Why Next Year’s Budget Could Get Even Worse

[LATIM] 6a00d8341c630a53ef011570e77d8a970c800wi.jpg

Yesterday, the legislature's non-partisan analyst projected that the state would face a $25.4 billion shortfall by the middle of next year (that number is the combination of an expected deficit of $6 billion in the current 2010-2011 budget year and of $19 billion in the next budget year, beginning July 1).

But it could be worse than that.


Several pieces of this year's budget are being challenged in court. Rulings by judges could force some program cuts to be restored, thus adding to the red ink.

Also, there are two temporary sources of revenue that expire next year: 1) The temporary tax increases approved by the legislature and Gov. Schwarzenegger in early 2009. 2) Federal stimulus funds that temporarily boosted the state budget on multiple fronts.

It's not yet clear exactly what those expirations will mean for revenues, and if the federal government will find other ways to help out the state. It looks unlikely, given that the talk in Washington, D.C., is about deficits and cutting spending.

The new governor and legislature face what amounts to an impossible task: balancing a budget in a broken governing system without the money to do the job.

Contact Us