CA: Budget risks future deficits

Mercury News ^ | 7/28/04 | Kate Folmar and Andrew LaMar

[NormsRevenge]

SACRAMENTO - Despite rosy talk of shared sacrifice and bipartisanship, the budget accord struck by Gov. Arnold Schwarzenegger and legislative leaders could augur gloomier budget negotiations in coming years.

The tentative $105.3 billion deal reached late Monday still awaits legislative approval later this week. In many ways, it resembles the revised spending plan Schwarzenegger proposed in May, a pastiche of borrowing, one-time fixes and side deals that come with future IOUs.

As budget negotiators spent weeks tinkering with two laws and creating new fiscal protections for cities and counties, critics contend they neglected a far more troublesome issue: California's penchant for spending more money than it takes in and patching over the difference with borrowing.

An estimated $8 billion to $10 billion deficit looms next budget year, analysts say. Unless state income vastly exceeds expectations, the imbalance could force lawmakers to do what they've been avoiding, slash spending or raise taxes.