Huffpost Politics
THE BLOG

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Jessica Levinson Headshot

California's Newly "Balanced" Budget Is a Farce

Posted: Updated:

California's budget deal, coming 100 days after the protracted budget negotiations began, is anything but cause for celebration. True, the state will be able to start issuing debt, which is needed to pay for a myriad of things, such as public works projects. Localities will also get some much anticipated state funds. However, the legislature closed the state's $19 billion budget gap with unduly optimistic predictions and accounting gimmicks.

Now, on to the rosy predictions contained in the budget deal:

First, California has balanced its budget in part based on the assumption that the state will get $5.4 billion in federal funds. The problem is that the federal government has indicated that it will give something closer to $1.3 billion.

So there is about $4 billion that we can fairly safely assume the state will be short next year.

Second, the budget assumes that California will have higher than expected tax receipts. Why? A cynic would say because the state needs to balance the budget, and utilizing unreasonably optimistic predictions is the way to do it.

Next, where will be remainder of the revenue come from?

The state expects to receive $1.2 billion in revenue from the delay of a corporate tax break. California is also getting approximately $2-3 billion from a transfer of state funds, which the state will eventually have to be paid back. So there is another few billion that the state will have to pay back in the future.

We're now up to $7 billion that the state will have to pay off in the near future.

Next, on deck, the spending cuts:

Forty percent of the $19 billion budget gap is made up in spending cuts. These cuts include: (1) a roll back of benefits to state workers, including a higher retirement age and a requirement for larger employee contributions to pension programs; (2) reductions in medical care to inmates; (3) reductions in pay to state in-home care workers; and (4) a reduction of approximately $3 billion in funding to schools, funding which is in fact voter mandated, and will have to be paid back in the future.

If you're still counting, we've now tallied approximately $10 billion that the state will have to pay back in the coming year or years.

The voters should tell their public officials that the time for accounting gimmicks and unrealistic expectations is gone. California just "closed its budget gap" by employing rosy predictions and accounting gimmicks, which actually demonstrate that the state is in the red to the tune of $10 billion.