Posted on 05/12/2005 6:57:02 PM PDT by NormsRevenge
SACRAMENTO (AP) - The state's improving economy is expected to provide Gov. Arnold Schwarzenegger with a windfall of several billions dollars next year that could help him close the budget deficit without raising taxes or imposing severe service cuts.
But Schwarzenegger, whose revised budget is set for release Friday, is more likely use a large portion of those unanticipated dollars to reduce the amount of borrowing the state will need in 2005-2006, according to administration officials.
The nonpartisan Legislative Analyst has estimated that the state would have about $2.2 billion in unexpected income next year. But rumors have been swirling about the Capitol that the figure could be as much as $1 billion higher.
Schwarzenegger did little to quell the speculation when he announced Wednesday that state coffers were full enough to allow him to propose restoring $1.3 billion to transportation programs next year that he had earmarked in January for other uses.
Advocates for education, public health and welfare are all hoping that the governor will use what remains of the extra money to restore proposed cuts to their programs.
But H.D. Palmer, spokesman for Schwarzenegger's Department of Finance would not disclose how much extra money might be available but said the priorities are transportation, reducing the amount of borrowing and creating new incentive pay for teachers.
"The governor is going to be very careful," Palmer said. "The lion's share of the revenues, we believe, are one-time in nature and we don't want to spend them on ongoing programs. That's how we got into this problem."
Schwarzenegger proposed a $111.7 billion budget in January, that relied on more than $4 billion in loans and transfers to close a shortfall estimated at $8.6 billion.
Included in the borrowing was the $1.3 billion he took from transportation. Sales taxes on gasoline and other automotive products are supposed to go to road improvements but can be diverted to other uses. But, by restoring the money to roads Schwarzenegger has already made a big dent in next year's borrowing.
The governor's January plan also included $1.7 billion in bonds authorized by voters last spring under Proposition 57.
Palmer said some of the unexpected income will be spent to reduce the Proposition 57 bonds.
If so, the biggest loser will be public schools.
Education officials have been complaining since the release of the January budget that schools would be getting at least $2 billion less than they should.
Schwarzenegger argues that he has increased the dollar amount for schools by nearly $3 billion over what was spent last year. He has maintained that school funding should be balanced with other needs.
Still, some critics are not convinced.
"If you want a world class work force 15 years from now, you've got to be educating your kids today," said Jean Ross, executive director of the California Budget Project, a liberal-leaning nonprofit that evaluates the impact of state spending on low- and middle-income families.
Ross said that she is also opposed to borrowing money to pay for needed services, but points out that Schwarzenegger has borrowed billions in the past and is likely to include a significant amount again next year.
"If you really think these are pressing needs, stop using debt to pay for them and raise the revenues needed," she said.
Wall Street will also closely scrutinize Schwarzenegger's budget, as California is still saddled with the nation's lowest credit rating among states. Some analysts said that while cutting the amount of borrowing is a positive step, a better one would be permanent changes that bring spending in line with income.
"We're looking for the state to fundamentally rein in its spending," said Jeffrey Thieman, vice president of municipal research at Charles Schwab & Co. "Any move toward shrinking that gap would be positive."
Thieman said he is concerned about the temptation for the governor and the Legislature to use the windfall to once again cover over the spending problems and adopt a "get out alive" - much as they have done the last two years.
Taxpayer groups said they are optimistic about the direction Schwarzenegger is taking.
"Overall, we pleased there's not been any broad increase in taxes," said Jon Coupal, executive director of the Howard Jarvis Taxpayers Association and a frequent adviser to the governor. "We do wish the administration would cut spending more but we understand given the makeup of the Legislature, that's a difficult thing to do."
Coupal said that he supports the governor's plan to put more money into transportation because most of those project will not require ongoing funding.
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On the Net:
http://www.dof.ca.gov/
Gov.'s Department of Finance
Ross said that she is also opposed to borrowing money to pay for needed services, but points out that Schwarzenegger has borrowed billions in the past and is likely to include a significant amount again next year.
"If you really think these are pressing needs, stop using debt to pay for them and raise the revenues needed," she said.
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reduced borrowing, but not reduced spending.. means we're living on borrowed time... and continuing to run a liberal agenda in the schools.. which is nothing more than a guaranteed recipe for certain disaster.
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
That's how we got into this problem."
Now that sounds good....
I still say the CA AG should file a lawsuit against the feds to recover the NINE BILLION A YEAR it's costing us to allow the illegals to stay here. Now that would be a WINDFALL!
I wrote the AG, I don't know if he reads his mail. LOL
And what about the 20 percent that we are not getting back from DC in taxes!!!!
Is anybody awake in Sacramento???
helloooooo
Semper Fi,
Kelly
Why does it make sense to send money to Washington and expect to get it back?
"Why does it make sense to send money to Washington and expect to get it back?"
it doesn't but all everyone pays federal taxes...
only problem is that Californians only get about eighty percent back...
some states get more than 100 percent back!
The extra revenue is nice but it still doesn't address the built in, annual, $8-10 billion deficit. At some point the piper must be paid.
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