California’s Climbing Debt Ratio Could Spur Deeper Health Cuts
New estimates suggest that California might need to pay as much as 10% of its general fund budget on debt service payments by fiscal year 2014-2015, the Sacramento Bee reports.
The state's debt payments currently account for about 6.7% of its general fund budget. Prior to this year, California did not spend more than 5.7% of its budget on debt servicing.
Officials say a combination of factors has contributed to the state's rising debt ratio. In recent years, voters have approved numerous bonds for hospitals, stem cell research and other infrastructure projects. At the same time, the recession has caused state revenue to fall dramatically.
Meanwhile, California continues to struggle with recurrent budget shortfalls. Last week, the Legislative Analyst's Office projected that the state would face about $20 billion in annual deficits through 2014-2015. Although California typically fulfills its debt obligations, the state still has the lowest bond rating in the nation.
Officials say California's worsening fiscal situation could lead lawmakers to propose even deeper cuts to already strained state programs and services. Others say lawmakers might look to raise taxes to bring in more revenue (Yamamura, Sacramento Bee, 11/24).
Today, KQED's "Forum" is scheduled to include a segment on California's budget situation. Panelists slated to participate are:
- Jon Fleishman, vice chair of the California Republican Party;
- Stephen Levy, director of the Center for Continuing Study of the California Economy; and
- Mark Paul, senior scholar and deputy director for the California Program for the New America Foundation (Krasny, "Forum," KQED, 11/24).