Claremont Insider: State Budget Crisis: It's Baaaaack

Friday, November 7, 2008

State Budget Crisis: It's Baaaaack

The California state budget deficit continues to grow, this just six weeks after state legislators and Governor Arnold Schwarzenegger papered over a $15 billion deficit with a thrown-together, gimmicky budget that was nearly 3 months overdue.

Claremont and other California local governments dodged several fiscal bullets when state leaders declined to pull local funding from such things as state transportation bonds.

Now comes the news that the state is looking at another huge deficit. The Sacramento Bee reports:

California faces a massive $11.2 billion deficit this fiscal year, even higher than projected in recent weeks, Senate President Pro Tem Don Perata said Wednesday.

Without immediate intervention, the nightmare could lead to an additional $13 billion hole in the 2009-10 fiscal year, according to Perata, citing numbers he said came from the Governor's Office.

The Oakland Democrat said the gap is so severe that it cannot be bridged by spending cuts alone. He suggested Wednesday that the state increase its vehicle license fee and tax oil extraction in California.

The LA Times has an article today
detailing the steps that Governor Schwarzenegger is contemplating to close the deficit. These measures include a 1.5% sale tax hike, which, together with the recently passed half-cent LA County MTA sales tax hike, would mean that purchases in LA County would be subject to a 10.25% tax rate.

Schwarzenegger is also talking about taxing oil extraction in the state as well as a number of other services.

In addition to the tax hikes, Schwarzenegger is also proposing spending cuts, including a possible $2.5 billion from education. He also wants to furlough state employees one day a month and may cut two paid holidays. The governor sent a letter to all California government workers notifying them of the possible cuts.

The Bee's State Worker blog has the letter posted. It begins, "Dear Valued State Worker":

Click on images to enlarge

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