California tax collections since the start of the fiscal year have fallen $1.5 billion behind projections, raising concern that the most-populous U.S. state will face automatic spending cuts.Tier 1 Cuts
Revenue was $810.5 million less than budgeted in October, bringing the total to 6.2 percent below expectations for July 1 through Oct. 31, according to figures released today by Controller John Chiang. Since the start of the fiscal year, the state has spent $1.7 billion more than it budgeted.
The $86 billion spending plan Governor Jerry Brown and fellow Democrats adopted in June included a series of cuts to be activated if revenue falls below certain levels. In December, Brown�s finance department will estimate whether the rest of the year�s revenue can meet the original projection.
�October�s poor revenues capped a very disappointing first four months of the fiscal year,� Chiang said in a statement. �Unless revenues and expenditures begin to track with projections, the state will face increasing cash pressure in the months ahead.�
- Trim University of California and California State University budgets by $100 million each
- Increase community-college fees by $10 per unit
- Cut in-home services for the elderly and disabled
Tier 2 Cuts
- Seven-day reduction in the school year to save $1.54 billion
- End $248 million in student busing subsidies
Tier 2 cuts kick in at the $2 billion shortfall level.
To put this in perspective, it took months of wrangling to reduce spending by $12 billion and the state is already (in a single quarter), $1.5 billion in the hole.
Rather than increase taxes (grumbling on that is guaranteed to start), how about ....
- Putting an end to collective bargaining for public unions
- Getting rid of needless bureaucracies
- Scrapping prevailing wage laws
- Scrapping defined benefit pension plans
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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