California is in deep doo-doo again!!

California again faces massive deficit, projected at $21 billion
The state's chief budget analyst foresees a fiscal mess extending past the recession for years to come. He puts much of the blame on unrealistic budgeting assumptions.

Reporting from Sacramento - California government is again beset with red ink, facing a nearly $21-billion deficit over the next year and half, according to a report released today by the state's chief budget analyst.

Nonpartisan Legislative Analyst Mac Taylor projected state spending severely out of line with tax collections not just amid the current recession but for years to come. Solving the fiscal mess will require "painful choices" in both cutting services and raising revenue, Taylor warned.

The gloomy forecast, which comes after Sacramento officials have already raised taxes and slashed programs this year, portends a fierce budget battle again in 2010.

Gov. Arnold Schwarzenegger, who last week predicted more across-the-board budget cuts, in January must unveil his plan to address the deficit.

"We look forward to receiving the governor's new budget proposal in January," Assembly Speaker Karen Bass (D-Los Angeles) said in a statement, "and will immediately begin work on crafting budget solutions that will once again require both difficult spending reductions and additional revenues."

The legislative analyst, whom both Republicans and Democrats look to for fiscal advice, reported that the current budget year accounts for $6.3 billion of the deficit. Much of that is the result of unrealistic budgeting assumptions that have evaporated in the four months since lawmakers and Schwarzenegger agreed on a spending plan.

That budget, currently in place, assumed receipts of nearly $1 billion from the federal government for Medi-Cal, a sum the analyst questioned. Another $1 billion was assumed from the sale of a quasi-public workers' compensation agency that has stalled. Prison spending has outstripped its allotment, and schools are owed more than had been expected under the state's complex funding formula.

An additional $14.4 billion of the deficit is for the fiscal year that begins next summer.

The deficit is expected to be worse in the years beyond, as temporary taxes expire and raids on local government funds must be repaid by Sacramento. The analyst projected a $21.3-billion deficit in fiscal 2011-12 and $23 billion in 2012-13.

Even those numbers could turn out to be conservative. The figures assume that California wins all its pending court cases, in which billions in spending reductions are being challenged.

The forecast also assumes no cost-of-living adjustments for state workers and programs, after the Legislature suspended them this year.