California’s budget crisis keeps getting worse. Reports have surfaced that the Governator will declare a “fiscal emergency” in early January; the deficit for this fiscal year is now forecast as somewhere between $10 and $15 billion. That’s a lot of money, and will require significant monetary machinations.
The Instapundit predicts that the governor will propose a “moderate” tax increase. However, California is one of the few states where all tax increases need a 2/3 vote of both houses of the legislature. The Flash Report stated that Assembly Leader Mike Villines told Michael Der Manouel, Jr., the president of the Lincoln Club, “Tax increases are dead on arrival in the State Assembly, there isn’t a revenue problem.”
So we will likely see the unstoppable force (Democrats love of tax increases) running into the unmovable object (Assembly Republicans rejection of any tax increases). Things will likely be very, very nasty in Sacramento, and at a minimum expect “user fees” to increase dramatically. Add in a possible recession in 2008, and the political scene will be very ugly.