Remember way back five weeks ago when the California budget
was declared balanced because $4 billion in higher revenues was expected in the
treasury? If the $4 billion didn’t appear, an automatic trigger would add additional
budget cuts of $2.5 billion.
Five weeks ago was before the federal debt-ceiling bill
passed with its promise of hundreds of billions of dollars in federal spending cuts.
Those cuts could mean a loss of billions of dollars for California. George
Skelton has a rundown of the federal money earmarked for California in his L.A.
Times column yesterday.
Five weeks ago there was no referendum circulating against
the Amazon tax measure. If the referendum achieves enough signatures, collection
of the estimated $300 million expected from the tax could be temporarily stopped
or even eliminated if the measure makes the ballot and the voters overturn the
law.
Five weeks ago there was no referendum against the bill to
end redevelopment that added over $1
billion to state government’s depository.
Five weeks ago doctors and insurers were not demanding that the
federal government reject $1.3 billion in Medi-Cal cuts.
Five weeks ago was before the stock market took a hard hit,
losing over 500 points in one day and falling for eight straight days signaling
a sinking economy.
The Department of Finance is supposed to certify by December
15 if the $4 billion projected revenue gain is accurate. If not the cuts
trigger must be pulled. Depending on how much the state is short the $4 billion
would determine how big the cuts are. A list of the cuts is here.
While, the Department of Finance was not expected to consider
the loss of federal money or the loss of revenue from lawsuits or referendums,
all these items have a huge effect on the budget.
Everyone hopes that unexpected revenue appears. I even suggested
in a post at the time the budget passed that the budget revenue "prognosticators
may be on to something."
Considering the direction the economy is headed, I don’t look like much
of a prognosticator, myself, now.
Things can turn around. Hopefully, they will. The new jobs report today
was positive. However, even if the $4 billion pours into the treasury in time,
would the cuts need to happen anyway because of lawsuits, referendums and lose
of federal funds?
I’d say the finger on the budget trigger has to be real
nervous right about now.