It's going to get much worse. Raising taxes in California will result in much less revenue, not more. It will force people to spend less than they are doing already. Notice they're talking about a $12 billion shortfall by 2010, but I say at least tripple that.
Bloomberg News, sent from my iPhone.
California Budget Runs $8 Billion Short, Analyst Says
March 13 (Bloomberg) -- California’s revenue over the next 16 months will fall at least $8 billion short of what Governor Arnold Schwarzenegger and lawmakers assumed when they passed a budget in February, the state’s fiscal analyst said.
The shortfall would leave California with a $6 billion deficit by June 2010, after a $2 billion budget reserve is spent, state Legislative Analyst Mac Taylor said in a report to lawmakers today. The shortfall would grow to $12 billion in the fiscal year that begins July 1, 2010, he said.
The new forecast shows how quickly the state’s finances are being upended by the worst recession since the Great Depression. Just three weeks ago, Schwarzenegger and lawmakers agreed to close a record $42 billion deficit with a package of tax increases, spending cuts and borrowing plans that were supposed to leave the government with a surplus 16 months from now.
“Unfortunately, the state’s economic and revenue outlook continues to deteriorate,” Taylor said in the report. “Even in the few weeks since the budget was signed, there have been a series of negative developments.”
The Legislature and governor will need to adopt “billions of dollars in additional solutions” to rebalance the budget, Taylor said.
Schwarzenegger’s budget anticipated an unemployment rate of 9.1 percent this year, a figure that has already been eclipsed as businesses continued to fire workers. In January, the rate reached 10.1 percent.
Rising Taxes
The $130 billion budget signed in February raised the state sales-tax rate to 8.25 percent from 7.25 percent and boosted vehicle license fees to 1.15 percent from 0.65 percent of the value of an automobile.
The spending plan also added 0.25 percentage point to all personal income tax brackets for two years, so that a resident taxed at 8 percent will face an 8.25 percent levy. That increase may drop to 0.125 percentage point depending upon how much money California receives under the economic stimulus measure signed by President Barack Obama. The budget anticipates at least $7.8 billion in such federal funds.
The spending plan also cut $15 billion of spending, half from schools and colleges, and anticipates issuing $5 billion of bonds backed by the state’s lottery, though voters must approve the debt in an election in May.
“Our year of shared sacrifice isn’t over,” said Noreen Evans, a Napa County Democrat and chairwoman of the Assembly Budget Committee. “As grim as it is, this forecast is not even the worst-case scenario facing California. We must be prepared for more bad news to come.”
To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net
Find out more about Bloomberg for iPhone: http://bbiphone.bloomberg.com/iphone
California Budget Runs $8 Billion Short, Analyst Says
March 13 (Bloomberg) -- California’s revenue over the next 16 months will fall at least $8 billion short of what Governor Arnold Schwarzenegger and lawmakers assumed when they passed a budget in February, the state’s fiscal analyst said.
The shortfall would leave California with a $6 billion deficit by June 2010, after a $2 billion budget reserve is spent, state Legislative Analyst Mac Taylor said in a report to lawmakers today. The shortfall would grow to $12 billion in the fiscal year that begins July 1, 2010, he said.
The new forecast shows how quickly the state’s finances are being upended by the worst recession since the Great Depression. Just three weeks ago, Schwarzenegger and lawmakers agreed to close a record $42 billion deficit with a package of tax increases, spending cuts and borrowing plans that were supposed to leave the government with a surplus 16 months from now.
“Unfortunately, the state’s economic and revenue outlook continues to deteriorate,” Taylor said in the report. “Even in the few weeks since the budget was signed, there have been a series of negative developments.”
The Legislature and governor will need to adopt “billions of dollars in additional solutions” to rebalance the budget, Taylor said.
Schwarzenegger’s budget anticipated an unemployment rate of 9.1 percent this year, a figure that has already been eclipsed as businesses continued to fire workers. In January, the rate reached 10.1 percent.
Rising Taxes
The $130 billion budget signed in February raised the state sales-tax rate to 8.25 percent from 7.25 percent and boosted vehicle license fees to 1.15 percent from 0.65 percent of the value of an automobile.
The spending plan also added 0.25 percentage point to all personal income tax brackets for two years, so that a resident taxed at 8 percent will face an 8.25 percent levy. That increase may drop to 0.125 percentage point depending upon how much money California receives under the economic stimulus measure signed by President Barack Obama. The budget anticipates at least $7.8 billion in such federal funds.
The spending plan also cut $15 billion of spending, half from schools and colleges, and anticipates issuing $5 billion of bonds backed by the state’s lottery, though voters must approve the debt in an election in May.
“Our year of shared sacrifice isn’t over,” said Noreen Evans, a Napa County Democrat and chairwoman of the Assembly Budget Committee. “As grim as it is, this forecast is not even the worst-case scenario facing California. We must be prepared for more bad news to come.”
To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net
Find out more about Bloomberg for iPhone: http://bbiphone.bloomberg.com/iphone
Sent from my iPhone
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