With the state
general fund gap for 2009-10 at $21.3 billion as a result of the defeat of the
governor's budget-related proposals Tuesday, Governor Arnold Schwarzenegger
issued a statement indicating he would like to remove from his May Revise a
proposal to borrow $6 billion in revenue anticipations warrants.
Despite the
impression left by reports in the media and criticisms from the spending lobby
in protesting against the proposed cuts, the governor's original May Revise leaned
more heavily on revenue solutions than on budget cuts. Of the $21.3 billion in
"budget solutions," revenue solutions comprise $12 billion to $13
billion of the total:
|
|
(in
billions) |
|
Revenue anticipation warrant |
$6.0 |
|
Borrowing from local government |
$2.0 |
|
Acceleration of estimated payments and withholding |
$2.3 |
|
Selling of part of State Compensation Insurance Fund |
$1.0 |
|
Revenue from oil leases |
$0.1 |
|
Selling state assets, such as the Los Angeles
Coliseum |
$1.0 (tentative) |
|
Park fee increase, fire insurance fee, etc. |
$0.5 |
|
|
$12.9 |
However, the governor said in his May 21 statement that a large chunk
of that revenue will not be pursued. He said: "Based upon information I gathered
in meetings I held while in Washington D.C., discussions with the legislative
leaders, and the will of the people who said loudly and clearly in Tuesday's
election that they want Sacramento to live within its means, yesterday I
directed my Department of Finance to bring me additional options to cut state
spending so that we can eliminate the need to seek borrowing in the form of a
revenue anticipation warrant in the revised state budget I have proposed."
Perhaps one factor in the governor's decision was the announcement that
the Obama administration would not guarantee the state's borrowing, and thus an
act of Congress would be required.
Cal-Tax President Teresa Casazza said: "We commend the governor
for his action. Borrowing $6 billion would be a disaster, as it would leave
more than a $12 billion hole in the 2010-11 budget.
After using the money this year, the state would not have the $6 billion in
revenue next year, as it would be one-time revenue. Then, the state would have
to pay back the $6 billion in borrowing, creating a $12 billion gap – plus
interest."
In other budget-related news:
State Did Not Violate Federal
Law by Cutting Pay of Home Health Care Workers. After meeting with U.S. Secretary of Health
and Human Services Kathleen Sibelius, the governor announced that the February
budget package that cut the pay of home health care workers did not violate
federal law. The Service Employees International Union had been lobbying to get
the federal government to conclude just the opposite. (Source: The Sacramento Bee, May 21.)
Cal-TaxReports, May 26, 2009
© 2009 California Taxpayers'
Association.
All Rights Reserved.