Despite efforts that have reduced California’s staggering budget deficits, State Legislative Analyst Elizabeth Hill estimates a 5.5 billion dollar shortfall for the next fiscal year and continuing deficits through 2012…. Even though recent tax revenues have built a reserve of more than 3-billion dollars in the current year.
“I think of this advanced stage of the economic expansion, one would expect that states would be running operating surpluses in fact that’s what’s happening in many states throughout the country…”
She cautions against using the state’s budget reserve to make up for the shortfall saying lawmakers should instead consider a mix of spending cuts and revenue increases—in other words— tax hikes. However, a spokesman for the state Department of Finance, which advises the Governor on his budget, says tax increases won’t happen.