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Davis, California

Tuesday, April 16, 2024

Governor estimates $5 to $7 billion budget gap

To add one more issue to the list of problems currently facing California’s budget, Governor Arnold Schwarzenegger estimated the budget will fall out of balance by $5 to 7 billion this fiscal year, on top of a $7.4 billion gap already projected for 2010-2011.

The governor is required to send a balanced budget to the legislature. If the governor’s estimate is correct, state officials will confront at least a $12.4-14.4 billion problem when Schwarzenegger releases his budget in January.

In an interview with the Fresno Bee Editorial Board, Schwarzenegger emphasized deep spending cuts as a solution to the budget gap but did not mention tax increases.

“We are not out of the woods yet,” Schwarzenegger said. “The key thing is, we have to go and still make cuts and still reign in the spending. It will be tougher because I think the low-hanging fruits and the medium-hanging fruits are all gone. I think that now we are going to the high-hanging fruits, and very tough decisions still have to be made.”

H.D. Palmer, Deputy Director of External Affairs for the California Department of Finance, said the Department of Finance is working to find solutions to this problem.

“We are going to have to propose solutions in January, but we have not made a decision on what these will be,” Palmer said. “We are planning on getting a better estimate of the size of the budget gap and possible solutions by the first week of December.”

The state is currently $1 billion behind in tax revenues. It is unlikely that taxes will be increased to remedy the budget gap.

“From this year’s special election, the governor concluded that voters don’t want increased taxes,” Palmer said.

The likely solution to the budget gap will be further cuts to programs like education and social services. The governor and legislators already agreed to substantial cuts to education and social services earlier this year, as well as temporary tax hikes.

Palmer said at this point, it is unclear what programs are likely to be cut, but education may be on the chopping block.

“It’s tough to say if education is going to be cut,” Palmer said. “The governor supports higher education, but we are facing a challenging fiscal climate.”

SARAH HANSEL can be reached at city@theaggie.org.


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