California Budget Crisis

3 Pages 783 Words

California’s deficit was said to be reaching a total of $20 Billion before last year’s election in November. Governor Gray Davis stated that this was no longer true and that the problem was fixed. After winning the election, he announced that the actual deficit was $34 Billion. Were the people deceived? Did Davis actually “hide” this budget crisis from the state of California? Voters felt that they did not have all the information they needed prior to casting their ballots in the 2002 election. The “Budget Crisis” is one of the reasons why concerned citizens and taxpayers are requesting a recall election.
With all the budgets of the states combined (excluding New York), California’s budget surpasses them all. The unbelievable deficit of $34 billion is divided into three components, 45% of it originating from the 2002 - 2003 general funds. When broken down, 51%, which is said to be $17.7 billion, comes from the Revenue Loss. This also includes, personal income, and sales and corporation taxes. About 36% or 12.6 billion is due to the “One-Time Solutions”, the funds and cuts used in this year’s budget and including borrowing against the tobacco settlement (which might not be available in 2004). Finally, the other $4.5 billion from mandatory expenditure increases, which includes the Proposition 98 (education spending), that resulted in the loss of anticipated federal funds. The breakdown of the deficit explains the reason why California is experiencing a serious “Budget Crisis”.
Even after knowing how the deficit came to be, Legislative Analyst Elizabeth Hill estimated the deficit at only $26.1 billion. This estimated total shortfalls Davis’ prediction of $34.6 billion that leaves $8.5 billion unaccounted for. To help with the crisis, Governor Davis proposed massive spending cuts. The reduction proposals totaled $3.4 billion and the projected savings over the span of two years totaled $10.2...