Dr. Housing Bubble Blog
Leave it to California to first, stall a budget for a record 85 days only to pass a budget that amounts to kicking the economic shiny can down the pothole-filled road. We may want to save those cans for their redemption value since things are getting progressively worse. Only 6 weeks after being signed, the budget is now facing a stunning $11.2 billion deficit. It took longer to pass the first budget than it took us to once again drive off an economic cliff. What exactly happened here?
Well first, the initial budget passed in September for the 2008-09 fiscal year amounted to a buffet of gimmicks, illusions, and putting your hand in one pocket, taking $20 out and shifting it over to your other pocket deluding yourself that you are now richer. So how did they pass that budget?
*$3.3 billion in sale of authorized Economic Recovery Bonds
*$1.9 billion in changes to accrual accounting
*$5.1 billion of lottery proceeds
*$1.4 billion in other initiatives
*$8 billion in spending cuts
This is what it took to pass a $143 billion budget on September 23. More debt and accounting smoke and mirrors. Nothing really addressed the structural problems facing the state. Barely enough time to catch our breath but here is what awaits California. This comes from the Special Session 2008-09 report:
“Economic conditions have deteriorated dramatically since the Governor signed the 2008 Budget Act of September 23. This deterioration was reflected in General Fund revenue collections for the month of September that came in $923 million below forecast. As a result, California faces a revenue shortfall of $11.2 billion this year. Specifically, the Department of Finance estimates that General Fund revenues will be approximately $567 million lower in 2007-08, $10.7 billion lower in 2008-09, and $13 billion lower in 2009-10 than earlier projections.”
This coming from our government so you know things are actually worse. So where was this supposed and deceptive money going to come from? Let us look at the revenue sources for the state: