The California legislature passed yet another Bad Budget™ that used gimmicks and a hoped for tax increase this fall to balance the budget. The budget passed on a party-line vote with no Republican support. Governor Jerry Brown has not yet signed the budget, and it’s possible he’ll use his red pencil (the line-item veto) to make changes.
The budget assumes the following
- Voters will approve Governor Brown’s proposed tax increase on the November ballot. That’s anything but a given since support is now at only 52% with the economy not exactly being a rosy situation;
- That there are no further shortfalls with tax revenues. Given the economy, there are definitely some rose-colored glasses being used;
- That borrowing costs don’t increase. The budget has plenty of borrowing; and
- That no unforeseen expenses hit the state. Even the $500 million that’s likely to go to Gilbert Hyatt would be a problem.
Even if everything in this scenario happens–something I think is very unlikely–the best case for California next June is that they will be looking at a $3 billion deficit. The worst case is something well over $20 billion.
Here’s a song that explains my feelings well:
