California is, once more, looking at a budget that’s underwater. That should be no surprise to my readers, as I noted that the current budget had a probable deficit of somewhere between $5 and $10 billion. This past week John Chiang, California’s Controller, reported that state revenues were down 5.3% for the first quarter of the new fiscal year.
The problem remains the same for the bronze state: You can’t spend more than you take in. California is in a severe recession (a depression in all but name); unemployment is 12.2% and the state’s business climate is miserable. Governor Schwarzenegger has threatened to veto all 700 bills that passed the legislature if he doesn’t get an agreement by midnight on Sunday on state water issues related to the Sacramento-San Joaquin Delta. (Ironically, the first major storm of the season is expected to come ashore late tomorrow.)
The solution hasn’t changed: Spend less money. Programs need to be cut, services need to be eliminated, the state bureaucracy needs to shrink. That hits all of the Democrats’ special interests (the California legislature is dominated by the Democrats) so the chance for budget sanity in Sacramento is slim.