Monday, July 20, 2009

The state's financial crisis

Reporters at the Bee's Capitol alert say that the Big 5 will reach a budget deal this PM. Lets see.

California budget deficit dwarfs other states
California isn't alone in facing very severe state budget deficits, but a new report from the National Conference of State Legislatures cites the "sheer size" of California's problem as dwarfing those of other states, even in relative terms.

The NCSL report says that collectively, states faced $142.6 billion in deficits for the 2009-10 fiscal year and many already are seeing signs that the total could grow.

"If you think legislators are breathing a sigh of relief because their budgets are passed, think again," said William Pound, NCSL executive director. "If history repeats itself, states are bound to see budget gaps reappear within the first quarter of FY 2010."

The report focused on California, noting that the original estimate of a $24.8 billion gap for 2009-10, plus a leftover deficit of $14.8 billion for 2008-09 "was resolved in a February 2009 budget agreement--except that it wasn't. The resolution included five ballot measures, representing about $5.8 billion of the fix, that failed to get voter support in a May special election.

"Adding the $5.8 billion unresolved figure to the amount of the gap that was closed ($18.9 billion), plus the newest gap ($14.2 billion) that officials expect because of declining revenues, California's cumulative FY 2010 gap explodes to a whopping $38.9 billion or 35 percent of the general fund budget."

The full NCSL report is available here.
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