Saying spending is poised to grow more than 50% faster than revenues, the state’s chief budget analyst called on lawmakers Wednesday to immediately begin cutting government programs or raising taxes to address a budget shortfall that has ballooned to $10 billion reports the Los Angeles Times.
Nonpartisan Legislative Analyst Elizabeth G. Hill, whom lawmakers of both parties look to for guidance on fiscal matters, said the cooling housing market, high energy prices and a batch of overly optimistic assumptions in the last budget are hitting state coffers hard.
“The Legislature should start now” curbing spending and finding new revenue, she said. “All the easy solutions are gone.”
The deficit has grown to more than the state spends on its entire public university system, Hill said. “We’re talking big dollars to close this gap.”
In less than three months — since lawmakers passed the last budget and projected a reserve of about $4 billion — California has plunged into the red. Property, sales and personal income taxes are down sharply as a result of the troubled housing market, and Hill predicted that the housing sector has yet to hit bottom.
Meanwhile, some big savings that lawmakers promised in the budget — and approved during the summer — appear unlikely to materialize.
The sale of a government agency that was expected to bring $1 billion to the state treasury is unlikely to occur this year, Hill said, and if a sale did take place the agency might fetch only half the projected amount.
Lawmakers also overestimated by $200 million the revenue the state would receive from Indian gambling and did not account for a planned pay raise for prison guards that is expected to cost $258 million.
Read it here: Lawmakers told to Fix Budget Now