November 15, 2007

California’s Budget Deficit Skyrockets To $10 Billion

California’s budget situation has deteriorated since the summer and the State is now facing a massive $10 billion revenue shortfall, according to state’s legislative analyst Elizabeth Hill. Her report, made to the legislature said the current fiscal year budget situation had worsened by $6 billion since its passage in August, wiping out a hoped-for $4.1 billion reserve and leaving a $1.9 billion deficit. Turmoil in housing markets and the slowing economy that caused a drop in property taxes, was the reason for the shortfall, but the report also noted that forecasted revenues from Indian casino compacts were over optimistic and would be delayed.

When Governor Schwarzenegger signed the state’s current spending plan in August, he called it “a balanced budget”. Even before then, however, the slumping housing and credit markets had begun cutting into state tax revenue and threatening to make next year’s budget even worse. Economists had warned that thedecline in new home sales and construction, layoffs and bankruptcies in the mortgage-lending industry, and a volatile stock market were erasing revenue that lawmakers thought would materialize to cover California’s $145 billion budget.

“Knowing the challenges that we face, throughout the fall, my administration has been examining a variety of options to close next year’s budget gap,” Governor Schwarzenegger said in a statement. ” I have not made any final decisions yet, but it’s clear that the decisions that will be involved will be tough.”

Filed under California Economy, California Government, California Legislature, Governor Schwarzenegger by

Leave a Comment

Fields marked by an asterisk (*) are required.

Made with an easy to use WordPress theme • Blues skin by TechieCoach