California just can't balance its budgets. The latest estimate came last week from Assembly budget officials in a legislative memo obtained by the Sacramento Bee. The newspaper reported that the officials "expect California to face a deficit of about $5 billion to $8 billion next fiscal year, higher than the $3.1 billion projected by Gov. Jerry Brown." The estimates are for fiscal year 2012-13, which begins July 1.
The warning comes after the state Department of Finance last month estimated a $654 million shortfall in revenue for the July-September quarter of the current, 2011-12 fiscal year.
"The deficit will be there," Esmael Adibi told us. "A deficit of $4 billion, $5 billion or even $6 billion is likely to happen" for fiscal 2012-13. Mr. Adibi is the director of the A. Gary Anderson Center for Economic Research at Chapman University. He has been crunching numbers for the school's annual economic forecast, presented by Mr. Adibi and Chapman President Jim Doti. The forecast will be held Dec. 6 at the Segerstrom Center for the Performing Arts in Costa Mesa.
"We're worried about personal income tax receipts, which have improved but are less than we anticipated," Mr. Adibi said.
Another area of concern is capital-gains tax receipts. "The stock market was doing well, but now has a hiccup. Capital gains are not as high as we anticipated. If we don't get enough capital gains, I would not be surprised to have much lower tax receipts than anticipated.
We'll have to wait until [later in] November and December to find out." But there is some light. "There has been some improvement in taxable sales collection due to relatively strong car sales."
The leaked Assembly budget memo commented on Gov. Brown's anticipation of $4 billion in added revenue. If the revenue doesn't come in, the June 2011 budget deal included an automatic "trigger" to cut spending to keep the budget balanced. In the memo's words, Gov. Brown's Department of Finance "has made clear that they actually expect the vast majority of the $4 billion will come in through estimated payment and final returns in the months of December through June."
In fact, Mr. Adibi warned, they're likely to get only $2 billion of that. That smaller amount means the trigger on spending cuts likely will be pulled in January.
Maybe someday Gov. Brown and the Democratic Legislature will figure out that jobs-killing tax rates and regulations are the cause of economic stagnation and budget deficits, and need to be changed.