California’s revised budget anti-jobs businesses say

Overly optimistic tax receipts combined with higher state expenditures are contributing factors for the Golden State’s financial Armageddon.

Gov. Jerry Brown, Democrat, was forced to admit that lawmaker’s enthusiastic projected revenues fell short and his office was forced to submit a revised budget. Overestimating potential revenues in California has become a common practice used to cook the books, however, all good things must come to an end and Governor Brown acknowledged the party is over.

According to California Budget Fact Check, California’s budget deficit has grown substantially since January from $9.2 billion to $15.7 billion. Three main factors that lead to the larger deficit: (1) the Governor’s prior budget projections have proven overly optimistic, (2) spending has grown this year and (3) the Governor’s budget anticipates growing spending even more in the next fiscal year.

 Perhaps most inexplicable is the fact that Gov. Brown intends to increase state spending.

The small bright spot in the Golden State’s financial balance sheet show the general fund revenues are expected to grow $4.9 billion and as a result the total state’s spending, which includes special funds and federal dollars, will reach $225 billion by next year.

“The problem isn’t that we don’t have enough money. The problem is that is that the Governor and others want to increase spending even faster than the money is coming in,” said George Runner member of the California State Board of Equalization.

Runner explains that the Governor and his friends don’t seem to realize the state has more than enough revenue to fund their programs, but Californians cannot find any jobs. “Yet rather than fight for jobs, the Governor is pushing tax hikes that will drive even more jobs and investment away from California,” he said.

California’s foolishness has only given more prudent governors of other states the opportunity to recruit businesses and highly-skilled workers to move away from the once Golden State.

“The answer to California’s budget problems has been and always will be jobs,” Runner explained. “When will our Governor realize this?”

Why Did The Deficit Grow?

According to California Budget Fact Check, the May budget revision proposes a number of changes, including steep tax increases. Some of the highlights of the May Revision include:

• The deficit has grown from $9.2 billion to $15.7 billion. This increase was a function of $1.7 billion in spending increases since the adopted 2011-12 budget, a failure of $4 billion of “phantom revenue” to materialize and increased spending proposed for 2012-13.
• The Governor’s office projects that revenues will grow $4.9 billion before the Governor’s tax increase. Unfortunately, absent proposed spending cuts and fund shifts, spending would grow 9.8 percent. Total state spending (from all funding sources) will reach a new historic high of nearly $225 billion in 2012-13. This is $12 billion higher than the 2011-12 (current year) budget and $30 billion higher than 2007-08, before the recession.
• The Governor’s proposed tax increase is estimated to raise $8.5 billion. Schools would only get a portion of this new funding, approximately $2.9 billion, even though the language of the initiative suggests that the tax increase is dedicated to school funding. The language of the initiative allows the state to reduce state support for schools and use those funds for fast growing health and welfare programs.

2011-2012 carryover deficits added to the woes

In January, Governor Brown assumed that the 2011-12 carryover deficit would be $4.1 billion. However, the May revision assumes that the carryover deficit will be $7.6 billion absent his proposed budget solutions.

“This dramatic change in the carryover deficit is the result of at least $1.7 billion in increased spending since the adoption of the 2011-12 budget, $400 million from the failure of the legislature to adopt targeted reductions by March, as the Governor asked, and the failure of the $4 billion in “phantom funding” used to close the budget in 2011-12 to materialize,” the California Budget Fact Sheet said. “Phantom funding was the tax revenue that the Governor projected above the amount of funding anticipated by the non-partisan Legislative Analyst.”

Spending is up across the board

Even with a $16 billion deficit looming, the state of California lawmakers approved a yearly spending increase estimated to be $4.9 billion. Looking at the numbers the drivers for the increases were due to health and welfare expenditures. However, if the state Legislature rejects the Brown’s proposed cuts, spending will grow by $9.7 billion.

Gov. Brown’s trigger cuts are on the horizon

The Governor’s new budget includes a number of cuts totaling $6.1 billion. In an effort to bypass the harsh cuts, Brown is traveling the state urging taxpayers to raise their own taxes. If the voters reject the multi-billion tax increases, schools will brunt 99 percent of the trigger cuts, Brown said. Keeping this in mind, it’s business as usual for the heavily Democratic legislature that reverts to the typical guilt mechanism and proposed tax hikes in place of cutting funds for California’s K-12 schools and colleges.


Apparently taxpayers cannot teach an old dog, new tricks (this is Governor Brown’s second tenure as governor) as he continues to promise business as usual for struggling Californians. Despite the lingering recession in the Golden-less State, taxpayers can expect higher deficits, higher spending and higher taxes. These lucky residents will also be subject to the new impending federal government’s 2013 taxmageddon (Bush tax cuts expire, payroll holiday tax expires and Obamacare taxes kick in.)

California Budget Fact Check;

For more stories;

© Copyright 2012 Kimberly Dvorak All Rights Reserved.

About thekdreport

Investigative journalist

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