New $8 Billion CA Deficit Announced

Published: March 13, 2009

Hmmmm, didn’t the Republicans tell us this was going to happen 2 – 3 weeks ago? I know I’ve told you about it a couple times as passed along to me by Sen.’s Hollingsworth and Benoit as well as Rep. Jeffries. The new budget simply doesn’t work. I paraphrase Sen. Hollingsworth when he was elevated to Senate Minority Leader during the last budget farrago. “You can’t balance California’s budget on the taxpayers wallets,” a cry that, unfortunately, fell on deaf ears.

“Regarding the budget – the recently concluded budget negotiations. which had gone on since last May and threatened to grind this state to a standstill, were still unsuccessful. What has been presented as a solution for the next 18 month cycle, will actually have to be revisited even before this current cycle ends in June. Why? Well it probably comes as a surprise to no one except the Democrats that revenues are not meeting their expectations. You may recall the recent budget was balanced in a mixture of tax increases (12.5 Billion), spending cuts (15.8 Billion) and borrowing from future revenues and federal government bail-outs (7.9 Billion).”

That’s from a February 27 post after breakfast with Sen. Hollingsworth.

Now listen to Legislative Budget Analyst Mac Taylor in the current release from the Sacramento Bee‘s Dan Walters:

Budget analyst sees new $8 billion deficit

The Legislature’s budget analyst, Mac Taylor, declared today that the immense package of spending cuts, new taxes and loans aimed at closing the state’s $40 billion budget deficit will fall short by $8 billion because the state’s economy is continuing to falter.

“Unfortunately, the state’s economic and revenue outlook continues to deteriorate,” the Legislative Analyst’s Office (LAO) said in a review of the package, which covered the remainder of this fiscal year and all of the next.

The LAO report will renew the Capitol’s partisan and ideological squabbling over spending cuts and new taxes and fuel calls on the left for even more tax increases and those on the right for deeper spending cuts. The full LAO report may be found here.

The report goes on to note the not only are we likely to tap another barrel of red ink before year end  (3 months) but that we can expect more of the same into next year, and the year after, the year after and the year after. 2014 is as far out as he goes.

And why is this happening? And with the budget only recently passed? Well according to the LAO it’s because “revenues will fall short of assumptions in the budget package by $8 billion.”

Or, as Sen. Hollingsworth put it “this revenue deficit is not IN SPITE of the tax increases but BECAUSE of the tax increases.” Put simply, it you take an extra $1,100 to $2,000 a year out of the average taxpayers pocket for the government to spend, that is money that person doesn’t have to spend. They will not be buying a new car or a new house, they will forego dinners out and new furniture and home improvements, they will not take a vacation or otherwise spend that money BECAUSE THEY DON’T HAVE IT! Only government can spend money it doesn’t have – not people.”

And if they’re not spending it on cars and boats and movies and dinners out, well, the providers of those services are making less also. But again unlike the government who keeps hiring people when the money runs out, normal businesses have to lay people off or, if it gets bad enough, they shut down or move their business to another state that’s a little smarter and cheaper. But all of those eventualities result in less revenue to the state from individuals and businesses so the legislature will want to raise taxes even more to off-set those reductions. It’s a Democratic death spiral friends, and we ain’t done yet.

Budget analyst Taylor summed up the situation thusly, “…to close the newly discovered $8 billion gap, the state should maximize its use of federal “stimulus” funds.

So a big shout out to all you responsible states out there – THANK YOU FROM CALIFORNIA. But can you get us a bit of an advance? We’re binding up a little in the shorts again this month – our diet for pork has not yet been sated.

Keep voting for hope and change folks, it’s all we’ve got left. Of course that’s just my opinion – I could be wrong.

The opinions in this commentary are strictly Gene Wunderlich’s personal opinions. While any reasonable and/or rational indivdual should agree wholeheartedly,
the opinons reflected herein may not necessarily be those of the Southwest Riverside County AOR, or any local or state government or other mental institution.

Last modified: March 13, 2009 at 2:51 pm | Originally published: March 13, 2009 at 2:51 pm
Printed: September 21, 2020