California faces new multi-billion-dollar deficit: official
California faces a fresh projected budget deficit of nearly 21 billion dollars just four months after approving a fiscal plan to close a similar shortfall, state officials said Wednesday.
A projection from the state's chief budget analyst Mac Taylor warned that the state's recession-ravaged economy, unrealistic budgeting assumptions and shrinking stimulus funds were behind the shortfall.
A summary of the fiscal outlook for the state said officials would need to address a 20.7 billion dollar budget hole.
The new funding crisis consisted of a 6.3 billion dollar projected deficit for 2009-2010 and a 14.4 billion dollar gap between projected revenues and spending in 2010-11.
"Addressing this large shortfall will require painful choices on top of the difficult choices the legislature made earlier this year," the summary said.
Governor Arnold Schwarzenegger is due to present his next budget in January and has already warned that Californians could be in for a further round of wide-ranging spending cuts.
"I think that there will be across-the-board cuts again," he told a news conference in San Jose last week.
In July, California lawmakers approved a deal to close a 26.3 billion dollar gap in the state's finances. The budget attracted howls of protest for its brutal 15-billion-dollar cuts to services such as education and health care.
Democratic lawmakers defended the spending cuts as a necessary evil due to an unprecedented drop in revenues caused by the recession, which has fueled soaring unemployment and skyrocketing home foreclosures.
The budget crisis had pushed California, which would have the world's eighth largest economy if it were a country, to the brink of bankruptcy, sending the state's credit-rating plunging and forcing it to start paying bills with IOUs.
Analysts and legislators say California's seemingly eternal fiscal gridlock is a consequence of the state's constitution, which requires a two-thirds majority to pass a budget or raise taxes.
California is only one of three states to require such a margin in its legislature to pass a budget.
AFP
