Wednesday, August 10, 2011

California dreamin'

So, what happens when you "balance" a budget but still come up $11 billion dollars short as California did just a couple of months ago? Not a problem... you just pencil in that $11 billion as "unanticipated revenue" and send it up to the Governor's office for a sign-off. What could possibly go wrong?

California's tax revenue plummeted in July, missing expectations by nearly $539 million and raising fears that deep education cuts will be needed to keep the state budget balanced.

The bad news, announced Tuesday, came less than two months after Gov. Jerry Brown and state lawmakers patched together a budget on the assumption that a budding economic recovery would produce a $4-billion revenue windfall. Those hopes are now fading.

The plunge occurred before the recent Wall Street gyrations that wiped away many of the year's stock-market gains. If the economy remains sluggish and the $4 billion does not materialize, cuts in public schools, universities, libraries, child care, and services for the elderly and frail will automatically take effect.

"Every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year," state Controller John Chiang said in a statement accompanying his July revenue report.
(italics, ours)

If you're wondering where that downgraded expectation of $4 billion in unanticipated revenue came from, we're just as confused as you are as that $11 billion figure was the one reported out in back in June.

And, it is duly noted that while California's political class were "missing expectations", we're curious about just what it is about California's economic/poltical climate that would be cause for any expectations to be missed.

More than most states, California depends upon revenue generated from capital gains on the wealthy but if you create a hostile business climate where the evil rich are moving out of the state and taking their businesses with them, what would you expect?

Again, more evidence of the completely amateurish and un-serious nature of California's ruling class.


W.C. Varones said...

But on the bright side, the Democrats are getting supermajorities from redistricting next year, so they'll be able to raise taxes to their hearts' content.

Will the last working Californian please turn out the lights.

Mutnodjmet said...

Johnny Chiang is a great Dem. He is letting us know what is going on -- and represents Californians first (instead of the party).

Harrison said...

I think Moonbeam kind of admitted this back when he signed the thing. Those shrewd Dems in Sacramento think nobody would notice.

Hey I WAS going to spend $100 on dinner tomorrow but since I changed my mind I now have SAVED that money!

Dean said...

I'm still puzzled how the unanticipated revenue went from $11 to $4 bil. What the heck is going on?

K T Cat said...

Good question, Dean. The 11 and the 4 are pretty far away from each other.

Dean said...

KT, there is much truth to the correlation between Sacramento's budget-making process and that time-honored pub/drinking game.