The Budget Outlook

Legislative Anaylists Office ^ | 11-15-2006 | Elizabeth Hill

[Amerigomag]

Summary

At the time the 2006-07 budget was passed last June, our longer-term revenue and expenditure projections indicated that California continued to face a significant budget problem. Although we estimated that California would conclude 2006-07 with a General Fund reserve of over $2 billion, we projected that the state would face operating shortfalls (that is, annual differences between revenues and expenditures) in the range of $4.5 billion to $5 billion during the subsequent two fiscal years. Our updated projections suggest a larger reserve in 2006-07 than we previously forecast, but also larger projected operating shortfalls in the out years. Specifically:

* The current year (2006-07) is projected to end with a reserve of about $3.1 billion, up about $1 billion from the $2.1 billion estimate contained in the 2006-07 Budget Act.

*However, expenditures will exceed revenues by $5.5 billion in 2007-08 and $5 billion in 2008-09, absent corrective actions. The 2006-07 carryover reserve could be used on a one-time basis to address over one-half of the projected 2007-08 shortfall, but would be exhausted thereafter. Thus, other actions will be needed to keep the budget in balance.

*In subsequent years, the operating shortfalls decline-particularly after repayments associated with the deficit-financing bonds (which were approved by the voters in March 2004) cease at the conclusion of 2009-10. Nevertheless, they remain over $1.2 billion through the end of the forecast period.

[Amerigomag]

If you read this forecast, you'll be a lot more informed and one step of our Austrian liberal. The long words exhaust him.

[Seruzawa]

Short version: Calif already bankrupt. Only cooking the govt books maintains a false apparency that it might be otherwise.

Same holds true for the Fed govt.

[goldstategop]

Its a foregone conclusion there will be NO spending cuts and NO tax increases. Sacramento gridlock.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus