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Governor-elect Jerry Brown Stares Down Massive Budget Deficit

Kevin Douglas Grant |
December 8, 2010 | 11:27 a.m. PST

Executive Editor

How bad is California's budget crisis?

Even worse than we thought, the Legislative Analyst's Office revealed Wednesday in a forum hosted by Governor-elect Jerry Brown in Sacramento.

Although the budget deficit currently stands at $6.1 billion, it will more than quadruple in the next fiscal year to an estimated $28.1 billion.

There are many reasons for profound gap between state revenues and expenditures, with the recession just the latest culprit in an ongoing mess.

"We went into the recession in very poor fiscal shape," said legislative analyst Mac Taylor.

The California Independent Voter Network explains

"For years, California has relied on temporary taxes and spending cuts, accounting tricks and subterfuges, and taking money from one area to fund another. But these are temporary fixes and do not solve the underlying problems. It's not just the legislature that is detached from reality. A recent poll showed that California voters don't want new taxes, and support spending cuts as long as they aren't in education or health care."

California's personal income tax revenues are down about 30 percent, with sales and corporate tax revenues down 20 percent each.  The unemployment rate is still among the highest in the nation.  And it's legacy of borrowing has situated the state under a heap of crushing debt. 

"We're borrowing just to keep going," Brown said. "And at some point you can't do that."

Panelists made it clear that major spending cuts will be necessary to begin balancing the budget.  As it stands, 40 percent of state expenditures go to education and 22 percent to health care.  The state employee payroll accounts for $9.2 billion, with about two thirds going to corrections. 

Although Brown told legislators, analysts and and journalists at the outset that the forum's purpose was not to find solutions, the audience became impatient after an hour of presented statistics.

State Republican leaders began to prod Brown about unemployment, state spending and tax increases, questions which Brown mostly dodged.  Instead, he focused on common ground.

"Our backs are to the wall," he said. "People will have to overcome their ideological predilections. There is a zone of potential common agreement."

Key takeaways from the discussion thus far: California was already digging itself a hole, but the recession turned it into a chasm.

An understatement from Brown: "In the three previous recessions, they never got as bad and they never took as long.  And that puts us in a very unique situation." 

Indeed, the Legislative Analyst's Office predicts California will not regain its lost jobs until 2015.  At the same time, Brown faces a State Legislature divided about how to best rectify the crisis.  He'll need to get both parties on board, plus an equally difficult group: California voters.




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