State tax collections in April have exceeded projections, a pleasant change for California fiscal authorities. As of April 19th, the Central Valley Business Times reported that California has a $1.9 billion surplus compared to a $1 billion deficit in January. The big question: Will the Legislature and Governor reduce California’s structural deficit or will it be spend, spend, spend (as usual)?
California requires a balanced budget, and a budget passed by June 30th. The latter has rarely happened in the last few years; the former has happened through gimmicks and the movement of funds rather than fixing California’s structural deficit.
Governor Schwarzenegger has said,
“I have an obligation, which is a promise to the people of California that I will bring down this structural deficit to zero, and that we will be fiscally responsible. So there is two choices: one is to create extra revenue through all the various different means that I have proposed, or the other one is to go and start making those cuts.”
The Governator released his new budget today, and the structural deficit is still around at $1.4 billion. And that’s before the Legislature gets their hands on the budget.
The news story from the Associated Press indicates that no one is happy with the budget. Democratic Assembly Speaker Fabian Nunez (D-Los Angeles) is upset with the cuts to social programs. Assembly Minority Leader Dick Ackerman (R-Tustin) wants more cuts so that the state isn’t running a structural deficit.
The budget requires a 2/3 vote to pass meaning that Republicans must consent. I think the spending cuts in social programs are d.o.a. and we’ll see yet another year with magical movement of money so that everyone can announce that the budget is balanced…but where the structural deficit increases. I hope I’m wrong but I doubt it.