Capitol Cash Squeeze Ahead

If you think the California budget has been tight, hang on. The big squeeze is yet to come. 

California's battered economy continues to underperform, increasing worries about spending cuts.

New numbers out Thursday from State Controller John Chiang show that so far this fiscal year, tax revenues continue to fall far behind expectations.

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Those revenues are $1.5 billion dollars below projections. In the month of October alone, revenues were $810 million short.   Even worse, the state's spending is exceeding projections by $1.7 billion.

"October's poor revenues capped a very disappointing first four months of the fiscal year," Chiang said Thursday.  "Unless revenues and expenditures begin to track with projections, the state will face increasing cash pressure in the months ahead."

In Chiang's typically-understated way, he is warning of an increased chance that the Brown Administration will have to pull the trigger on spending cuts next month.

The budget passed last summer assumed the state would bring in an extra $4 billion in revenues. Critics called it an unrealistic guess, a gimmick that simply put off more cuts. 

Under terms of the budget deal, a shortfall of up to $2 billion would trigger cuts of $100 million each to the University of California and California State University systems.  An even higher shortfall would mean mid-year cuts to California's K-12 schools.

The Brown Administration has consistently said it's too soon to make specific decisions

H.D. Palmer with the Department of Finance tells Prop Zero that his department huddled this week with a wide range of economic experts and is looking at a trigger decision "based on a whole 12 month forecast."

Palmer says it's not a political decision, but one based on hard data.

In other words, the administration could choose to hold off the cuts on the expectation of more tax revenues in the spring.  But that isn't calming the unease of educators and others who worry about how to run their schools with this kind of uncertainty looming.

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