$10 Billion Dollar Hole In State Budget

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(Sacramento, CA)
Wednesday, November 14, 2007

Legislative Analyst Elizabeth Hill says she expects the state to be about two billion dollars in the hole this fiscal year – and be short another eight billion next year.  She blames the housing slump, lower tax revenues and unexpected events such as wildfires.  But she says there’s another ongoing problem:

“Spending is growing at about seven percent and revenues are growing at about four-point-six percent.”

Hill says rising oil prices could also affect the state’s bottom line.  She recommends the legislature act now to help narrow the future gap:

“The key thing to remember is all the easy solutions are gone and so that, these are really tough choices.”

She says that could mean cutting programs or raising taxes.  One positive note – Hill’s not predicting a recession, but rather “modest economic growth.”  She also expects the revenue picture to brighten in a few years.