The budget gurus who forecast California's revenues missed their April projections -- the month most families pay their state income taxes -- by 30% or $3 billion. The shortfall wiped out gains the previous four months that gave Legislators hope would ease their budget nightmare.
Furthermore, the experts are clueless why they missed their projections by so much.
Economists and finance officials say it might be the state's 12.6% unemployment rate swelling the ranks of those resident receiving refunds. If corporate and sales tax revenues, which have not been tallied, follow the same path, the state will face an $18.6 billion budget deficit which must be adopted by June 30.
"It's hard to imagine how we're going to [balance the budget] without doing more severe damage to the economy," said state Sen. Denise Moreno Ducheny (D-San Diego), who chairs the Senate's budget committee.
The alternative could mean even deeper cuts in government services — schools, healthcare for the poor and services for seniors. Lawmakers may also be forced to consider more reductions in funds for public universities, as well as additional tax hikes.
"Folks were starting to be pretty optimistic that we were going to be able to bounce our way back from a big chunk of the problem," said Michael Cohen, a deputy in the state's nonpartisan Legislative Analyst's Office.
Ted Gibson, a former state economist, said this was not the first time rising revenue has been followed by a plunge. The flow of state tax revenue, he said, is notoriously hard to predict.
Gov. Arnold Schwarzenneger will introduce his budget recommendations May 14. In California, state budgets must be approved by a two-thirds margin in both Assembly and Senate.
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EPILOGUE
Another year. Another mess in Sacramento. Republican candidate for governor, Meg Whitman, has inundated the state with television campaign ads claiming she can solve the budget woes she describes as a "Crises in Confidence." Another GOP candidate, Steve Poizner, promises a 10% cut across the board in taxes and spending. The Democrat, Jerry Brown, has been mum on the subject. California voters, myself included, view Sacramento with disdain and disgust.
Readers comments are welcome as long as they remain civil. We reserve the right to delete any comments that are vulgar, libelous and totally irrelevant to this posting. -- Jer
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