CHESSNOID

It seemed just like yesterday that the budget barely passed, but we already back trying to balance the state budget again. Unlike the Federal government where deficits are solved just by printing more money, the state government must raise tax revenues or cut programs. At this point, raising revenues is an impossible task in this shrinking economy so program cuts are inevitable. We have a couple of measures to try to raise taxes, but they probably won’t get the vote.

San Francisco Chronicle:

Today, Schwarzenegger upped the ante by informing legislative leaders that he intends to release a revised version of his budget on Thursday, five days before the election, that will spell out solutions to fiscal crisis.

“In order to avert both a budget shortfall and a cash crisis, it is imperative that we begin work immediately to address these challenges,” Schwarzenegger wrote in the letter.

Matt David, a spokesman for Schwarzenegger, said the governor believes “he has the responsibility to be level with Californians on the size of the problem and how he plans to approach it in solving it.”

Schwarzenegger had planned to release his proposed revisions to the state’s budget on May 28.

With California’s economy continuing to deteriorate, most state finance officials were predicting another large deficit. The nonpartisan Legislative Analyst Office in March forecast an $8 billion revenue shortfall for the upcoming fiscal year, which begins July 1.

California’s economy is so big that if we get into deeper problems like laying off state government employees, the rest of the nation will feel the effects. I wouldn’t even be surprised if the Federal government stepped in to bailout our state. Obama’s administration would argue that our state is just too big to fail.   I am still against all bailouts!