State lawmakers from both houses met in the Assembly Chambers to hear the bad news… dished out by the state Controller, the Treasurer, the head of the Department of Finance and their own Legislative Analyst. Treasurer Bill Lockyer included some stern advice in his presentation: He said come up with a balanced budget soon:
“No gimmicks, no phony accounting, no borrowing that merely postpones the day of reckoning. Those cupboards are bare. Stop relying on the tooth fairy and other fantasies.”
The Governor and lawmakers face a budget deficit that’s expected to grow to 28 billion dollars over the next year and a half. Revenues are falling and the state’s credit rating is in the dumps. Treasurer Lockyer warned if lawmakers don’t address those problems soon, Californians will soon see it. Public works projects all over the state—from traffic signals to school construction will come to a halt. That’s because the fund he uses for those projects is drying up. And he won’t be able to sell bonds to replenish it. He says that will hamper an economic recovery.
“Conservatively estimated those infrastructure projects represent 12-and-a-half billion dollar hit in lost revenues to the private sector and 200-thousand jobs that we need.”
Controller John Chiang says the state faces running out of cash by March. If that happens one option is to issue I.O.U’s instead of payments to schools and businesses. He says that’s not the way to go.
“It sends the wrong message to our creditors and its use is limited.”
But state Legislative Analyst Mac Taylor said between raising revenues and cutting spending—there are no easy solutions. He says California already has some of the highest tax rates in the country. But he says balancing the budget with spending cuts alone would gut major programs.
“You’d have to completely eliminate funding for our universities, U.C. and C.S.U. You’d have to eliminate all funding for Cal Works and payments to the elderly and the disabled.”
Usually in December the Capitol is fairly quiet—lawmakers are in their districts. But this week and next legislators will be meeting in budget committees. G.O.P members are soon expected to roll out their plan to address the state’s fiscal situation. Democratic leaders in both the Senate and Assembly say they will get something done before the end of the year.