ..
in my neck of the woods,
they’re building 15 story hotels to go along with their slots and sluts.
hollywood folks won’t have to drive to vegas.
Deport all of those illegals and the deficit won't be so high, you numbskulls. Oh, ah, alas, that means you'll have to mow your own lawns.
Then of course, we will see another article like this, and I'll paste in this same post...
By any rational measurement the state of CA is broke.
It will only get worse from here on..declining revenues due to drop in realestate capital gains and declining income tax revenues as good jobs leave the state. Also..stock options are down. They actually think they can float bonds to support current spending..
The politico’s in CA are nuts.
LOL! No they're not, it just looks that way because of the nifty way government(s) keep their books.
In 2003 and according to the state's Comprehensive Annual Financial Report, California Has At Least $59.83 Billion in Surpluses of the Taxpayers Money it is not using.
Check out the website. The author is a retired USAF Lieutenant Colonel and has been a Federal Accountant working with Comprehensive Annual Financial Reports for 15 years.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
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