New Budget Already $8 Billion Out of Whack — Legislative Analyst Says

Less than one month after Gov. Arnold Schwarzenegger signed a budget aimed at closing a massive $42 billion gap between revenues and spending commitments, the state’s still deteriorating economy will add another $8 billion to the state’s revenue hole between now and June 30, 2010,  according to the Legislative Analyst. 

The Legislative Analyst’s assessment of the state’s fiscal outlook also says that because several of the key provisions of the recently enacted budget are short term, budget gaps will continue, growing to $12.6 billion in the fiscal year beginning July 1, 2010 and climbing to $26 billion in the fiscal year starting July 1, 2013.

Personal income will stay stagnant this year and begin to increase slightly in 2010, according to the report. But it will climb slowly over the subsequent five years. Employment won’t go up until 2011.

At risk in the current budget is another $6 billion in savings which won’t appear if voters reject three of six measures on the May 19 special election ballot — Propositons 1C, 1D and 1E.

“Our year of shared sacrifice is not over. As grim as it is, this forecast is not even the worst-case scenario facing California,” said Assemblywoman Noreen Evans, a Santa Rosa Democrat who chairs the lower house’s budget committee. “We must be prepared for more bad news to come.”

Echoing the Legislative Analyst’s findings, State Controller John Chiang’s monthly cash report, issued March 12, showed revenue collected in February was $1 billion below estimates. (See below.)

Go here for the complete Legislative Analyst report.

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