California Budget Deficit is up to $16 billion

California’s budget deficit has risen to an eye popping $16 billion. What seems to be going mostly unreported in this, is that Governor Schwarzenegger has been repeatedly wrong in his budget projections. Wasn’t that one of the major reasons we recalled his predecessor? We haven’ t heard the last of this- not by a long shot. As reported in the San Diego Union:

California’s nonpartisan fiscal watchdog on Wednesday said the state’s budget shortfall has grown to $16 billion and offered an unprecedented and competing plan to close the gap by imposing both spending cuts and tax increases.

Legislative Analyst Elizabeth Hill said Gov. Arnold Schwarzenegger’s proposal for the 2008-09 budget year is flawed because it fails to set funding priorities and correct the state’s chronic imbalance between spending and revenue. “A decline in revenue means we have a larger shortfall than the governor projected,” she said. “Our recommendations will affect all Californians in some way. However, we think that will benefit all Californians in the long run.”

Last month, Schwarzenegger pegged the shortfall at $14.5 billion through June 2009. A continuing decline in the housing market that has created ripple effects throughout the economy has contributed to a sharp drop in tax revenue. Hill criticized the across-the-board budget cuts to most state agencies that Schwarzenegger proposed. Instead, she called for targeting and eliminating nonessential state services and raising tax revenue by cutting personal and corporate tax credits for families, businesses and motorists. She also advocated a higher gasoline tax.