California budget cuts loom as revenue dips, spending soars
By Kevin Yamamura
Sacramento Bee
Sacramento Bee
Published: Friday, Nov. 11, 2011 - 12:00 am | Page 3A
For October, Chiang said, California was $810.5 million behind what was expected, or 16.3 percent.
Notably, the state missed its personal income tax estimate by $451 million, or 12.9 percent, which the Franchise Tax Board attributed to lower withholdings and estimated tax payments.
The state also faced spending pressures through the first four months of the year. Chiang reported that California spent $1.7 billion more than budget writers expected.
Under the budget deal Gov. Jerry Brown signed in June, the state will automatically cut a variety of programs depending on how deep budget analysts determine the revenue shortfall will be.
If the state falls between $1 billion and $2 billion short, the budget calls for cuts in higher education, social services and public safety. If the state falls more than $2 billion short, the state will cut K-12 schools and community colleges.
The depth of the state's revenue shortfall so far has caused concern among program beneficiaries and leaders. However, it is not a given that the state will pull those triggers in December even if it ends up more than $2 billion shy in revenue by that point. As Assembly officials noted last week, it remains possible the Department of Finance and the Legislative Analyst's Office will say in coming weeks that California can make up that gap with a burst of spring revenue.
To help close the budget in June, Brown and lawmakers relied on a $4 billion optimistic bump in revenue over the 2011-12 fiscal year, a calculation that has grown in controversy every month the state falls short of hitting its estimates.
"October's poor revenues capped a very disappointing first four months of the fiscal year," Chiang said in a statement. "Unless revenues and expenditures begin to track with projections, the state will face increasing cash pressure in the months ahead."
Notably, the state missed its personal income tax estimate by $451 million, or 12.9 percent, which the Franchise Tax Board attributed to lower withholdings and estimated tax payments.
The state also faced spending pressures through the first four months of the year. Chiang reported that California spent $1.7 billion more than budget writers expected.
Under the budget deal Gov. Jerry Brown signed in June, the state will automatically cut a variety of programs depending on how deep budget analysts determine the revenue shortfall will be.
If the state falls between $1 billion and $2 billion short, the budget calls for cuts in higher education, social services and public safety. If the state falls more than $2 billion short, the state will cut K-12 schools and community colleges.
The depth of the state's revenue shortfall so far has caused concern among program beneficiaries and leaders. However, it is not a given that the state will pull those triggers in December even if it ends up more than $2 billion shy in revenue by that point. As Assembly officials noted last week, it remains possible the Department of Finance and the Legislative Analyst's Office will say in coming weeks that California can make up that gap with a burst of spring revenue.
To help close the budget in June, Brown and lawmakers relied on a $4 billion optimistic bump in revenue over the 2011-12 fiscal year, a calculation that has grown in controversy every month the state falls short of hitting its estimates.
"October's poor revenues capped a very disappointing first four months of the fiscal year," Chiang said in a statement. "Unless revenues and expenditures begin to track with projections, the state will face increasing cash pressure in the months ahead."
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