In April, Californians sent $11.3 billion in personal income tax payments to the state, $4 billion more than predicted in January, according to the Department of Finance. So, what should be done with this money?
The California Constitution requires a balanced budget, so there’s no such thing as deficits or surpluses—at least on paper. The reality is a bit different, of course. For the last few years, the state has borrowed funds from a variety of sources in order to balance the books. Funds tapped included payments to local governments, funds for education, and emergency funds.
H.D. Palmer, a spokesman for the Department of Finance, notes what happened the last time California had an unexpected surplus. “When the dot-com boom went spectacularly bust and those one-time revenues disappeared, that increased the structural deficit that we are still working to close.”
It even appears that Democrats in the state legislature know that California has fiscal issues. “We as Democrats need to be careful and focus on getting ourselves out of this hole so we don’t have a permanent structural deficit,” said Wes Chesbro (D-Arcata).
So will the money go to reducing the structural deficit and paying back the debt/borrowed funds, or will the Democrats in the legislature attempt to spend the money? The budget is supposed to be approved by June 30th (a deadline that’s rarely met), so we should have some idea on this soon.