MANCHESTER, UNITED KINGDOM - OCTOBER 22: In this photo illustration British pound coins can be seen next to American Dollar notes on October 22, 2008 in Manchester, England. The British pound has hit it's lowest point against the Dollar in five years after fears of a recession were acknowledged by the government and financial experts today. (Photo by Christopher Furlong/Getty Images)
California suffers from a structural deficit--a budget gap where revenues lag behind expenditures by $20 billion and will continue to do so through 2016 unless the state either reduces spending or increases taxes.
In the previous blog we covered possible spending cuts--painful but doable if we're willing to pay the price. In this blog, we consider what for many is the unthinkable--revenue increases.
Where can we find that much money?
Here are six ideas:
There you have it. These areas alone would bring in new revenues by approximately $15-17 billion. The virtue is that the pain is spread out over every category of income, including businesses and individuals.
Unless Californians are prepared to eliminate health insurance for the poor, do away with higher education, or shut down various portions of state government altogether, the structural deficit will not disappear without some revenue enhancements.
It may well be that the governor and legislature choose some of these areas and not others. Combined with shared sacrifices via selective cuts discussed in the last blog, the state could eliminate its structural deficit.